By: Carona S.B. No. 626
(Thompson)
A BILL TO BE ENTITLED
AN ACT
relating to lottery winnings, including assignment of winnings,
periodic payments of winnings, and the deduction of child support
delinquency amounts from winnings paid to a prize winner.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter I, Chapter 466, Government Code, is
amended by adding Section 466.4001 to read as follows:
Sec. 466.4001. DEFINITION. In this subchapter, "prize
winner" means a person who presents a valid winning ticket, claims a
lottery prize, and is recognized by the commission as the person
entitled to receive lottery prize payments. The term does not
include an assignee of a lottery prize.
SECTION 2. Subsection (b), Section 466.406, Government
Code, is amended to read as follows:
(b) Payment of prize payments not previously assigned as
provided by this section or Section 466.410 shall be made to the
estate of a deceased prize winner [prizewinner] if the prize winner
[prizewinner] was an individual.
SECTION 3. Section 466.407, Government Code, is amended by
amending Subsections (a) and (b) and adding Subsection (a-1) to
read as follows:
(a) The executive director shall deduct the amount of a
delinquent tax or other money from the winnings of a prize winner
[person] who has been finally determined to be:
(1) delinquent in the payment of a tax or other money
to a state agency and that delinquency is reported to [collected by]
the comptroller under Section 403.055[, the Texas Workforce
Commission, or the Texas Alcoholic Beverage Commission];
(2) [delinquent in making child support payments
administered or collected by the attorney general;
[(3) delinquent in reimbursing the Texas Department of
Human Services for a benefit granted in error under the food stamp
program or the program of financial assistance under Chapter 31,
Human Resources Code;
[(4)] in default on a loan made under Chapter 52,
Education Code; or
(3) [(5)] in default on a loan guaranteed under
Chapter 57, Education Code.
(a-1) The executive director shall deduct delinquent child
support payments from the winnings of a prize winner in the amount
of the delinquency as determined by a court or a Title IV-D agency
under Chapter 231, Family Code.
(b) If the [a person's] winnings of a prize winner exceed
the amount of a delinquency under Subsection (a) or (a-1), the
director shall pay the balance to the prize winner [person]. The
director shall transfer the amount deducted to the appropriate
agency or to the state disbursement unit under Chapter 234, Family
Code, as applicable.
SECTION 4. Section 466.4075, Government Code, as added by
Chapter 1104 (H.B. 2424), Acts of the 75th Legislature, Regular
Session, 1997, is amended to read as follows:
Sec. 466.4075. DEDUCTIONS OF CHILD SUPPORT FROM CERTAIN
LOTTERY WINNINGS. (a) This section applies only to a prize that is
[required to be paid in periodic installments and is] awarded by the
director under Section 466.402(b), including a prize paid in
periodic installments.
(b) In the event of a single payment, the executive director
shall deduct from winnings of the prize winner an amount for
delinquent child support owed by the prize winner if the executive
director has been provided with a certified copy of a court order or
a writ of withholding issued under Chapter 158, Family Code, or
notice of a child support lien created under Subchapter G, Chapter
157, Family Code.
(c) If the prize is paid in periodic installments, the [The]
executive director shall deduct [an amount a court has ordered a
person to pay as child support] from [a person's] periodic
installment winnings paid to a prize winner amounts owed by the
prize winner for child support if the executive director has been
provided with a certified copy of a court order or a writ of
withholding issued under Chapter 158, Family Code, or notice of a
child support lien created under Subchapter G, Chapter 157, Family
Code. This subsection does not apply to the payment of amounts to a
person to whom the prize winner assigns the right to receive prize
payments under Section 466.410.
(d) [(c)] The court order, writ of withholding, or notice of
a child support lien provided under Subsection (c) must direct
child support to be paid in the manner in which the periodic
installment prize is paid. The executive director is not required
to receive the court order, the writ of withholding, or notice of
child support lien until the executive director determines there is
a periodic installment prize to which the prize winner is entitled.
(e) [(d)] If the [a person's] winnings of a prize winner
exceed the amount deducted under Subsection (b) or (c) and Section
466.407 or any other section of this chapter allowing a deduction
from the winnings of a prize winner, the executive director shall
pay the balance to the prize winner [person]. The executive
director shall transfer the money deducted under Subsection (b) or
(c) to the appropriate person as determined by court order, the
clerk of the court that issued the order for placement in the
registry of the court, or the state disbursement unit under Chapter
234, Family Code, as appropriate.
