The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1899-11-18
Reasons Given by the Commissioners
of Internal Revenue for His New
Construction Of the Law.
GROWTH OF OUR COMMERCE
EXPORTS AND IMPORTS RUNNING
ABOVE $4,000, 200, 900 A YEAR.
Total of 81 ,6S7 ,6I7,415 for Ten Months
of 1s99-Few Bonds offered TO
Secretary Gage.

WASHINGTON, Nov. I7.-Commissioner
Wilson, of the Internal Revenue Bureau.
has rendered an important decision in which
he holds. in effect, that the policies of life
insurance companies which are exempt from
taxation under the war revenue act are
only such as are issued by fraternal socie-
ties or orders. beneficiary societies or or
ders, farmers purely local cooperative
companies or associations and employees re-
lief associations operated on the lodge sys-
tenn or local cooperative plan, and that the
exemption does not apply 10 the policies OF
life insurance issued by mutual insurance
companies, per sc, although they may have
features of mutually. A further restriction
imposed by the law on the exempted COM
panies is that they shall not be conducted
for profit" The commissioner says, in part:
Il am of the opinion that IL was the in
tention of Congress to exempt from taxa
tion, policies Of life insurance issued by
fraternal societies or orders, and benefi-
ciary societies or orders which are oper-
ated on plans similar TO the lodge or ritu-
alistic form. II surely cannot be said that
a mutual life insurance company is a fra
ternal society or order, nor can IL be said
that a mutual life insurance company is a
beneficiary society or order, although fra
ternal and beneficiary societies may he
mutual.
''Tns office holds that all insurance COM
panies that are doing business on the old
line or fixed premium plan. where policies
are ssued for a given, definite, fixed or
stated premium payable or capable OF being
estimated I'm advance, I'm so far as determin-
ing the question of taxation on their poll
cies is concerned, are organized and con-
Quoted 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 II actually costs the association to
carry the risk.
1.-THE other class of companies do busf-
ness on the assessment plan, which is a
sum specifically levied on a fixed and def
mite plan within the limit of the companys
or societys fundamental law or organiza-
ton. to pay losses, or losses and expenses
incurred.
IAN association coming within the ex-
empted classes which is organized and does
business on the plan OF levying q sum on
its members TO pay losses or losses and ex-
penses 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 fixed premiums to be collected at
regular intervals, without regard TO whether
not a loss actually occurs. are compa-
nies that are, in the opinion of this Office,
prima facie conducted for profit This Of
flee. therefore, holds that the proviso in the
paragraph relating to the question Of profit
can apply only 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 a loss occurs.