Virginian-pilot. (Norfolk, Va.) 1898-1911, 1899-11-19
THE OBSERVER
TAX oNIMsURANcE.

| {
LIFE POLICIES SUBJECT TO WAR
TAX.
Commissioner Wilson, of the Internal
Iteyenue Bureau, has rendered an I'M
portant decision, In which he holds In
effect that the policies of life insllr-
ance companies which are exempt
from taxation under the war revenue
act ara only such as are issued by
fraternal socities or orders: henei-
cfary societies or orders; farmers
purely co-operatlvt companies or asso-
cintions, and employees relief nssocfa-
lions operated on the lodge system or
local cooperative plan, and that the
exemption does not apply to the poll
cies 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 companies is
that they shall not he Conducted for
profit" The Commissioner says In
Fart:
EN- Of lie or;ni5n that II was Til
intention OF Congress TO exempt from
taxation policies OF life insurance is
sued by fraterral socities or orders,
and beneficiary socities or orders
which are operated on plans similar
to the lodge or ritualstic form
1t surely cannot be said that n
mutual life insurance company is
fraternal society or order; nor can il.
be said that mutual life insurance
company is beneficiary society or
order, although fraternnl and beneh-
ciary societies may be mutual.
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 pay
able or capable of being estimated in
c cn,. Il. ,i,,,,
question OF taxation on their policies
IS concerned, are organized and con-
Quoted for profit, whether the premium
Is paid by assessment or not. The as
ISOLATION When it COLLECTS n premium
under this plan undertakes to carry n
risk for the price fixed and agreed
upon with the insured, and this
amount must be paid no matter what
1t actually costs the association TO
carry the risk.
The other class of companies do n
business on the assessment plan, which
Is business specifically levied upon n
fixed and definite plan within the
unit Oh the companies or socities fun
damental law or organization, TO nav
losses, or losses and expenses incurred
| An association coming within the
| exempted classes. which is organized
and does business on the plan OF levy
| ing a sum upon its members 10 nav
| losses, or losses and expenses incurred
| Is prima facie, not doing business for
profit. This in cases where the assess
ments are made to provide for thc
payment on losses as they occur
Such companies as make assess
ments based upon fixed premiums tn
be collected at regular intervals with
| out regard to whether or moi n loss
actually occurs. are companies that are
In the opinion of this Office primo
| facie conducted for profit.
prom the above, this office holds
that the proviso in the paragraph re-
lating to the question OF profit can
only apply to societies or asssocio
tons, which collect funds for the pav.
inents Of losses by assessments. anon
their members, and in whose contror,
no provision is made for any returns
to the policy holder before n death or
| q loss occurs"