(f) [(e)] The commission may [shall] adopt rules necessary
to administer [under] this section [that:
[(1) allow a person with a court order under Chapter
157 or 158, Family Code, to file copies of the order with the
commission; and
[(2) describe the procedures used by the commission to
compare the list of persons winning periodic installment prizes
under Section 466.402(b) with a list of obligors compiled from
orders filed under Subdivision (1) and to make the deductions
required under this section].
(g) Section 9.406, Business & Commerce Code, does not apply
to periodic payments of lottery prize winnings under this section.
SECTION 5. Section 466.410, Government Code, is amended by
amending Subsections (a), (b), (e), and (i) and adding Subsection
(k) to read as follows:
(a) A person may assign, in whole or in part, the right to
receive prize payments that are paid by the commission in
installments over time if the assignment is made to a person
designated by an order of a district court of Travis County, except
that a person may not assign the right to receive prize payments if
the person is subject to a child support order and is delinquent in
making support payments under that order [installment prize
payments due within the final two years of the prize payment
schedule may not be assigned].
(b) A district court shall issue an order approving a
voluntary assignment and directing the commission to direct prize
payments in whole or in part to the assignee if:
(1) a copy of the petition for the order and copies of
all notices of any hearing in the matter have been served on the
executive director not later than 20 days prior to any hearing or
entry of any order. The commission may intervene in a proceeding to
protect the interests of the commission but shall not be considered
an indispensable or necessary party. A petition filed under this
section shall include in the caption the prize winner's
[prizewinner's] name as it appears on the lottery claim form;
(2) the assignment is in writing, executed by the
assignor and assignee (or designated agent), and by its terms
subject to the laws of this state; and
(3) the assignor provides a sworn and notarized
affidavit stating that the assignor:
(A) is of sound mind, over 18 years of age, is in
full command of the person's faculties, and is not acting under
duress;
(B) is not delinquent in payment of child support
under a court or administrative order issued in this state or
another state;
(C) has been advised regarding the assignment by
independent legal counsel and has had the opportunity to receive
independent financial and tax advice concerning the effects of the
assignment;
(D) [(C)] understands that the assignor will not
receive the prize payments, or portions of the prize payments, for
the assigned years;
(E) [(D)] understands and agrees that with
regard to the assigned payments, the state, the commission, and its
officials and employees will have no further liability or
responsibility to make the assigned payments to the assignor;
(F) [(E)] has been provided a one-page written
disclosure statement stating, in boldfaced type, 14 points or
larger:
(i) the payments being assigned, by amounts
and payment dates;
(ii) the purchase price being paid, if any;
(iii) if a purchase price is paid, the rate
of discount to the present value of the prize, assuming daily
compounding and funding on the contract date; and
(iv) the amount, if any, of any origination
or closing fees that will be charged to the assignor; and
(G) [(F)] was advised in writing, at the time the
assignment was signed, that the assignor had the right to cancel
without any further obligation not later than the third business
day after the date the assignment was signed.
(e) The court order shall include specific findings as to
compliance with the requirements of Subsections (b), (c), and (d)
and shall specify the prize payment or payments assigned, or any
portion thereof, including the dates and amounts of the payments to
be assigned, the years in which each payment is to begin and end,
the gross amount of the annual payments assigned before taxes, and
the [prizewinner's] name of the prize winner as it appears on the
lottery claim form[, the assignor's social security or tax
identification number, and, if applicable, the citizenship or
resident alien number of the assignee if an individual].
(i) Notwithstanding any other provision of this section,
there will be no right to assign prize payments following:
(1) the issuance, by the Internal Revenue Service, of
a technical rule letter, revenue ruling, or other public ruling of
the Internal Revenue Service that determines that, based on the
right of assignment as provided by this section, a lottery prize
winner [prizewinner] who does not assign prize payments would be
subject to an immediate income tax liability for the value of the
entire prize rather than annual income tax liability for each
installment when paid; or
(2) the issuance by a court of a published decision
holding that, based on the right of assignment as provided by this
section, a lottery prize winner [prizewinner] who does not assign
prize payments would be subject to an immediate income tax
liability for the value of the entire prize rather than annual
income tax liability for each installment when paid.
(k) Section 9.406, Business & Commerce Code, does not apply
to periodic payments of lottery prize winnings under this section.
SECTION 6. (a) Subsection (c), Section 466.407,
Government Code, is repealed.
(b) Section 466.4075, Government Code, as added by Chapter
135 (H.B. 566), Acts of the 75th Legislature, Regular Session,
1997, is repealed.
SECTION 7. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.