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Stamp tax-Insurance policies.

Tax ou insurance policies issued by foreign insurance companies having agencies in the United States.



Washington, D. C., September 14, 1898.

SIR: This office has received information which leads it to believe that the various taxes imposed by Schedule A of the war revenue act on policies of insurance of all kinds are not being paid and collected so far as they are issued by foreign insurance companies having agencies in this country.

This office holds that all policies of insurance issued and delivered in the United States affecting the lives and property of the residents of this country are liable to the same tax, whether issued by foreign or domestic companies. To hold otherwise would be to construe the law in a manner so absurd as to declare that Congress intended to discrimi nate against our citizens carrying on the insurance business and give their foreign competitors possession of the field.

I desire that you or some of your most competent assistants will, as soon as practicable, make an examination of the foreign insurance agencies in New York City and vicinity, and ascertain whether said companies have been stamping the policies issued by them according to the rates prescribed in Schedule A. If there is reason to believe that such policies have not been duly stamped, you will call upon the proper agents to make returns to the collectors of internal revenue for the districts in which the offices are located of all taxes so delinquent, and if in any case where there is reason to believe that unstamped policies have been issued the agents of the company refuse or neglect to make the proper returns, you will confer with the collector for the purpose of taking proceedings to make an assessment from the best information that can be obtained.

You will report all cases of delinquency found by you to the collector of internal revenue for the proper district and to this office.

Respectfully, yours,

N. B. SCOTT, Commissioner. Mr. ROBERT WILLIAMS, Revenue Agent, New York, N. Y.


Stamp tax-Fire insurance policies.

Fire insurance policy-When assigned or transferred, taxed in proportion to the

unearned premium.



Washington, D. C., September 19, 1898.

SIR: This office is in receipt of a letter from William H. Furber & Son, 13 School street, Boston, Mass., under date of September 14, 1898.

These gentlemen ask, how a policy of insurance should be stamped when it is assigned or transferred to a new holder or owner of the property insured and one-half or two-thirds of the term has expired. You will inform them that such assignments of policies


are subject to taxation in proportion to the unearned premium of the policy. This unearned premium is the basis of taxation, and computa tion is made on this amount.

Respectfully, yours,

N. B. SCOTT, Commissioner

Mr. JAMES D. GILL, Collector Internal Revenue, Boston, Mass.


(See also DECISIONS 19841, p. 117; 19973, p. 182; 20235, p. 71.)


Stamp tax-Assignment of life insurance policy.

A stamp required upon assignment of a policy of insurance.



Washington, D. C., July 18, 1898. SIR: Messrs. H. M. Black & Co., bankers and brokers, 55 Broadway, New York, make the following inquiry through the Attorney-General, viz: Whether the stamp required upon the assignment of a policy of insurance shall be estimated by the amount of the face of the policy or the cash value of the policy at the time of assignment. The law says—

That upon each and every assignment of a policy of insurance a stamp duty shall be required and paid at the same rate as that imposed on the original instrument.

This language is plain and unmistakable, and can not be interpreted to mean other than that the stamp upon the assignment shall be the same as that required upon the original policy, and that the cash value of the policy at the time of the assignment does not affect the amount of tax.


Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. F. EIDMAN, Collector Third District, New York, N. Y.


Stamp tax-Life insurance policies.

A policy of insurance is not valid unless it bears the proper canceled revenue stampStamps may be affixed by local agents when policies are delivered.



Washington, D. C., July 20, 1898.

SIR: Your letter of the 12th instant, in regard to life insurance companies, has been received.

You state that life insurance companies are sending policies to their agents with a stamp inclosed or affixed, but not canceled, and that the

instructions from the companies to agents are to collect from the insured party the premium and the value of the stamp.

The insured insist that the law contemplates payment of stamp tax by the company issuing the insurance, and decline to pay. The agents say they can not afford to lose the business for the value of the stamp, and they, too, insist that the companies have no right to shift this burden upon their shoulders, because they know the agent will pay for stamp rather than lose the business in case the insured declines.

You are informed that a policy does not require a stamp until it is issued or offered as an insurance policy, and the insurance company can stamp a policy through its local agents as well as through its general agent or head office. Any agent of the company who is charged with the duty of delivering the policy to the policy holder and receiving the premium is authorized to affix and cancel the stamp in behalf of the company.

If the company insists that the insured party pay the value of the stamp, it is not a matter which the internal-revenue laws can deal with. It is a matter between the insurance company and the policy holder. A policy of insurance is not valid unless it bears the proper canceled revenue stamp.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. A. J. DAUGHERTY, Collector Fifth District, Peoria, Ill.


