HBA-TYH H.B. 823 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 823
By: Smithee
Insurance
5/6/1999
Introduced



BACKGROUND AND PURPOSE 

A charitable gift annuity (CGA) is a fund-raising vehicle that charities
have used for over a century in Texas.  In the arrangement, a donor makes a
gift to charity in exchange for a below market annuity for life.  The
Internal Revenue Code allows the donor to make charitable income, gift, and
estate tax deductions for the difference between the value of the gift and
the value of the annuity received in return for the gift.  In 1995, the
legislature passed legislation to clarify existing law to recognize
charitable gift annuities as having always been legal in Texas.  A federal
court has ruled that the legislature's intent to have the 1995 legislation
apply to litigation ongoing at that time was not clearly stated.  H.B. 823
clarifies that it was the intent of the legislature in 1995 to establish
the legality of  charitable gift annuities being challenged in lawsuits
pending at that time. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate 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; ESTOPPEL.
Requires an annuity that the donor has treated as a charitable gift annuity
in a filing with the United States Internal Revenue Service to be
considered as  a qualified charitable gift annuity issued by a charitable
organization, as described by Sections 1 (Definitions), 2 (Not Insurance),
and 6 (Not Unfair or Deceptive Trade Practice) of this article and Section
2(b), Article 1.14-1 of this code, in any litigation or other proceeding
brought by or on behalf of a donor or the donor's heirs or distributees.  

SECTION 2.  (a)  Provides that the purpose of this section is to clarify
the intent of the legislature with respect to the effect of Sections 1, 2,
and 6, Article 1.14-1A, Insurance Code, and Section 2(b), Article 1.14-1,
Insurance Code, as those sections existed immediately before the effective
date of this Act.  

(b)  Provides that Sections 1, 2, and 6, Article 1.14-1A, Insurance Code,
and Section 2(b), Article 1.14-1, Insurance Code, as those sections existed
immediately before the effective date of this Act, apply to any charitable
gift annuity issued before, on, or after the effective date of this Act,
including any charitable gift annuity that is the subject of litigation or
another proceeding that is pending on the effective date of this Act.  

(c)  Provides that this section applies without regard to the effective
date of the legislation enacting Article 1.14-1A, Insurance Code, or any
other legislation enacted by any legislature that amended the provisions of
Article 1.14-1A, Insurance Code.  

SECTION 3.  Makes application of this Act retroactive.

SECTION 4.  Emergency clause.
  Effective date: upon passage.