HOUSE AMENDED
PRIOR PRINTER'S NOS. 1799, 1969 PRINTER'S NO. 2200
No. 1433 Session of 1996
INTRODUCED BY HOLL, FUMO, MUSTO, CORMAN, GREENLEAF, LAVALLE AND
WENGER, MARCH 8, 1996
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 26, 1996
AN ACT
1 Exempting the issuance by a qualified charity of a qualified
2 charitable gift annuity from regulation under insurance laws.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Charitable
7 Gift Annuity Exemption Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Qualified charitable gift annuity." An annuity which:
13 (1) Qualifies as a "charitable gift annuity" under
14 section 501(m)(5) of the Internal Revenue Code of 1986
15 (Public Law 99-514, 26, U.S.C. § 501(m)(5)) or any successor
16 provision.
1 (2) Contains in a written agreement substantially all of
2 the following provisions:
3 (i) The parties acknowledge that, as of the date
4 hereof, the fair market value of the property transferred
5 to (the qualified charity) is substantially in excess of
6 the fair market value of the annuity and that the
7 difference between those values constitutes a gift by the
8 donor to (the qualified charity) for its charitable
9 purposes.
10 (ii) (The qualified charity) has advised the donor
11 that a charitable gift annuity is not designed primarily
12 as an investment but rather as a charitable gift.
13 (iii) The promise to pay the annuity is not
14 insurance under the laws of Pennsylvania, is not subject
15 to regulation by the Insurance Department and is not
16 protected by any State guaranty fund THE PENNSYLVANIA <--
17 LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION UNDER
18 ARTICLE XVII OF THE ACT OF MAY 17, 1921 (P.L.682,
19 NO.284), KNOWN AS THE INSURANCE COMPANY LAW OF 1921, or
20 other protective device.
21 (iv) A statement as to whom the donor may contact to
22 obtain a copy of the following information:
23 (A) the organization's status under section
24 170(c) of the Internal Revenue Code of 1986 (Public
25 Law 99-514, 26 U.S.C. § 170(c)) or any successor
26 provisions; and
27 (B) financial statements filed with a
28 governmental agency or audited financial statements
29 from the charity showing that the charity has
30 unrestricted and unencumbered assets in the form of
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1 cash, cash equivalents or publicly-traded securities
2 of at least $100,000 plus one-half of the principal
3 value of any annuities issued by the organization and
4 then in effect.
5 (v) The date the qualified charity or its
6 predecessor came into existence, and a statement that
7 qualified charities must have been in existence for at
8 least three years.
9 (vi) A description of the basis upon which the
10 organization qualifies as a qualified charity.
11 "Qualified charity." An organization which on the date a
12 qualified charitable gift annuity is issued meets all of the
13 following criteria:
14 (1) Is an organization described in section 170(c) of
15 the Internal Revenue Code of 1986 (Public Law 99-514, 26
16 U.S.C. § 170(c)) or any successor provision.
17 (2) Has been in continuous existence for at least three
18 years or is the successor to or an entity controlled by such
19 organization.
20 (3) Has unrestricted and unencumbered assets in the form
21 of cash, cash equivalents or publicly traded securities of at
22 least $100,000 plus one-half of the principal value of any
23 annuities issued by the organization and then in effect.
24 (4) Is one of the following types of organizations:
25 (i) educational institutions subject to regulation <--
26 by the Department of Education;
