RS C.S.H.B. 3601 75(R)BILL ANALYSIS INSURANCE C.S.H.B. 3601 By: Smithee 5-8-97 Committee Report (Substituted) BACKGROUND The Legislature passed in 1995 H.B. 3104 to clarify existing law to recognize charitable gift annuities as having always been legal in Texas. A federal court has now ruled that the Legislature's intent to have the 1995 legislation apply to existing litigation was not clearly enough stated. PURPOSE H.B. 3601 is to make clear that the legislation passed two years ago to recognize charitable gift annuities as legal applies to charitable gift annuities being challenged in pending lawsuits. The bill will also prevent donors who tell the Internal Revenue Service that their donation was a charitable gift annuity from taking a contrary position in court. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 1.14-1A, Insurance Code, by adding Section 7 as follows: Sec. 7 TREATMENT OF ANNUITY AS CHARITABLE GIFT ANNUITY: Any annuity treated by the donor as a charitable gift for any federal tax purpose shall be considered in any litigation or proceeding brought by or on behalf of the donor or the donor's heirs or distributees, as a charitable gift annuity issued by a charitable organization for purposes of Section 1, 2, and 6 of this article an Section 2(b), Article 1.14-1, Insurance Code. SECTION 2. Sections 1, 2, 6, and 7, Article 1.14-1A, Insurance Code, and Section 2(b) Article 1.14-1, Insurance Code as they existed on the effective date of this act apply to any charitable gift annuity issued before, on, or after the effective date of this act. This includes any gift annuity that is the subject of litigation or another proceeding pending on the effective date of this act. SECTION 3. Emergency Clause, Effective Date upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Changes the bill by removing "Estoppel" from the title of the section. Rewords SECTION 1. Changes from "in a filing with the United States Internal Revenue Service" to "for any federal tax purpose." SECTION 2. Formerly SECTION 2(b) of act. Changes from legislative purpose statement to application of Sections 1, 2 , 6, and 7, article 1.14-1A, Insurance Code as they exist upon the effective date of this act, to apply to any charitable gift annuity issued before, on, or after the effective date of this act. This includes one that is the subject of litigation. Adds reference to Section 2(b) as part of article 1.14-1A. SECTION 3. Deletes SECTION 3, and replaces with the emergency clause. Formerly SECTION 4 of act.