S.B. No. 626
 
 
 
 
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.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 626 passed the Senate on
  April 5, 2011, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 626 passed the House on
  May 23, 2011, by the following vote:  Yeas 142, Nays 0, one
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor