By Patterson S.B. No. 1031
75R7009 MWV-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the assignment of a lottery prize.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 466.402(d), Government Code, is amended
1-5 to read as follows:
1-6 (d) The state is discharged of all further liability on the
1-7 payment of a prize under Section 466.403, 466.404, 466.406, [or]
1-8 466.407, or 466.410 or this section or under any additional
1-9 procedures established by rule.
1-10 SECTION 2. Section 466.406, Government Code, is amended to
1-11 read as follows:
1-12 Sec. 466.406. RIGHT TO PRIZE [NOT ASSIGNABLE]. (a) [Except
1-13 as otherwise provided by this section, the right of any person to a
1-14 prize is not assignable.]
1-15 [(b)] Payment of a prize may be made to the estate of a
1-16 deceased prizewinner.
1-17 (b) [(c)] A prize to which a winner is otherwise entitled
1-18 may be paid to any person under an appropriate judicial order.
1-19 SECTION 3. Subchapter I, Chapter 466, Government Code, is
1-20 amended by adding Section 466.410 to read as follows:
1-21 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
1-22 assign, in whole or in part, the right to receive prize payments
1-23 that are paid in installments over time by the commission if the
1-24 assignment is made to a person designated by an order of a district
2-1 court of the county where the assignor resides or Travis County.
2-2 (b) A district court shall issue an order approving a
2-3 voluntary assignment and directing the commission to direct prize
2-4 payments in whole or in part to the assignee if:
2-5 (1) the assignment is in writing, executed by the
2-6 assignor, and by its terms subject to the laws of this state; and
2-7 (2) the assignor provides a sworn affidavit stating
2-8 that the assignor:
2-9 (A) is of sound mind, is in full command of the
2-10 person's faculties, and is not acting under duress;
2-11 (B) has been advised regarding the assignment by
2-12 an independent legal counsel and has had the opportunity to receive
2-13 independent financial and tax advice concerning the effects of the
2-14 assignment;
2-15 (C) understands that the person will not receive
2-16 the prize payments, or portions of the prize payments, for the
2-17 assigned years;
2-18 (D) understands and agrees that with regard to
2-19 the assigned payments, the state, the commission, and its officials
2-20 and employees will have no further liability or responsibility to
2-21 make the assigned payments to the assignor;
2-22 (E) has been provided a one-page written
2-23 disclosure statement stating, in boldfaced type, 14 points or
2-24 larger:
2-25 (i) the payments being assigned by amounts
2-26 and payment dates;
2-27 (ii) the purchase price being paid;
3-1 (iii) the rate of discount to the present
3-2 value of the prize, assuming daily compounding and funding on the
3-3 contract date; and
3-4 (iv) the amount, if any, of any
3-5 origination or closing fees that will be charged to the assignor;
3-6 and
3-7 (F) was advised in writing, at the time the
3-8 assignment contract was signed, that the assignor had the right to
3-9 cancel the contract without any further obligation not later than
3-10 the third business day after the date the contract was signed.
3-11 (c) A voluntary assignment may not include or cover payments
3-12 or portions of payments that are subject to any offset provided by
3-13 this chapter.
3-14 (d) The commission shall establish and collect a reasonable
3-15 fee to defray any administrative expenses associated with an
3-16 assignment made under this section, including the cost to the
3-17 commission of any processing fee imposed by a private annuity
3-18 provider. The commission shall establish the amount of the fee to
3-19 reflect the direct and indirect costs associated with processing
3-20 the assignment.
3-21 (e) Notwithstanding any other provision of this section, a
3-22 prizewinner does not have a right to assign prize payments
3-23 following:
3-24 (1) the issuance, by the United States Internal
3-25 Revenue Service, of a technical rule letter, revenue ruling, or
3-26 other public ruling of the Internal Revenue Service that determines
3-27 that, based on the right of assignment provided by this section, a
4-1 lottery prizewinner who does not assign prize payments would be
4-2 subject to an immediate income tax liability for the value of the
4-3 entire prize rather than annual income tax liability for each
4-4 installment when paid; or
4-5 (2) the issuance by a court of a published decision
4-6 holding that, based on the right of assignment provided by this
4-7 section, a lottery prizewinner who does not assign prize payments
4-8 under this section would be subject to an immediate income tax
4-9 liability for the value of the entire prize rather than annual
4-10 income tax liability for each installment when paid.
4-11 (f) After receiving a letter or ruling from the Internal
4-12 Revenue Service or a published decision of a court, as provided by
4-13 Subsection (e), the director shall immediately file a copy of the
4-14 letter, ruling, or published decision with the secretary of state.
4-15 When the director files a copy of the letter, ruling, or published
4-16 decision with the secretary of state, a prizewinner is ineligible
4-17 to assign a prize under this section.
4-18 SECTION 4. This Act takes effect September 1, 1997.
4-19 SECTION 5. The importance of this legislation and the
4-20 crowded condition of the calendars in both houses create an
4-21 emergency and an imperative public necessity that the
4-22 constitutional rule requiring bills to be read on three several
4-23 days in each house be suspended, and this rule is hereby suspended.