2013 - 2014 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO SENATE BILL 152
October 7, 2013 - Offered by Senator Lasee.
1An Act to repeal
601.31 (1) (a) 4., 601.31 (1) (b) 4., 601.31 (1) (c) 4., 601.31 (1) 2
(k) 4., chapter 615 and 646.01 (1) (a) 2. d.; to amend
600.03 (27), 620.25 (2) and 3
645.02 (6); and to create
632.65 of the statutes; relating to: exemption from
4regulation for certain annuities.
Analysis by the Legislative Reference Bureau
An annuity is an insurance contract under which the insurer agrees to pay the
person covered under the annuity (annuitant) periodic payments, starting
immediately or at a future date, for a set period of time or an indefinite period of time,
such as for the remainder of the annuitant's life. Annuities and their sale are
regulated by the office of the commissioner of insurance (OCI). This substitute
amendment exempts from all regulation by OCI a qualified charitable gift annuity,
which is defined in the substitute amendment as an annuity: 1) that is established
under a transaction that is treated, for federal income tax purposes, partly as a
charitable contribution and partly as an investment in an annuity contract, and 2)
for which the obligation to pay is not an "acquisition indebtedness" under a provision
in the Internal Revenue Code. To meet the second criterion just described, an
annuity must be the sole consideration issued in exchange for property, if the value
of the annuity is less than 90 percent of the value of the property; must be payable
over the life of one or two individuals in being at the time the annuity is issued; and
must be payable under a contract that does not guarantee a minimum amount, or
specify a maximum amount, of payments and that does not provide for an adjustment
in the amount of the annuity payments by reference to the income received from the
transferred, or any other, property.
The substitute amendment: 1) provides that a charitable organization may not
issue a qualified charitable gift annuity unless it has been in continuous existence
for at least three years, or is the successor or affiliate of a charitable organization that
has been in continuous existence for at least three years; 2) requires that a contract
for a qualified charitable gift annuity contain a disclosure statement that the
annuity is not insurance, is not subject to regulation by the commissioner of
insurance, and is not protected by an insurance guaranty fund or association; and
3) requires a person that issued an existing qualified charitable gift annuity before
the date that the new provisions go into effect to provide notice of the new provisions
relating to the regulation of qualified charitable gift annuities to the policy owner or
beneficiary of that qualified charitable gift annuity.
The substitute amendment repeals the chapter of the statutes and all related
provisions that relate to the regulation of, and requirements for, gift annuities. The
substitute amendment also removes an issuer of gift annuities from the definition
of "insurer" so that laws applying to insurers do not apply to issuers of gift annuities.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
600.03 (27) of the statutes is amended to read:
"Insurer" means any person or association of persons doing an 3
insurance business as a principal, and includes, but is not limited to, fraternals, 4issuers of gift annuities,
cooperative associations organized under s. 185.981, 5
insurers operating under subch. I of ch. 616,
and risk retention groups. It "Insurer" 6
also includes any person purporting or intending to do an insurance business as a 7
principal on his or her own account. "Insurer" does not include a person that issues
8only qualified charitable gift annuities, as defined in s. 632.65 (1).
601.31 (1) (a) 4. of the statutes is repealed.
601.31 (1) (b) 4. of the statutes is repealed.
601.31 (1) (c) 4. of the statutes is repealed.
601.31 (1) (k) 4. of the statutes is repealed.
Chapter 615 of the statutes is repealed.
620.25 (2) of the statutes is amended to read:
This section does not apply to ss. s.
234.26 and 615.10
632.65 of the statutes is created to read:
5632.65 Annuities exempt from regulation. (1)
In this section, "qualified 6
charitable gift annuity" means an annuity that satisfies all of the following:
1. The annuity is established under a transaction that, for federal income tax 8
purposes, is treated partly as a charitable contribution under section 170
of the 9
Internal Revenue Code and partly as an investment in an annuity contract under 10
of the Internal Revenue Code.
2. The annuity meets the requirements of an annuity for which the obligation 12
to pay is excluded from the definition of "acquisition indebtedness" under section 514 13
(c) (5) of the Internal Revenue Code.
(a) Notwithstanding any provision of chs. 600 to 646 to the contrary and 15
except as provided in this section, a qualified charitable gift annuity is not subject 16
to regulation under chs. 600 to 646.
(b) A charitable organization may not issue a qualified charitable gift annuity 18
unless the charitable organization has been in continuous existence for at least 3 19
years, or is a successor or affiliate of a charitable organization that has been in 20
continuous existence for at least 3 years.
(c) A qualified charitable gift annuity contract must include the following 22
disclosure statement: "A qualified charitable gift annuity is not insurance under the 23
laws of this state and is not subject to regulation by the commissioner of insurance 24
of this state or protected by an insurance guaranty fund or an insurance guaranty 25
This section applies to qualified charitable gift annuities in existence on or 2
after the effective date of this subsection .... [LRB inserts date]. A person that issued 3
before the effective date of this subsection .... [LRB inserts date], a qualified 4
charitable gift annuity that is in existence on the effective date of this subsection .... 5
[LRB inserts date], shall provide notice of the provisions of this section to the policy 6
owner or beneficiary, whichever is appropriate, of the qualified charitable gift 7
645.02 (6) of the statutes is amended to read:
All licensees under ch. 615 or
646.01 (1) (a) 2. d. of the statutes is repealed.
This act takes effect on December 31, 2013, or on the day after publication, 13
whichever is later.