Stamp tax-Insurance companies.

Mutual life insurance companies liable to tax unless conducted for the benefit of the members, without profit to such members-Fraternal, beneficiary, and purely local companies defined.



Washington, D. C., August 1, 1898,

SIR: I am in receipt of your letter of the 25th ultimo, requesting that you be informed whether policies of insurance issued by your companies (copies of which you submit) are taxable under the revenue act of June 13, 1898.

You state in your letter that the company (Security Mutual Life Insurance Company) is a purely cooperative of mutual company; that it issues no stock, and has no stockholders; and that all profits or surplus assets go to its members in the way of dividends, reduction of premiums, or additions to policies in case of death.

The act referred to in imposing tax on life insurance policies provides that the tax shall not apply "to any fraternal, beneficiary society, or order, or farmers' purely local cooperative company or association, or employees' relief associations operated on the lodge system, or local 12593


cooperation plan, organized and conducted solely by the members thereof for the exclusive benefit of its members and not for profit." It is clear from the language used that the exemptions made are not intended to apply to life insurance companies, although organized and conducted on the mutual plan, unless such companies are "fraternal,” "beneficiary," or "purely local" in their character.

The term fraternal or beneficiary, as used in connection with life insur ance companies, would seem to have no application to the company you represent; and admitting it to be a purely cooperative association as claimed, its business, it appears, is not confined to any particular locality, nor conducted exclusively for the benefit of its members without profit.

Upon examination of the form of policy submitted by you, I also find that the premiums charged are at certain fixed rates, and payable at stipulated times, as in the case of ordinary life insurance, and not according to the assessment plan usually adopted by cooperative insurance companies.

From the examination given, I am clearly of the opinion that the policies issued by your company do not come within the exemption referred to.

Respectfully, yours,


N. B. SCOTT, Commissioner.

Counsel Security Mutual Life Insurance, Binghamton, N. Y.`


First weekly premiums.

First weekly premiums received in various collection districts by local agents of life insurance companies may be included in the monthly returns rendered to the collector of the district in which such companies are located.



Washington, D. C., September 14, 1898.

SIR: Referring to your letter of the 11th instant, and to office telegram of this date, in reference to returns to be made, under the revenue act of June 13, 1898, of first weekly premiums in case of life insurance companies issuing policies on the industrial or weekly payment plan, and having agents in several collection districts, you are informed that where, as is claimed, premiums collected by or charged to such agents can be determined and reported by the home company during the month in which the same are so collected or charged, all such premiums may be included in the return (Form 422) filed with the collector of the dis trict in which the principal office of the company is located.

In such cases, however, each company will be required to state in its return (Form 422) that the return made includes and covers all first

weekly premiums on policies issued by the company throug. its several agencies during the period named, specifying the States (and, if known, the collection district) in which such agencies are located.

The collector receiving such return will, if satisfied that the same is a true and accurate statement of all premiums so received, at once notify the collectors of the various districts in which the company's agencies are located that a return of the premiums received by the company from such agencies has been filed in his office; and collectors receiving such notification will not, in such cases, require returns to be made by the local agents of that company.

Upon filing each subsequent return the company will likewise specify the States or districts from which first weekly premiums have been received during the month, and when the list of States or districts so furnished is found to agree with that furnished with the last previous return made by the company, no further notification to the collectors in whose districts such agencies are located will be required.

Respectfully, yours,

N. B. SCOTT, Commissioner. Mr. CHAS. E. SAPP, Collector Fifth District, Louisville, Ky.


Stamp tax-Insurance policies.

Policies of insurance (marine) issued by foreign companies having no established agencies in the United States are nevertheless subject to the stamp tax when obtained by or through insurance brokers residing in this country.



Washington, D. C., October 25, 1898. SIR: 1 am in receipt, under your reference of the 4th instant, of the report of Special Employee Robert Towne, addressed to you on the 29th instant, also a letter from Mr. M. C. Harrison, insurance agent, of Portland, Oreg., in reference to certain marine-insurance policies issued by foreign companies to residents of this country, on which policies the premium tax imposed by the revenue act of June 13, 1898, has not been paid.

From the statements made, it appears that the policies in question were issued and delivered abroad, where suit for recovery thereon must be brought, and that the companies issuing such policies have no representatives in this country; that Mr. Harrison, as an insurance broker, obtained these policies through a London broker, with whom he "splits commissions," and that the premiums collected on these policies issued since July 1, 1898, aggregate $16,958, including $360 premiums on two policies written in Mr. Harrison's name and assigned by him, on which assignment also the required stamps were not affixed.

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