HBA-TYH H.B. 823 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 823 By: Smithee Insurance 5/6/1999 Introduced BACKGROUND AND PURPOSE A charitable gift annuity (CGA) is a fund-raising vehicle that charities have used for over a century in Texas. In the arrangement, a donor makes a gift to charity in exchange for a below market annuity for life. The Internal Revenue Code allows the donor to make charitable income, gift, and estate tax deductions for the difference between the value of the gift and the value of the annuity received in return for the gift. In 1995, the legislature passed legislation to clarify existing law to recognize charitable gift annuities as having always been legal in Texas. A federal court has ruled that the legislature's intent to have the 1995 legislation apply to litigation ongoing at that time was not clearly stated. H.B. 823 clarifies that it was the intent of the legislature in 1995 to establish the legality of charitable gift annuities being challenged in lawsuits pending at that time. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 1.14-1A, Insurance Code, by adding Section 7, as follows: Sec. 7. TREATMENT OF ANNUITY AS CHARITABLE GIFT ANNUITY; ESTOPPEL. Requires an annuity that the donor has treated as a charitable gift annuity in a filing with the United States Internal Revenue Service to be considered as a qualified charitable gift annuity issued by a charitable organization, as described by Sections 1 (Definitions), 2 (Not Insurance), and 6 (Not Unfair or Deceptive Trade Practice) of this article and Section 2(b), Article 1.14-1 of this code, in any litigation or other proceeding brought by or on behalf of a donor or the donor's heirs or distributees. SECTION 2. (a) Provides that the purpose of this section is to clarify the intent of the legislature with respect to the effect of Sections 1, 2, and 6, Article 1.14-1A, Insurance Code, and Section 2(b), Article 1.14-1, Insurance Code, as those sections existed immediately before the effective date of this Act. (b) Provides that Sections 1, 2, and 6, Article 1.14-1A, Insurance Code, and Section 2(b), Article 1.14-1, Insurance Code, as those sections existed immediately before the effective date of this Act, apply to any charitable gift annuity issued before, on, or after the effective date of this Act, including any charitable gift annuity that is the subject of litigation or another proceeding that is pending on the effective date of this Act. (c) Provides that this section applies without regard to the effective date of the legislation enacting Article 1.14-1A, Insurance Code, or any other legislation enacted by any legislature that amended the provisions of Article 1.14-1A, Insurance Code. SECTION 3. Makes application of this Act retroactive. SECTION 4. Emergency clause. Effective date: upon passage.