By: Armbrister S.B. No. 1117
99S0594/2
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the payment of certain lottery prizes.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsection (d), Section 466.402, Government Code,
1-4 is amended to read as follows:
1-5 (d) The state is discharged of all further liability on the
1-6 payment of a prize under Section 466.403, 466.404, 466.406, [or]
1-7 466.407, or 466.410 or this section or under any additional
1-8 procedures established by rule.
1-9 SECTION 2. Section 466.406, Government Code, is amended to
1-10 read as follows:
1-11 Sec. 466.406. RIGHT TO PRIZE [NOT ASSIGNABLE]. (a) [Except
1-12 as otherwise provided by this section, the right of any person to a
1-13 prize is not assignable.]
1-14 [(b)] Payment of a prize shall [may] be made to the estate
1-15 of a deceased prizewinner.
1-16 (b) [(c)] A prize to which a winner is otherwise entitled
1-17 may be paid to any person under an appropriate judicial order.
1-18 SECTION 3. Subchapter I, Chapter 466, Government Code, is
1-19 amended by adding Section 466.410 to read as follows:
1-20 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
1-21 assign, in whole or in part, the right to receive prize payments
1-22 that are paid by the commission in installments over time if the
1-23 assignment is made to a person designated by an order of a district
1-24 court of the county where the assignor resides or Travis County.
2-1 (b) A district court shall issue an order approving a
2-2 voluntary assignment and directing the commission to direct prize
2-3 payments in whole or in part to the assignee if:
2-4 (1) the assignment is in writing, executed by the
2-5 assignor, and by its terms subject to the laws of this state; and
2-6 (2) the assignor provides a sworn affidavit stating
2-7 that the assignor:
2-8 (A) is of sound mind, is in full command of the
2-9 person's faculties, and is not acting under duress;
2-10 (B) has been advised regarding the assignment by
2-11 independent legal counsel and has had the opportunity to receive
2-12 independent financial and tax advice concerning the effects of the
2-13 assignment;
2-14 (C) understands that the person will not receive
2-15 the prize payments, or portions of the prize payments, for the
2-16 assigned years;
2-17 (D) understands and agrees that with regard to
2-18 the assigned payments, the state, the commission, and its officials
2-19 and employees will have no further liability or responsibility to
2-20 make the assigned payments to the assignor;
2-21 (E) has been provided a one-page written
2-22 disclosure statement stating, in boldface type, 14 points or
2-23 larger:
2-24 (i) the payments being assigned, by
2-25 amounts and payment dates;
2-26 (ii) the purchase price being paid;
3-1 (iii) the rate of discount to the present
3-2 value of the prize, assuming daily compounding and funding on the
3-3 contract date; and
3-4 (iv) the amount, if any, of any
3-5 origination or closing fees that will be charged to the assignor;
3-6 and
3-7 (F) was advised in writing, at the time the
3-8 assignment contract was signed, that the assignor had the right to
3-9 cancel the contract without any further obligation not later than
3-10 the third business day after the date the contract was signed.
3-11 (c) A voluntary assignment may not include or cover payments
3-12 or portions of payments that are subject to any offset provided by
3-13 this chapter.
3-14 (d) The commission shall establish and collect a reasonable
3-15 fee to defray any administrative expenses associated with an
3-16 assignment made under this section, including the cost to the
3-17 commission of any processing fee imposed by a private annuity
3-18 provider. The commission shall establish the amount of the fee to
3-19 reflect the direct and indirect costs associated with processing
3-20 the assignment.
3-21 (e) Notwithstanding any other provision of this section, a
3-22 prizewinner does not have a right to assign prize payments
3-23 following:
3-24 (1) the issuance, by the Internal Revenue Service, of
3-25 a technical rule letter, revenue ruling, or other public ruling of
3-26 the Internal Revenue Service that determines that, based on the
4-1 right of assignment provided by this section, a lottery prizewinner
4-2 who does not assign prize payments under this section would be
4-3 subject to an immediate income tax liability for the value of the
4-4 entire prize rather than annual income tax liability for each
4-5 installment when paid; or
4-6 (2) the issuance by a court of a published decision
4-7 holding that, based on the right of assignment provided by this
4-8 section, a lottery prizewinner who does not assign prize payments
4-9 under this section would be subject to an immediate income tax
4-10 liability for the value of the entire prize rather than annual
4-11 income tax liability for each installment when paid.
4-12 (f) After receiving a letter or ruling from the Internal
4-13 Revenue Service or a published decision of a court as provided by
4-14 Subsection (e), the director shall immediately file a copy of the
4-15 letter, ruling, or published decision with the secretary of state.
4-16 When the director files a copy of the letter, ruling, or published
4-17 decision with the secretary of state, a prizewinner is ineligible
4-18 to assign a prize under this section.
4-19 SECTION 4. Section 466.403, Government Code, is amended to
4-20 read as follows:
4-21 Sec. 466.403. PAYMENT OF PRIZE IN INSTALLMENTS. (a) If the
4-22 director determines that prize money is to be paid in installments,
4-23 the comptroller shall invest funds from the state lottery account
4-24 as necessary to ensure the payment of the installments. The
4-25 investments may be in securities, annuities, or other instruments
4-26 as determined by the comptroller.
5-1 (b) Except as otherwise provided by this chapter, with
5-2 regard to any prize money to be paid in installments in accordance
5-3 with a schedule established by the commission at the time of award,
5-4 the commission shall not alter the timing or amount of scheduled
5-5 payments or otherwise accelerate, defer, commute, or discount such
5-6 scheduled payments.
5-7 SECTION 5. This Act takes effect September 1, 1999.
5-8 SECTION 6. The importance of this legislation and the
5-9 crowded condition of the calendars in both houses create an
5-10 emergency and an imperative public necessity that the
5-11 constitutional rule requiring bills to be read on three several
5-12 days in each house be suspended, and this rule is hereby suspended.