the different case which you describe of a "saloon or beer garden where the party going in such place is obliged to buy a cigar at the entrance." This is in effect a charge for admission; and special tax should be paid for a concert or exhibition given in such place. Respectfully, yours, G. W. WILSON, Commissioner. Mr. F. E. COYNE, Collector First District, Chicago, Ill. (21665.) Special tax-County fair associations. In the absence of an express statutory provision exempting county fair associations from special tax for fairs given by them, it is held that the tax must be paid under the eighth paragraph of section 2, act of June 13, 1898. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 10, 1899. SIR: Your letter of the 26th ultimo has been received, relating to the question of the special-tax liability of county fair associations (which, you say, are in Minnesota "quasi public corporations") for the fairs given by them each year. You express the opinion "that they do not come within the scope of the act of 1898." The eighth paragraph of the act of June 13, 1898, however, requires that a special tax of $10 shall be paid for public. exhibitions or shows for money; and as this office is unable to find sufficient ground for holding that a county fair, for admission to which the public are required to pay a stated price, is not an exhibition for money, it has held that special tax must be required to be paid therefor, reckoned from the first day of the month in which such exhibition is given to the first day of July following, at the rate of $10 for the year beginning July 1 in the calendar year. In the absence of an express statutory provision exempting county fair associations from this tax, a contrary ruling would not, it seems to me, be well founded except as to such of these associations as are shown to be State institutions. It is not understood that under the laws of the State of Minnesota any of these associations there are State agencies. Respectfully, yours, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. C. W. SOMERBY, Assistant Attorney-General, St. Paul, Minn. EXPRESS COMPANIES. (See BILLS OF LADING; RECEIPTS; and DECISION 21709, p. 67.) INSURANCE. (See also DECISIONS 20551, p. 71; 21110, p. 274.) (20677.) Stamp tax on reinsurance policies-Opinion of Attorney-General. No tax accrues on a contract between life insurance companies for reinsurance upon any life or lives. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., February 6, 1899. The appended opinion of the honorable Attorney-General is promulgated for the information and guidance of the Internal-Revenue Service. N. B. SCOTT, Commissioner. DEPARTMENT OF JUSTICE, Washington, D. C., February 3, 1899. The SECRETARY OF THE TREASURY. SIR: I have the honor to acknowledge the receipt of yours of October 18, 1898, asking my opinion as to whether, under the provisions of the war-revenue act, what are called reinsurance policies, issued by insurance companies, are required to be stamped. The Commissioner of Internal Revenue, in his letter of October 12, 1898, to you upon this subject, and which you inclose, says: "This question of reinsurance relates only to the assumption by one insurance company of a part of a risk taken by another on receiving a proportionate part of the premium that was originally paid. It is of no interest to the beneficiary or the party primarily insured, except perhaps as the double insurance may contribute to his benefit in case of the insolvency of the company with which he originally contracted." And in the statement filed by the representatives of the insurance companies in this matter it is said that a reinsurance policy "is substantially an agreement between two life companies sharing, according to the terms of the contract, the risk which, prior to such agreement, was being carried by one of the companies." The provision of the act of June 13, 1898, applicable to this subject is the paragraph of Schedule A under the head of "Insurance (life)," and is as follows: "Policy of insurance, or other instrument, by whatever name the same shall be called, whereby any insurance shall hereafter be made upon any life or lives, for each one hundred dollars or fractional part thereof, eight cents on the amount insured." Upon the facts given by the Commissioner, which appear to be in harmony with those furnished by the representatives of the insurance companies, these contracts, which are made exclusively between the insurance companies themselves, and after the original policy of life insurance to the individual has been issued, could not be construed as instruments whereby insurance is made upon life or lives. The insurance upon the life is made by the original policy or instrument which is issued as evidence of the contract between the insurance company and the assured. After this contract is completed, as I understand it, insurance companies, in order to divide the risk, adopt this plan of reinsurance, as they call it, by which some company other than that which issued the policy, in consideration of a portion of the premium, agrees to assume part of the risk, and it is to evidence this contract that what are called reinsurance policies are issued, not to the assured in the original policy, but to the company which is the original insurer. To require a stamp upon such a contract after the original policy issued to the assured has been duly stamped would be, in effect, to levy a double tax on a single transaction for life insurance, which I do not think the law contemplates and which its proper construction will not sustain. Further than this, as I have stated before, there is no insurance made upon any life or lives by these contracts between the insurance companies. The assured is no party to them and has no interest in them, except, perhaps, in so far as security for the payment of the policy may be increased. But I do not think this sufficient to subject contracts such as are above described to stamp taxes. Very respectfully, JAMES E. BOYD, Assistant Attorney-General. Approved: JOHN W. GRIGGS, Attorney-General. (20726.) Stamp tax-Life insurance policies. Change of beneficiaries in life insurance policies-When taxable. