(21646.) Stamp tax-Installment accident insurance policies. Policies of accident insurance, whereon the premiums are payable in installments, should be stamped, when issued, on a basis of the full premium charged for the whole term. The policy can not be stamped on a basis of the first premium paid and the application stamped as succeeding premiums are paid. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 9, 1899. SIR: This office has recently determined a question in regard to the taxation of installment policies of accident insurance issued by the Standard Life & Accident Insurance Company, of Detroit, Mich., * * * which is also applicable to similar policies of insurance issued by the Travellers' Life & Accident Insurance Company, of Hartford, Conn. The statement of facts upon which the ruling is based is as follows: The policies issued by the Travellers' Life & Accident Insurance Company, of Hartford, Conn., upon which this office specifically rules are policies insuring against accidental death or injuries, and also giving weekly indemnity for loss of time caused by such accidental injuries. The contract evidencing this insurance is for the term of one year, and the premiums are payable in two, two, three, and five months. It is expressly agreed in the contract issued that the premiums paid are for separate and independent contracts for the consecutive periods above named, and each of these payments shall apply to only its corresponding insurance period. It is contended that if the company pays the tax on the entire premium chargeable upon the policy when it is issued, it pays a tax upon a large percentage of premium which it never collects, there being a corresponding amount of average delinquency in transacting the business. The Travellers' Insurance Company, therefore, wishes to pay tax only on the premium for the first two months when the policy is issued, and as the policy passes out of its hands at that time to stamp the application as the premiums for the succeeding period are paid. In response to this request, it must be observed (1) That the law does not provide for the case of insurance premiums payable in installments. (2) The instrument issued by this insurance company embodies four contracts embracing an entire year, and when made and issued tax accrues on the entire premium chargeable thereon for the period covered. (3) Section 7 of the act of June 13, 1898, is as follows: That if any person or persons shall make, sign, or issue, or cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, without the same being duly stamped 13442-10 for denoting the tax hereby imposed thereon, or without having thereupon an adhesive stamp to denote said tax, such person or persons shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not more than one hundred dollars, at the discretion of the court, and such instrument, document, or paper, as aforesaid, shall not be competent evidence in any court. The above includes all contracts of insurance issued, as well as all other documents taxable under Schedule A, and there is absolutely no authority to stamp an instrument so issued, except to the full amount due under the contract or contracts covered therein, whether the premiums are made payable in installments or otherwise. The proposition of the company to pay tax only on the first premium due when the contract of insurance is issued by placing a stamp thereon corresponding thereto, and pay tax on the subsequent premiums when paid by placing the stamp for the same on the application for insurance, is inadmissible, because thereby the stamping of an instrument not required by law to be stamped would be authorized. If this insurance company desires to stamp each contract by itself, it must issue four different contracts during the year, and in that case they could stamp such contracts as they are issued; otherwise, a stamp will be required equal to the tax on the amount ultimately chargeable for premium in every instrument issued, and the stamps must be affixed at the time of issue in accordance with section 7 of the act of June 13, 1898. The application of this company to stamp its contracts in any other way is denied. Please inform the company of the ruling herein contained, that it may conform to the requirements herein set forth. ROBT. WILLIAMS, Jr., Acting Commissioner. Respectfully, yours, Mr. THOMAS A. LAKE, Collector Internal Revenue, Hartford, Conn (21779.) Stamp tax-Exemption of life-insurance policies. Classes of life-insurance companies whose policies are exempt if the companies are not conducted for profit.-What constitutes, prima facie, being "conducted for profit." TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 16, 1899. GENTLEMEN: I am in receipt of your letter of August 19, 1899, in which you inclose a brief, wherein your views are submitted in regard to the question of taxation on policies of life insurance issued by mutual life-insurance companies doing a purely assessment business not for profit. This brief is submitted in the matter of the applica tion of the Bankers' Life Association, of Des Moines, Iowa, for exemption from the war-revenue tax in regard to its policies of life insurance. You state that the law in imposing a tax upon policies of life insurance exempts from the operation thereof certain specified societies "organized and conducted solely by the members thereof for the exclusive benefit of its members, and not for profit. You state further that "it is clear that this exception can only apply to mutual companies, because they alone are organized and conducted solely by the members thereof for the exclusive benefit of their members," and "it is equally clear that the exemption can not apply to all mutual associations, but only to those organized and conducted not for profit. * * * Having ascertained, then, that an association is mutual, the sole remaining question is, Is it organized and conducted not for profit?" Then follows your argument as to determining the question of whether or not the association is conducted for profit. This office quite agrees with you in the manner of determining the question of profit; but that part of your brief first above quoted assumes a premise not borne out by the provisions of the paragraph in Schedule A relating to life insurance. In other words, you assume that the paragraph in question includes mutual life-insurance companies per se. Upon examination of said paragraph you will find that no such class of companies is referred to. It