By King of Parker, Morrison H.B. No. 1799
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the assignment or deposit of certain lottery prizes.
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 GENERALLY ASSIGNABLE. (a)
1-13 Except as [otherwise] provided by this section and Section 466.410,
1-14 the right of any person to a prize is not assignable.
1-15 (b) Payment of prize payments not previously assigned as
1-16 provided by this section or Section 466.410 shall [a prize may] be
1-17 made to the estate of a deceased prizewinner if the prizewinner was
1-18 an individual.
1-19 (c) A prize to which a winner is otherwise entitled may be
1-20 paid to any person under an appropriate judicial order.
1-21 SECTION 3. Section 466.408(b), Government Code, is amended
1-22 to read as follows:
1-23 (b) If a claim is not made for prize money on or before the
1-24 180th day after the date on which the winner was selected, the
2-1 prize money shall be deposited to the credit of the Texas
2-2 Department of Health State Owned Multi-categorical Teaching
2-3 Hospital Account for the purpose of providing funding for indigent
2-4 health care [used to provide additional money to the state lottery
2-5 account for the purposes prescribed by Section 466.355(b)(1)].
2-6 SECTION 4. Subchapter I, Chapter 466, Government Code, is
2-7 amended by adding Section 466.410 to read as follows:
2-8 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
2-9 assign, in whole or in part, the right to receive prize payments
2-10 that are paid by the commission in installments over time if the
2-11 assignment is made to a person designated by an order of a district
2-12 court of Travis County, except that installment prize payments due
2-13 within the final two years of the prize payment schedule may not be
2-14 assigned.
2-15 (b) A district court shall issue an order approving a
2-16 voluntary assignment and directing the commission to direct prize
2-17 payments in whole or in part to the assignee if:
2-18 (1) a copy of the petition for the order and copies of
2-19 all notices of any hearing in the matter have been served on the
2-20 executive director not later than 20 days prior to any hearing or
2-21 entry of any order. The commission may intervene in a proceeding
2-22 to protect the interests of the commission but shall not be
2-23 considered an indispensable or necessary party. A petition filed
2-24 under this section shall include in the caption the prizewinner's
2-25 name as it appears on the lottery claim form;
2-26 (2) the assignment is in writing, executed by the
2-27 assignor and assignee (or designated agent), and by its terms
3-1 subject to the laws of this state; and
3-2 (3) the assignor provides a sworn and notarized
3-3 affidavit stating that the assignor:
3-4 (A) is of sound mind, over 18 years of age, is
3-5 in full command of the person's faculties, and is not acting under
3-6 duress;
3-7 (B) has been advised regarding the assignment by
3-8 independent legal counsel and has had the opportunity to receive
3-9 independent financial and tax advice concerning the effects of the
3-10 assignment;
3-11 (C) understands that the assignor will not
3-12 receive the prize payments, or portions of the prize payments, for
3-13 the assigned years;
3-14 (D) understands and agrees that with regard to
3-15 the assigned payments, the state, the commission, and its officials
3-16 and employees will have no further liability or responsibility to
3-17 make the assigned payments to the assignor;
3-18 (E) has been provided a one-page written
3-19 disclosure statement stating, in boldfaced type, 14 points or
3-20 larger:
3-21 (i) the payments being assigned, by
3-22 amounts and payment dates;
3-23 (ii) the purchase price being paid, if
3-24 any;
3-25 (iii) if a purchase price is paid, the
3-26 rate of discount to the present value of the prize, assuming daily
3-27 compounding and funding on the contract date; and
4-1 (iv) the amount, if any, of any
4-2 origination or closing fees that will be charged to the assignor;
4-3 and
4-4 (F) was advised in writing, at the time the
4-5 assignment was signed, that the assignor had the right to cancel
4-6 without any further obligation not later than the third business
4-7 day after the date the assignment was signed.
4-8 (c) It shall be the responsibility of the assignor to bring
4-9 to the attention of the court, either by sworn testimony or by
4-10 written declaration submitted under penalty of perjury, the
4-11 existence or nonexistence of a current spouse. If married, the
4-12 assignor shall identify his or her spouse and submit to the court a
4-13 sworn and notarized statement wherein the spouse consents to the
4-14 assignment. If the assignor is married and the sworn and notarized
4-15 statement is not presented to the court, the court shall determine,
4-16 to the extent necessary and as appropriate under applicable law,
4-17 the ability of the assignor to make the proposed assignment without
4-18 the spouse's consent.