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., February 20, 1899. SIR: This office is in receipt of a letter, bearing date of February 2, 1899, from Hubert Cillis, vice-president and secretary of the Germania Life Insurance Company, 20 Nassau street, New York City, in which he states the following: In July of last year the following inquiry was made to this office: "When a policy of life insurance, say for $5,000, is assigned to secure a note of $500, what amount of revenue stamps is required in such case?" The opinion expressed by this office was as follows: "When a policy of life insurance is assigned as collateral security for a loan exceeding $1,000, it should be stamped as a pledge according to the amount of the debt secured and not according to the face of the policy." From this opinion, we have drawn the inference that where an assignment of such a policy is absolute in form, to be valid it must be stamped the same as the original instrument-that is, 8 cents per $1,000 of insurance or any fraction thereof. The inference drawn by this gentleman is correct, and in regard to assignments of life insurance policies that are subject to taxation, you will please inform him that this office has reconsidered its former ruling wherein it was held that every change of a beneficiary in a life insurance policy would subject the policy to a taxation of 8 cents for each $100 of value of the policy. Upon this reconsideration this office now holds that a change of beneficiary in these policies is not subject to taxation unless the same is made for a valuable consideration. The following changes of beneficiaries are not held to be subject to taxation by this office, viz: The life of A is insured and the policy is made payable to A's heirs or personal representatives. A is a single man and marries, and requests the company to name his wife as beneficiary in the policy, instead of making it payable to his heirs or personal representatives. This change is not subject to taxation. Another instance: In the above case, should A's wife die before he does and should he marry again and request that his second wife be named as the beneficiary under the policy, no tax would accrue. Should, however, an absolute assignment of the policy be made to another person, or should the beneficiary named in the policy become placed in such a position by reason of some valuable consideration, this change would be subject to taxation at the same rate as that imposed upon the policy originally. You will please inform Mr. Cillis of this reconsidered decision of this office, and further, that the forms of assignment which he incloses (one "original" and one "duplicate") are subject to tax or are not subject to tax, according to the manner in which they are used in relation to the above ruling. In both these forms (original and duplicate) appears a power of attorney, and this, in the original, is subject to a tax of 25 cents in addition to the tax on the assignment, in case it is such an assignment as is subject to tax. The duplicate is not subject to taxation in any event if the words "original duly stamped” are added. Respectfully, yours, N. B. SCOTT, Commissioner. Mr. CHAS. H. TREAT, Collector Second District, New York, N. Y. (20781.) Stamp tax-Guaranty and fidelity insurance policies. When the policies should be stamped as policies of insurance and not as bonds. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., March 1, 1899. SIR: This office is in receipt of your letter of February 7, 1899, in which you present for consideration the question of the amount of internal-revenue stamps required to be affixed to one of your fidelity insurance contracts running to railroads and other corporations, whereby you insure them against loss on account of the dishonesty or culpable negligence of employees. You inclose a sample copy of such a contract, together with schedule thereto attached. On this schedule will appear the number, name, position, and location of each employee in the service at the time of the execution and delivery of the contract. Opposite the names will appear the amounts for which they are respectively bonded or insured. By the first condition of the contract provision is made for the employer to notify your company of the appointment of any new employee and for your acceptance of the risk so as to cover such new employee. This is all done by use of Forms 70 and 71, copies of which are also inclosed by you. Under Form 70 the company notifies you of the name of a new employee to be covered by the insurance contract issued by you. When you accept this new risk you execute Form 71 and send it to the insured company, and the question is, the proper stamping of these instruments. Your brief has been carefully considered, and you are informed that this office takes the following position in regard to the taxability of these instruments: First. This office regards the original contract issued by you to be in the nature of a policy of insurance alone. It should be stamped to the amount of one-half of 1 cent for each $1 of premium charged by your company. It does not require a 50-cent stamp in any event. Second. When an additional risk is presented to your company under Form 70 and accepted under Form 71, the latter should be stamped in the same manner as the original contract of insurance. Form 71 then becomes a part of the original contract and is covered in under it. When the original contract is properly stamped and Form 71 is also properly stamped, the requirements of Schedule A have been fully complied with. This office looks upon these instruments, not in the nature of bonds which require a 50-cent stamp, but rather in the nature of insurance policies, which are required to be stamped under the paragraph relating to insurance (casualty, fidelity, and guaranty) in Schedule A. No one is a party to these instruments in the nature of a principal in such a way as would require them to be stamped with a 50-cent stamp. In other words, it is not the bond of a principal, said principal becoming the principal obligor on the bond with your company as surety, but is in the nature of an insurance policy, similar in law to life insurance policies and fire insurance policies, the difference being only in the risk assumed. Respectfully, yours, Mr. GEORGE A. VANDEVEER, G. W. WILSON, Commissioner. General Solicitor National Surety Company, New York, N. Y. |