CTR Exemption - Phase II

Posted By: Jennifer

CTR Exemption - Phase II - 08/11/17 04:08 PM

The business is a gas station/convenience store that does sell lottery tickets. The business indicates the gaming does not exceed 50% of the sales which would qualify as exempt if it meets the other requirements. Do we require a list of the sales receipts? Go on the business word? How is it examined?
Posted By: Beachbum, CRCM

Re: CTR Exemption - Phase II - 08/11/17 04:36 PM

We have a lot of these types of businesses as customers. we monitor the amount of lottery activity based on the Debits your state lottery system is making from the customer's account. even if the customer does not have a separate lottery account, tracking the debits allows you to reasonably assume the amount of lottery sales for the month. Examiners have not critized our approach to this tracking.(knock-on-wood)
Posted By: Jennifer

Re: CTR Exemption - Phase II - 08/11/17 04:47 PM

Thank you so much! That helps a lot.
Posted By: rlcarey

Re: CTR Exemption - Phase II - 08/11/17 05:11 PM

Plus it is revenue and not sales. They get what? $0.05 or $0.10 a ticket they sell?
Posted By: thomasj

Re: CTR Exemption - Phase II - 08/11/17 05:37 PM

I used to go through this useless exercise every year for each exempt customer who sold lottery tickets. It was truly just so the examiner or auditor could check a box. The store makes about 3%, if that, of total sales on tickets (at least the last time I looked) and not one of our exempt customers ever even came close to having that be 50% of revenue. But sure as the sky is blue - If there was not a spreadsheet attached to the exemption review of a customer selling lottery tickets - it would be mentioned. The time we spent on that could have been much better spent elsewhere. Thankfully in the last few years we were able to automate the process to some degree which made it less time consuming but no less frustrating.
Posted By: PrimeTime

Re: CTR Exemption - Phase II - 08/11/17 08:41 PM

Used to be in the same boat as the other who have shared their experience - we'd have the customer sign an attestation form saying "I don't derive more than 50% of gross revenues from lottery sales" & monitor the activity to a degree, passed the examiner sniff test & no comments were ever made.

...until this past year, when the examiner made a stink about it and made the recommendation that we obtain annual tax returns from said customers as that would be the only foolproof way of verifying that the information is accurate. While I don't disagree that it's the only way of being 100% certain on the figures (customer could lie, they might have other bank accounts so how do you truly know what their revenues are, etc.), I think it was overkill.

Experience is going to change with each examiner; just because it's not an issue today doesn't mean it won't be one in the future.
Posted By: Elwood P. Dowd

Re: CTR Exemption - Phase II - 08/11/17 09:14 PM

FIN 2009 G001 is supposedly on point, but rivals the most worthless thing they ever published.

In short, if I'm the businessman, I'm not giving you a copy of my income tax return or even my income statement just so you can recognize me as an exempt person. The fact I wouldn't give them to you is incidental however, because neither would break down the sources of income the way the regulators apparently think they would. The crowning irony is that the lottery receipts, being state funds, are no longer reportable, but they are still fixated on how much merchants make from selling lottery tickets?

Good example of where regulatory practices defeat regulatory intentions. Revoke the exemption and file the damn CTRs.