4-19 (d) With respect to any given prize, the order shall also
4-20 recite and identify all prior assignments by amount of or fraction
4-21 of payment assigned, the identity of the assignee, and the date(s)
4-22 of payment(s) assigned. A court order obtained pursuant to this
4-23 section, together with all such prior orders, shall not require the
4-24 commission to divide any single prize payment among more than three
4-25 different persons.
4-26 (e) The court order shall include specific findings as to
4-27 compliance with the requirements of Subsections (b), (c), and (d)
5-1 and shall specify the prize payment or payments assigned, or any
5-2 portion thereof, including the dates and amounts of the payments to
5-3 be assigned, the years in which each payment is to begin and end,
5-4 the gross amount of the annual payments assigned before taxes, the
5-5 prizewinner's name as it appears on the lottery claim form, the
5-6 assignor's social security or tax identification number, and, if
5-7 applicable, the citizenship or resident alien number of the
5-8 assignee if an individual.
5-9 (f) A certified copy of a court order granted under this
5-10 section shall be delivered to the commission and such order must be
5-11 provided to the commission no later than 20 days prior to the date
5-12 upon which the first assigned payment is to be paid to the
5-13 assignee. Within 20 days of receipt of the court order, the
5-14 commission shall acknowledge in writing to both the assignor and
5-15 the assignee its receipt of said court order. Unless the
5-16 commission provides written notice to the assignor and assignee
5-17 that the commission cannot comply with the court order, the
5-18 commission shall thereafter make the prize payments in accordance
5-19 with the court order.
5-20 (g) The commission shall establish and collect a reasonable
5-21 fee to defray any administrative expenses associated with an
5-22 assignment made under this section, including the cost to the
5-23 commission of any processing fee imposed by a private annuity
5-24 provider. The commission shall establish the amount of the fee to
5-25 reflect the direct and indirect costs associated with processing
5-26 the assignment.
5-27 (h) An assignment pursuant to court order may not include or
6-1 cover payments or portions of payments that are subject to any
6-2 offset provided by this chapter.
6-3 (i) Notwithstanding any other provision of this section,
6-4 there will be no right to assign prize payments following:
6-5 (1) the issuance, by the Internal Revenue Service, of
6-6 a technical rule letter, revenue ruling, or other public ruling of
6-7 the Internal Revenue Service that determines that, based on the
6-8 right of assignment as provided by this section, a lottery
6-9 prizewinner who does not assign prize payments would be subject to
6-10 an immediate income tax liability for the value of the entire prize
6-11 rather than annual income tax liability for each installment when
6-12 paid; or
6-13 (2) the issuance by a court of a published decision
6-14 holding that, based on the right of assignment as provided by this
6-15 section, a lottery prizewinner who does not assign prize payments
6-16 would be subject to an immediate income tax liability for the value
6-17 of the entire prize rather than annual income tax liability for
6-18 each installment when paid.
6-19 (j) After receiving a letter or ruling from the Internal
6-20 Revenue Service or a published decision of a court as provided by
6-21 Subsection (i)(1) or (2), the executive director shall immediately
6-22 file a copy of the letter, ruling, or published decision with the
6-23 secretary of state. When the executive director files a copy of
6-24 the letter, ruling, or published decision with the secretary of
6-25 state, an assignor is ineligible to assign a prize under this
6-26 section, and the commission shall not make any payment to an
6-27 assignee pursuant to a court order entered after the date of such
7-1 letter or ruling.
7-2 SECTION 5. This Act takes effect September 1, 1999.
7-3 SECTION 6. The change in law made by this Act to Section
7-4 466.408(b), Government Code, applies only to a prize for which the
7-5 winner is selected on or after September 1, 1999. A prize for
7-6 which the winner was selected before September 1, 1999, is governed
7-7 by the law as it existed immediately before the effective date of
7-8 this Act, and that law is continued in effect for that purpose.
7-9 SECTION 7. The importance of this legislation and the
7-10 crowded condition of the calendars in both houses create an
7-11 emergency and an imperative public necessity that the
7-12 constitutional rule requiring bills to be read on three several
7-13 days in each house be suspended, and this rule is hereby suspended.