27 (ii) hospitals subject to regulation by the
28 Department of Health or the Department of Public Welfare;
29 or
30 (I) EDUCATIONAL INSTITUTIONS, THE CURRICULA OF WHICH <--
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1 IN WHOLE OR IN PART ARE REGISTERED WITH OR APPROVED BY
2 THE DEPARTMENT OF EDUCATION, EITHER DIRECTLY OR BY
3 ACCEPTANCE OF ACCREDITATION BY AN ACCREDITING BODY
4 RECOGNIZED BY THE DEPARTMENT OF EDUCATION, AND ANY
5 AUXILIARY ASSOCIATIONS, FOUNDATIONS AND SUPPORT GROUPS
6 WHICH ARE DIRECTLY RESPONSIBLE TO EDUCATIONAL
7 INSTITUTIONS.
8 (II) HOSPITALS WHICH ARE SUBJECT TO REGULATION BY
9 THE DEPARTMENT OF HEALTH OR THE DEPARTMENT OF PUBLIC
10 WELFARE AND THE HOSPITAL FOUNDATION, IF ANY, WHICH IS AN
11 INTEGRAL PART THEREOF.
12 (iii) charitable organizations which are required to
13 or do file a registration statement with the Department
14 of State under the provisions of the act of December 19,
15 1990 (P.L.1200, No.202), known as the Solicitation of
16 Funds for Charitable Purposes Act.
17 (IV) SENIOR CITIZEN CENTERS AND NURSING HOMES WHICH <--
18 ARE NONPROFIT AND CHARITABLE AND WHICH VOLUNTARILY FILE A
19 REGISTRATION STATEMENT WITH THE DEPARTMENT OF STATE UNDER
20 THE PROVISIONS OF THE ACT OF DECEMBER 19, 1990 (P.L.1200,
21 NO.202), KNOWN AS THE SOLICITATION OF FUNDS FOR
22 CHARITABLE PURPOSES ACT.
23 (V) ANY BONA FIDE DULY CONSTITUTED RELIGIOUS
24 INSTITUTIONS AND SUCH SEPARATE GROUPS OR CORPORATIONS
25 WHICH FORM AN INTEGRAL PART OF RELIGIOUS INSTITUTIONS,
26 PROVIDED THAT:
27 (A) SUCH RELIGIOUS INSTITUTIONS, GROUPS OR
28 CORPORATIONS ARE TAX EXEMPT PURSUANT TO THE INTERNAL
29 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
30 1 ET SEQ.).
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1 (B) NO PART OF THEIR NET INCOME INURES TO THE
2 DIRECT BENEFIT OF ANY INDIVIDUAL; AND
3 (C) THEIR CONDUCT IS PRIMARILY SUPPORTED BY
4 GOVERNMENT GRANTS OR CONTRACTS, FUNDS SOLICITED FROM
5 THEIR OWN MEMBERSHIPS, CONGREGATIONS OR PREVIOUS
6 DONORS AND FEES CHARGED FOR SERVICES RENDERED.
7 (VI) ANY CORPORATION ESTABLISHED BY AN ACT OF
8 CONGRESS THAT IS REQUIRED BY FEDERAL LAW TO SUBMIT ANNUAL
9 REPORTS OF ITS ACTIVITIES TO CONGRESS CONTAINING ITEMIZED
10 ACCOUNTS OF ALL RECEIPTS AND EXPENDITURES AFTER BEING
11 FULLY AUDITED BY THE DEPARTMENT OF DEFENSE.
12 Section 3. Exemption from regulation.
13 The laws of this Commonwealth regulating issuance, including,
14 but not limited to, the act of May 17, 1921 (P.L.682, No.284),
15 known as The Insurance Company Law of 1921, and the act of May
16 17, 1921 (P.L.789, No.285), known as The Insurance Department
17 Act of 1921, shall not apply to the issuance by a qualified
18 charity of a qualified charitable gift annuity.
19 Section 4. Previously issued annuities.
20 A charitable gift annuity issued prior to the effective date
21 of this act shall be deemed to be a qualified charitable gift
22 annuity if both of the following conditions are met:
23 (1) The charitable gift annuity qualified as a
24 charitable contribution under the provisions of the Internal
25 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et
26 seq.) governing charitable deductions at the time the
27 charitable gift annuity was issued.
28 (2) The issuing organization was a qualified charity at
29 the time the charitable gift annuity was issued or becomes a
30 qualified charity within one year of the effective date of
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1 this act.
2 Section 5. Effective date.
3 This act shall take effect in 60 days.
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