1-1 By: King of Parker, Morrison H.B. No. 1799
1-2 (Senate Sponsor - Armbrister)
1-3 (In the Senate - Received from the House April 29, 1999;
1-4 April 30, 1999, read first time and referred to Committee on
1-5 Finance; May 10, 1999, reported favorably by the following vote:
1-6 Yeas 8, Nays 1; May 10, 1999, sent to printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to the assignment or deposit of certain lottery prizes.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 466.402(d), Government Code, is amended
1-12 to read as follows:
1-13 (d) The state is discharged of all further liability on the
1-14 payment of a prize under Section 466.403, 466.404, 466.406, [or]
1-15 466.407, or 466.410 or this section or under any additional
1-16 procedures established by rule.
1-17 SECTION 2. Section 466.406, Government Code, is amended to
1-18 read as follows:
1-19 Sec. 466.406. RIGHT TO PRIZE NOT GENERALLY ASSIGNABLE. (a)
1-20 Except as [otherwise] provided by this section and Section 466.410,
1-21 the right of any person to a prize is not assignable.
1-22 (b) Payment of prize payments not previously assigned as
1-23 provided by this section or Section 466.410 shall [a prize may] be
1-24 made to the estate of a deceased prizewinner if the prizewinner was
1-25 an individual.
1-26 (c) A prize to which a winner is otherwise entitled may be
1-27 paid to any person under an appropriate judicial order.
1-28 SECTION 3. Section 466.408(b), Government Code, is amended
1-29 to read as follows:
1-30 (b) If a claim is not made for prize money on or before the
1-31 180th day after the date on which the winner was selected, the
1-32 prize money shall be deposited to the credit of the Texas
1-33 Department of Health State Owned Multi-categorical Teaching
1-34 Hospital Account for the purpose of providing funding for indigent
1-35 health care [used to provide additional money to the state lottery
1-36 account for the purposes prescribed by Section 466.355(b)(1)].
1-37 SECTION 4. Subchapter I, Chapter 466, Government Code, is
1-38 amended by adding Section 466.410 to read as follows:
1-39 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
1-40 assign, in whole or in part, the right to receive prize payments
1-41 that are paid by the commission in installments over time if the
1-42 assignment is made to a person designated by an order of a district
1-43 court of Travis County, except that installment prize payments due
1-44 within the final two years of the prize payment schedule may not be
1-45 assigned.
1-46 (b) A district court shall issue an order approving a
1-47 voluntary assignment and directing the commission to direct prize
1-48 payments in whole or in part to the assignee if:
1-49 (1) a copy of the petition for the order and copies of
1-50 all notices of any hearing in the matter have been served on the
1-51 executive director not later than 20 days prior to any hearing or
1-52 entry of any order. The commission may intervene in a proceeding
1-53 to protect the interests of the commission but shall not be
1-54 considered an indispensable or necessary party. A petition filed
1-55 under this section shall include in the caption the prizewinner's
1-56 name as it appears on the lottery claim form;
1-57 (2) the assignment is in writing, executed by the
1-58 assignor and assignee (or designated agent), and by its terms
1-59 subject to the laws of this state; and
1-60 (3) the assignor provides a sworn and notarized
1-61 affidavit stating that the assignor:
1-62 (A) is of sound mind, over 18 years of age, is
1-63 in full command of the person's faculties, and is not acting under
1-64 duress;
2-1 (B) has been advised regarding the assignment by
2-2 independent legal counsel and has had the opportunity to receive
2-3 independent financial and tax advice concerning the effects of the
2-4 assignment;
2-5 (C) understands that the assignor will not
2-6 receive the prize payments, or portions of the prize payments, for
2-7 the assigned years;
2-8 (D) understands and agrees that with regard to
2-9 the assigned payments, the state, the commission, and its officials
2-10 and employees will have no further liability or responsibility to
2-11 make the assigned payments to the assignor;
2-12 (E) has been provided a one-page written
2-13 disclosure statement stating, in boldfaced type, 14 points or
2-14 larger:
2-15 (i) the payments being assigned, by
2-16 amounts and payment dates;
2-17 (ii) the purchase price being paid, if
2-18 any;
2-19 (iii) if a purchase price is paid, the
2-20 rate of discount to the present value of the prize, assuming daily
2-21 compounding and funding on the contract date; and
2-22 (iv) the amount, if any, of any
2-23 origination or closing fees that will be charged to the assignor;
2-24 and
2-25 (F) was advised in writing, at the time the
2-26 assignment was signed, that the assignor had the right to cancel
2-27 without any further obligation not later than the third business
2-28 day after the date the assignment was signed.
