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.