relates to policies of insurance issued by First. Fraternal societies or orders. Second. Beneficiary societies or orders. Third. Farmers' purely local cooperative companies or associations. Fourth. Employees' relief associations operated on the lodge system or local cooperative plan. It is only policies of life insurance issued by the above classes or associations that can be exempt from taxation; and the further restriction is applied to the above-named associations that they must be such organizations as are conducted solely by the members thereof for the exclusive benefit of their members, and not for profit. I am of the opinion that it was the intention of Congress to exempt from taxation policies of life insurance issued by fraternal societies or orders, and beneficiary societies or orders which are operated on plans similar to the lodge or ritualistic form. It surely can not be said that a mutual life-insurance company is a fraternal society or order; nor can it be said that a mutual life-insurance company is a beneficiary society or order, although fraternal and beneficiary societies my be mutual. I can not, therefore, agree with you in your premise, wherein you state that it is clear that the exemptions can only apply to mutual companies. The paragraph in Schedule A can only apply to the classes of insurance companies specifically set forth, none of which are known in the insurance world as mutual insurance companies per se. Although they may have features of mutuality, they are required to have other features not common to mutual insurance companies. It will be noticed that the proviso in the paragraph in Schedule A relating to life insurance is very different from the proviso in the paragraph of Schedule A relating to fire insurance. In the proviso in the paragraph relating to fire insurance mutual fire-insurance companies are specifically mentioned. It will be seen further that in the paragraph relating to casualty, fidelity, and guaranty companies of insurance, there are no exempted classes. The Bankers' Life Association, of Des Moines, Iowa, is not one of the class of companies mentioned in the paragraph. It is not a fraternal society or order. It is not a beneficiary society or order. It is not a farmers' purely local cooperative company. It is not an employees' relief association; nor is it operated on the lodge system or local cooperative plan. Said association would, in order to be exempt, have to come within the classes specified, and, further, it would have to be operated on the lodge system or local cooperative plan. The Bankers' Life Association can not be included within the above requirements. I am, therefore, of the opinion, and so hold, that the policies of life insurance issued by the Bankers' Life Association are subject to taxation. While passing upon the question of taxation of these policies, my views in regard to the question of profit, and what is contemplated by the phrase "organized and conducted not for profit," are herewith set forth. Presuming that a company comes within one of the classes specifically set forth, it then has to have a further test applied to it as to whether or not it is conducted for profit. As to the plan of organization and the method of doing business, the companies specifically set forth in the paragraph are divided into two general classes-those which collect premiums in advance, and those wherein the premium is paid by assessing their members for losses which have actually occurred. This office holds that all insurance companies that are doing business on the old-line or fixed-premium plan, where policies are issued for a given, definite, fixed, or stated premium payable or capable of being estimated in advance, in so far as determining the question of taxation on their policies is concerned, are organized and conducted for profit, whether the premium is paid by assessment or not. The association, when it collects a premium under this plan, undertakes to carry a risk for the price fixed and agreed upon with the insured, and this amount must be paid, no matter what it actually costs the association to carry the risk. The other class of companies does a business on the assessment plan, which is a sum specifically levied upon a fixed and definite plan within the limit of the companies' or societies' fundamental law or organization, to pay losses, or losses and expenses incurred. (Joyce on Insurance, vol. 2, sec. 1245.) An association coming within the exempted classes which is organized and does business on the plan of levying a sum upon its members to pay losses, or losses and expenses incurred, is prima facie not doing business for profit. This is in cases where the assessments are made to provide for the payment of losses as they occur. Such companies as make assessments based upon fixed premiums, to be collected at regular intervals, without regard to whether or not a loss actually occurs, are companies that are, in the opinion of this office, prima facie conducted for profit. From the above, this office holds that the proviso in the paragraph, relating to the question of profit, can only apply to societies or associations which collect funds for the payment of losses by assessment upon their members, and in whose contract no provision is made for any returns to the policy holder before a death or a loss occurs. G. W. WILSON, Commissioner. Messrs. CARR & PARKER, Attorneys at Law, Des Moines, Iowa. Respectfully, yours, INTERNAL-REVENUE STAMPS. (20875.) Schedule A-Refunding. Evidence required in support of claims for amounts paid for adhesive stamps used in error or excess. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., March 16, 1899. SIR: In all claims for the refunding of amounts paid for adhesive documentary or proprietary stamps used in error or in excess it should be clearly stated, under oath, who paid for the stamps, whether they were purchased at a discount or at the full face-value, and whether the party in whose name the claim is made has been reimbursed for the stamps by any person or persons. * * * G. W. WILSON, Commissioner. Mr. B. F. PARLETT, Collector Internal Revenue, Baltimore, Md. Respectfully, yours, (21560.) Redemption of unused documentary stamps. Opinion of the Attorney-General as to the power of the Commissioner of Internal OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., August 31, 1899. The appended opinion of the Attorney-General, in relation to the power of the Commissioner of Internal Revenue to redeem unused |