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 multicategorical teaching hospital
2-3 account or the tertiary care facility account as follows:
2-4 (1) not more than $40 million in prize money each
2-5 biennium may be deposited to or appropriated from the Texas
2-6 Department of Health state-owned multicategorical teaching hospital
2-7 account, which is an account in the general revenue fund; and
2-8 (2) all prize money subject to this section in excess
2-9 of $40 million each biennium shall be deposited in the tertiary
2-10 care facility account. Money deposited in the tertiary care
2-11 facility account may only be appropriated to the department for
2-12 purposes specified in Chapter 46, Health and Safety Code [used to
2-13 provide additional money to the state lottery account for the
2-14 purposes prescribed by Section 466.355(b)(1)].
2-15 SECTION 4. Subchapter I, Chapter 466, Government Code, is
2-16 amended by adding Section 466.410 to read as follows:
2-17 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
2-18 assign, in whole or in part, the right to receive prize payments
2-19 that are paid by the commission in installments over time if the
2-20 assignment is made to a person designated by an order of a district
2-21 court of Travis County, except that installment prize payments due
2-22 within the final two years of the prize payment schedule may not be
2-23 assigned.
2-24 (b) A district court shall issue an order approving a
2-25 voluntary assignment and directing the commission to direct prize
2-26 payments in whole or in part to the assignee if:
2-27 (1) a copy of the petition for the order and copies of
3-1 all notices of any hearing in the matter have been served on the
3-2 executive director not later than 20 days prior to any hearing or
3-3 entry of any order. The commission may intervene in a proceeding
3-4 to protect the interests of the commission but shall not be
3-5 considered an indispensable or necessary party. A petition filed
3-6 under this section shall include in the caption the prizewinner's
3-7 name as it appears on the lottery claim form;
3-8 (2) the assignment is in writing, executed by the
3-9 assignor and assignee (or designated agent), and by its terms
3-10 subject to the laws of this state; and
3-11 (3) the assignor provides a sworn and notarized
3-12 affidavit stating that the assignor:
3-13 (A) is of sound mind, over 18 years of age, is
3-14 in full command of the person's faculties, and is not acting under
3-15 duress;
3-16 (B) has been advised regarding the assignment by
3-17 independent legal counsel and has had the opportunity to receive
3-18 independent financial and tax advice concerning the effects of the
3-19 assignment;
3-20 (C) understands that the assignor will not
3-21 receive the prize payments, or portions of the prize payments, for
3-22 the assigned years;
3-23 (D) understands and agrees that with regard to
3-24 the assigned payments, the state, the commission, and its officials
3-25 and employees will have no further liability or responsibility to
3-26 make the assigned payments to the assignor;
3-27 (E) has been provided a one-page written
4-1 disclosure statement stating, in boldfaced type, 14 points or
4-2 larger:
4-3 (i) the payments being assigned, by
4-4 amounts and payment dates;
4-5 (ii) the purchase price being paid, if
4-6 any;
4-7 (iii) if a purchase price is paid, the
4-8 rate of discount to the present value of the prize, assuming daily
4-9 compounding and funding on the contract date; and
4-10 (iv) the amount, if any, of any
4-11 origination or closing fees that will be charged to the assignor;
4-12 and
4-13 (F) was advised in writing, at the time the
4-14 assignment was signed, that the assignor had the right to cancel
4-15 without any further obligation not later than the third business
4-16 day after the date the assignment was signed.
4-17 (c) It shall be the responsibility of the assignor to bring
4-18 to the attention of the court, either by sworn testimony or by
4-19 written declaration submitted under penalty of perjury, the
4-20 existence or nonexistence of a current spouse. If married, the
4-21 assignor shall identify his or her spouse and submit to the court a
4-22 sworn and notarized statement wherein the spouse consents to the
4-23 assignment. If the assignor is married and the sworn and notarized
4-24 statement is not presented to the court, the court shall determine,
4-25 to the extent necessary and as appropriate under applicable law,
4-26 the ability of the assignor to make the proposed assignment without
4-27 the spouse's consent.
5-1 (d) With respect to any given prize, the order shall also
5-2 recite and identify all prior assignments by amount of or fraction
5-3 of payment assigned, the identity of the assignee, and the date(s)
5-4 of payment(s) assigned. A court order obtained pursuant to this
5-5 section, together with all such prior orders, shall not require the
5-6 commission to divide any single prize payment among more than three
5-7 different persons.
