BP BHEAD INT S [atlas:bill]

AN ACT Relating to assignment of lottery rights; and amending RCW 67.70.100.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 67.70.100 and 1996 c 228 s 2 are each amended to read as follows:

(1) Except under subsection (2) of this section, no right of any person to a prize drawn is assignable, except that payment of any prize drawn may be paid to the estate of a deceased prize winner, and except that any person pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled.

(2)(a) The payment of all or part of the remainder of an annuity may be assigned to another person, pursuant to a voluntary assignment of the right to receive future annual prize payments, if the assignment is made pursuant to an appropriate judicial order of the Thurston county superior court or the superior court of the county in which the prize winner resides, if the winner is a resident of Washington state. If the prize winner is not a resident of Washington state, the winner must seek an appropriate order from the Thurston county superior court.

(b) If there is a voluntary assignment under (a) of this subsection, a copy of the petition for an order under (a) of this subsection and all notices of any hearing in the matter shall be served on the attorney general no later than ten days before any hearing or entry of any order.

(c) The court receiving the petition may issue an order approving the assignment and directing the director to pay to the assignee the remainder of an annuity so assigned upon finding that all of the following conditions have been met:

(i) The assignment has been memorialized in writing and executed by the assignor and is subject to Washington law;

(ii) The interest or discount rate based on the estimated funding date has been disclosed, in writing, to the prize winner;

(iii) The assignor provides a sworn declaration to the court attesting to the facts that the assignor has had the opportunity to be represented by independent legal counsel in connection with the assignment, has received independent financial and tax advice concerning the effects of the assignment, and is of sound mind and not acting under duress, and the court makes findings determining so; and

((~~(iii)~~)) (iv) The proposed assignment does not and will not include or cover payments or portions of payments subject to offsets pursuant to RCW 67.70.255 unless appropriate provision is made in the order to satisfy the obligations giving rise to the offset.

(d) The commission may intervene as of right in any proceeding under this section but shall not be deemed an indispensable or necessary party.

(3) The director will not pay the assignee an amount in excess of the annual payment entitled to the assignor.

(4) The commission may adopt rules pertaining to the assignment of prizes under this section, including recovery of actual costs incurred by the commission. The recovery of actual costs shall be deducted from the initial annuity payment made to the assignee.

(5) ((No voluntary assignment under this section is effective unless and until the national office of the federal internal revenue service provides a ruling that declares that the voluntary assignment of prizes will not affect the federal income tax treatment of prize winners who do not assign their prizes)) Notwithstanding any other provision of this section, a prize winner may not assign prize payments pursuant to subsection (2) of this section if either of the following occurs:

(a) The issuance by the United States internal revenue service of a determination letter, revenue ruling, or other public ruling of the internal revenue service in which the internal revenue service determines, based upon the right of assignment provided in subsection (2) of this section, that a Washington lottery prize winner who does not assign any prize payments pursuant to subsection (2) of this section would be currently 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

(b) The issuance by an appellate court of competent jurisdiction of a published decision holding that, based upon the right of assignment provided in subsection (2) of this section, a Washington lottery prize winner who does not assign any prize payments pursuant to subsection (2) of this section would be currently 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.

(6) Upon receipt of a determination letter or revenue ruling from the internal revenue service or a published decision of an appellate court of competent jurisdiction, as specified in subsection (5) of this section, the director shall immediately file a copy of that letter, ruling, or published decision with the secretary of state. Immediately upon the filing by the director of a letter, ruling, or published decision with the secretary of state, a prize winner is ineligible to assign a prize pursuant to subsection (2) of this section.

(7) All voluntary assignments made between June 6, 1996, and the effective date of this section that were executed in accordance with the provisions of subsection (2) of this section shall remain in effect and be honored by the commission, however, the requirement that the interest or discount rate must be disclosed in writing to the prize winner does not apply to any assignment agreement executed before the effective date of this section.

((~~(6)~~)) (8) The commission and the director shall be discharged of all further liability upon payment of a prize pursuant to this section.