By King of Parker, Morrison H.B. No. 1799
76R5312 GJH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the assignment 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 ASSIGNABLE]. (a) [Except
1-13 as otherwise provided by this section, the right of any person to
1-14 a 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 Travis County.
2-2 (b) The commission:
2-3 (1) may intervene in a proceeding under this section;
2-4 and
2-5 (2) is not a necessary or indispensable party in the
2-6 proceeding.
2-7 (c) A district court shall issue an order approving a
2-8 voluntary assignment of prize payments and directing the commission
2-9 to direct the payments in whole or in part to the assignee if:
2-10 (1) a copy of the petition for the order and a copy of
2-11 the notice of a hearing on the matter are served on the executive
2-12 director not later than the 10th day before the date of the
2-13 hearing;
2-14 (2) the assignment is in writing, is executed by the
2-15 assignor, and is subject to the laws of this state; and
2-16 (3) the assignor provides a sworn affidavit stating
2-17 that the assignor:
2-18 (A) is 18 years of age or older;
2-19 (B) is of sound mind, is in full command of the
2-20 person's faculties, and is not acting under duress;
2-21 (C) has been advised regarding the assignment by
2-22 an independent legal counsel and has had the opportunity to receive
2-23 independent financial and tax advice concerning the effects of the
2-24 assignment;
2-25 (D) understands that the person will not receive
2-26 the prize payments, or portions of the prize payments, for the
2-27 assigned years;
3-1 (E) understands and agrees that the state, the
3-2 commission, and its officials and employees will have no further
3-3 liability or responsibility to make the assigned payments to the
3-4 assignor;
3-5 (F) has been provided a one-page written
3-6 disclosure statement stating, in boldface type 14 points or larger:
3-7 (i) the payments being assigned by amounts
3-8 and payment dates;
3-9 (ii) the purchase price;
3-10 (iii) the rate of discount to the present
3-11 value of the prize, assuming daily compounding and funding on the
3-12 contract date; and
3-13 (iv) the amount, if any, of any
3-14 origination or closing fees that will be charged to the assignor;
3-15 and
3-16 (G) was advised in writing, at the time the
3-17 assignment contract was signed, that the assignor had the right to
3-18 cancel the contract without any further obligation not later than
3-19 the third business day after the date the contract was signed.
3-20 (d) The order shall include specific findings regarding
3-21 compliance with the requirements of Subsection (c) and specify:
3-22 (1) the prize payments or portion of prize payments
3-23 assigned;
3-24 (2) the year in which each assigned payment is to be
3-25 made;
3-26 (3) the gross amount of the annual payments assigned
3-27 before taxes;
4-1 (4) the prizewinner's name as it appears on the
4-2 lottery claim form;
4-3 (5) the full legal name of the assignor if different
4-4 from the prizewinner's name as it appears on the lottery claim
4-5 form;
4-6 (6) the assignor's social security number or tax
4-7 identification number;
4-8 (7) the assignee's full legal name and social security
4-9 number or tax identification number; and
4-10 (8) if applicable, the citizenship and resident alien
4-11 number of the assignee.
4-12 (e) The prizewinner shall declare to the court, by sworn
4-13 testimony or by notarized declaration submitted under penalty of
4-14 perjury, whether the prizewinner is married. A married
4-15 prizewinner:
4-16 (1) shall identify the prizewinner's spouse and submit
4-17 to the court a notarized statement signed by the spouse consenting
4-18 to the assignment; or
4-19 (2) may allow the court to determine the ability of
4-20 the prizewinner to make the assignment without the consent of the
4-21 spouse.
4-22 (f) On receipt of a certified copy of a court order under
4-23 this section, the commission shall:
4-24 (1) provide to the assignor and the assignee a written
4-25 acknowledgment of the commission's receipt of a court order granted
4-26 under this section; and
4-27 (2) make prize payments as provided by the order.
5-1 (g) A voluntary assignment may not include a payment or
5-2 portion of a payment that is subject to any deduction required by
5-3 this chapter.
5-4 (h) The commission shall establish and collect a reasonable
5-5 fee to defray any administrative expenses associated with an
5-6 assignment made under this section, including the cost to the
5-7 commission of any processing fee imposed by a private annuity
5-8 provider. The commission shall itemize the amount of the fee to
5-9 reflect the direct and indirect costs associated with processing
5-10 the assignment.
5-11 (i) Notwithstanding any other provision of this section, a
5-12 prizewinner may not assign prize payments unless the director has
5-13 received an official determination from the Internal Revenue
5-14 Service that, based on the right of assignment provided by this
5-15 section, a lottery prizewinner who does not assign prize payments
5-16 is not subject to immediate income tax liability for the assignment
5-17 value of the entire prize rather than annual income tax liability
5-18 for each installment when paid.
5-19 (j) The director shall request an official determination
5-20 described in Subsection (i) from the Internal Revenue Service. If
5-21 the director receives an official determination from the Internal
5-22 Revenue Service, the director shall immediately file the official
5-23 determination with the secretary of state's office for publication
5-24 in the Texas Register.
5-25 SECTION 4. The importance of this legislation and the
5-26 crowded condition of the calendars in both houses create an
5-27 emergency and an imperative public necessity that the
6-1 constitutional rule requiring bills to be read on three several
6-2 days in each house be suspended, and this rule is hereby suspended,
6-3 and that this Act take effect and be in force from and after its
6-4 passage, and it is so enacted.