5-8 (e) The court order shall include specific findings as to
5-9 compliance with the requirements of Subsections (b), (c), and (d)
5-10 and shall specify the prize payment or payments assigned, or any
5-11 portion thereof, including the dates and amounts of the payments to
5-12 be assigned, the years in which each payment is to begin and end,
5-13 the gross amount of the annual payments assigned before taxes, the
5-14 prizewinner's name as it appears on the lottery claim form, the
5-15 assignor's social security or tax identification number, and, if
5-16 applicable, the citizenship or resident alien number of the
5-17 assignee if an individual.
5-18 (f) A certified copy of a court order granted under this
5-19 section shall be delivered to the commission and such order must be
5-20 provided to the commission no later than 20 days prior to the date
5-21 upon which the first assigned payment is to be paid to the
5-22 assignee. Within 20 days of receipt of the court order, the
5-23 commission shall acknowledge in writing to both the assignor and
5-24 the assignee its receipt of said court order. Unless the
5-25 commission provides written notice to the assignor and assignee
5-26 that the commission cannot comply with the court order, the
5-27 commission shall thereafter make the prize payments in accordance
6-1 with the court order.
6-2 (g) The commission shall establish and collect a reasonable
6-3 fee to defray any administrative expenses associated with an
6-4 assignment made under this section, including the cost to the
6-5 commission of any processing fee imposed by a private annuity
6-6 provider. The commission shall establish the amount of the fee to
6-7 reflect the direct and indirect costs associated with processing
6-8 the assignment.
6-9 (h) An assignment pursuant to court order may not include or
6-10 cover payments or portions of payments that are subject to any
6-11 offset provided by this chapter.
6-12 (i) Notwithstanding any other provision of this section,
6-13 there will be no right to assign prize payments following:
6-14 (1) the issuance, by the Internal Revenue Service, of
6-15 a technical rule letter, revenue ruling, or other public ruling of
6-16 the Internal Revenue Service that determines that, based on the
6-17 right of assignment as provided by this section, a lottery
6-18 prizewinner who does not assign prize payments would be subject to
6-19 an immediate income tax liability for the value of the entire prize
6-20 rather than annual income tax liability for each installment when
6-21 paid; or
6-22 (2) the issuance by a court of a published decision
6-23 holding that, based on the right of assignment as provided by this
6-24 section, a lottery prizewinner who does not assign prize payments
6-25 would be subject to an immediate income tax liability for the value
6-26 of the entire prize rather than annual income tax liability for
6-27 each installment when paid.
7-1 (j) After receiving a letter or ruling from the Internal
7-2 Revenue Service or a published decision of a court as provided by
7-3 Subsection (i)(1) or (2), the executive director shall immediately
7-4 file a copy of the letter, ruling, or published decision with the
7-5 secretary of state. When the executive director files a copy of
7-6 the letter, ruling, or published decision with the secretary of
7-7 state, an assignor is ineligible to assign a prize under this
7-8 section, and the commission shall not make any payment to an
7-9 assignee pursuant to a court order entered after the date of such
7-10 letter or ruling.
7-11 SECTION 5. This Act takes effect September 1, 1999.
7-12 SECTION 6. The change in law made by this Act to Section
7-13 466.408(b), Government Code, applies only to a prize for which the
7-14 winner is selected on or after September 1, 1999. A prize for
7-15 which the winner was selected before September 1, 1999, is governed
7-16 by the law as it existed immediately before the effective date of
7-17 this Act, and that law is continued in effect for that purpose.
7-18 SECTION 7. The importance of this legislation and the
7-19 crowded condition of the calendars in both houses create an
7-20 emergency and an imperative public necessity that the
7-21 constitutional rule requiring bills to be read on three several
7-22 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1799 was passed by the House on April
28, 1999, by a non-record vote; that the House refused to concur in
Senate amendments to H.B. No. 1799 on May 22, 1999, and requested
the appointment of a conference committee to consider the
differences between the two houses; and that the House adopted the
conference committee report on H.B. No. 1799 on May 30, 1999, by a
non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1799 was passed by the Senate, with
amendments, on May 20, 1999, by a viva-voce vote; at the request of
the House, the Senate appointed a conference committee to consider
the differences between the two houses; and that the Senate adopted
the conference committee report on H.B. No. 1799 on May 30, 1999,
by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor