Income from Coin Operated Amusement Machines (COAM)
In
some divorce cases, spouses are self-employed. Compared to analyzing the income
of a spouse who is a W-2 employee, analyzing the income of a spouse who owns
and operates a business may be more complicated.
Analysis of business income is not
straightforward, and sole reliance on tax returns to figure out a spouse's
business income may not be a wise strategy. Oftentimes, a thorough analysis of
the business's financial and accounting records may be warranted.
One type of business that folks may be
familiar with in Georgia is Coin Operated Amusement Machines ("COAM"s).
Essentially, these are amusement machines that customers pay to play and
possibly win non-cash prizes. Redemption of prizes cannot be in cash. In other
words, COAM's cannot be used for gambling. You may have seen these coin
machines at some gas stations in Georgia.
There is a body of statutory laws
dedicated to the regulation of COAM's in Georgia. See generally O.C.G.A.
ยง 50-27-70 et seq. The COAM department is a part of the Georgia Lottery
Corporation ("GLC").
In a divorce case where one spouse's
income is at least partially derived from COAM's, it may be important to engage
in discovery to gather relevant evidence and information about the spouse's
income generated from COAM's. Gathering such evidence and information requires
an understanding of how COAM's work.
Revenue
from COAM's must be deposited into a bank account separate from the bank
account into which other business receipts are deposited. For example, if a gas
station has COAM's on its premises, then the receipts from the operation of the
gas station and the revenue from the COAM's at the gas station must be
segregated. On every Wednesday, the GLC does a sweep of the COAM bank account.
Then, the net receipts from the operation of COAM's are split three ways: (1)
GLC retains 5% to 10% of the net receipts; (2) the owner or operator of the
location where the COAM's are installed receives up to 47.5% of the net
receipts; and (3) the master license holder of COAM's receives up to 47.5% of
the net receipts.
Also,
Georgia law prohibits a business premises from deriving more than 50% of its
gross retail business receipts from COAM's. In other words, Georgia law
prohibits COAM's from becoming the business's main source of revenue. The owner
or operator of a business location where COAM's are installed is required to
report to the GLC, on a monthly basis, gross retail receipts for the business
location.
Discovery of Coin Operated Amusement Machines (COAM)
To analyze a spouse's income from COAM's, the
following documents may be requested directly from the COAM department of the
GLC via a request for production of documents or subpoena:
1.
Documents
showing any and all payment of annual Location License fee, non-refundable
payment processing fee, administrative fee, and non-refundable late fee of
$1,000.00 to the COAM Division of the GLC by [business name].
2.
Any
new and renewal COAM applications (and documents and supporting materials submitted
therewith) submitted to the COAM Division of the GLC by [business name].
3.
Documents
showing the results of Georgia Department of Revenue (DOR) check (to determine
if there are any outstanding tax liabilities or obligations, officer/owner
discrepancies, address discrepancies or missing tax returns) as a part of
COAM's Class B Location License compliance check regarding [business name].
4.
Any
and all Electronic Funds Transfer Authorization Form (including any updated
Forms) for Location License Holders submitted to the COAM Division or Retailer
Contracts and Administration ("RCA") Department of the GLC by [business name].
5.
To
the extent not covered by Paragraph 4 supra, documents showing the identity
(i.e., name of the bank, account holder, and account number) of [business
name]'s dedicated COAM Electronic Funds Transfer account.
6.
Documents
showing the date on which Class B COAMs were connected to the Central
Accounting System as it pertains to [business name].
7.
Location
Period Accounting Reports, Weekly Invoice Reports, Gaming Machine Meters Period
Balance Reports, and any other accounting or monitoring reports available on
the Intralot Portal showing [business name]'s Net Receipts.
8.
Monthly
Gross Retail Receipts reported to the COAM Division of the GLC by [business
name] and [business name]'s Monthly Sales Summary.
9. Any
and all 1099-MISC Forms sent to [business name] by the GLC.
Written by: Daesik Shin