2-29 (c) It shall be the responsibility of the assignor to bring
2-30 to the attention of the court, either by sworn testimony or by
2-31 written declaration submitted under penalty of perjury, the
2-32 existence or nonexistence of a current spouse. If married, the
2-33 assignor shall identify his or her spouse and submit to the court a
2-34 sworn and notarized statement wherein the spouse consents to the
2-35 assignment. If the assignor is married and the sworn and notarized
2-36 statement is not presented to the court, the court shall determine,
2-37 to the extent necessary and as appropriate under applicable law,
2-38 the ability of the assignor to make the proposed assignment without
2-39 the spouse's consent.
2-40 (d) With respect to any given prize, the order shall also
2-41 recite and identify all prior assignments by amount of or fraction
2-42 of payment assigned, the identity of the assignee, and the date(s)
2-43 of payment(s) assigned. A court order obtained pursuant to this
2-44 section, together with all such prior orders, shall not require the
2-45 commission to divide any single prize payment among more than three
2-46 different persons.
2-47 (e) The court order shall include specific findings as to
2-48 compliance with the requirements of Subsections (b), (c), and (d)
2-49 and shall specify the prize payment or payments assigned, or any
2-50 portion thereof, including the dates and amounts of the payments to
2-51 be assigned, the years in which each payment is to begin and end,
2-52 the gross amount of the annual payments assigned before taxes, the
2-53 prizewinner's name as it appears on the lottery claim form, the
2-54 assignor's social security or tax identification number, and, if
2-55 applicable, the citizenship or resident alien number of the
2-56 assignee if an individual.
2-57 (f) A certified copy of a court order granted under this
2-58 section shall be delivered to the commission and such order must be
2-59 provided to the commission no later than 20 days prior to the date
2-60 upon which the first assigned payment is to be paid to the
2-61 assignee. Within 20 days of receipt of the court order, the
2-62 commission shall acknowledge in writing to both the assignor and
2-63 the assignee its receipt of said court order. Unless the
2-64 commission provides written notice to the assignor and assignee
2-65 that the commission cannot comply with the court order, the
2-66 commission shall thereafter make the prize payments in accordance
2-67 with the court order.
2-68 (g) The commission shall establish and collect a reasonable
2-69 fee to defray any administrative expenses associated with an
3-1 assignment made under this section, including the cost to the
3-2 commission of any processing fee imposed by a private annuity
3-3 provider. The commission shall establish the amount of the fee to
3-4 reflect the direct and indirect costs associated with processing
3-5 the assignment.
3-6 (h) An assignment pursuant to court order may not include or
3-7 cover payments or portions of payments that are subject to any
3-8 offset provided by this chapter.
3-9 (i) Notwithstanding any other provision of this section,
3-10 there will be no right to assign prize payments following:
3-11 (1) the issuance, by the Internal Revenue Service, of
3-12 a technical rule letter, revenue ruling, or other public ruling of
3-13 the Internal Revenue Service that determines that, based on the
3-14 right of assignment as provided by this section, a lottery
3-15 prizewinner who does not assign prize payments would be subject to
3-16 an immediate income tax liability for the value of the entire prize
3-17 rather than annual income tax liability for each installment when
3-18 paid; or
3-19 (2) the issuance by a court of a published decision
3-20 holding that, based on the right of assignment as provided by this
3-21 section, a lottery prizewinner who does not assign prize payments
3-22 would be subject to an immediate income tax liability for the value
3-23 of the entire prize rather than annual income tax liability for
3-24 each installment when paid.
3-25 (j) After receiving a letter or ruling from the Internal
3-26 Revenue Service or a published decision of a court as provided by
3-27 Subsection (i)(1) or (2), the executive director shall immediately
3-28 file a copy of the letter, ruling, or published decision with the
3-29 secretary of state. When the executive director files a copy of
3-30 the letter, ruling, or published decision with the secretary of
3-31 state, an assignor is ineligible to assign a prize under this
3-32 section, and the commission shall not make any payment to an
3-33 assignee pursuant to a court order entered after the date of such
3-34 letter or ruling.
3-35 SECTION 5. This Act takes effect September 1, 1999.
3-36 SECTION 6. The change in law made by this Act to Section
3-37 466.408(b), Government Code, applies only to a prize for which the
3-38 winner is selected on or after September 1, 1999. A prize for
3-39 which the winner was selected before September 1, 1999, is governed
3-40 by the law as it existed immediately before the effective date of
3-41 this Act, and that law is continued in effect for that purpose.
3-42 SECTION 7. The importance of this legislation and the
3-43 crowded condition of the calendars in both houses create an
3-44 emergency and an imperative public necessity that the
3-45 constitutional rule requiring bills to be read on three several
3-46 days in each house be suspended, and this rule is hereby suspended.
3-47 * * * * *