Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-06-24
PAY TAX ON PREMIUMS
CORPORATION COUNSEL PASSES
ON ASSESSMENT INSURANCE.
Companies to Be Assessed Ia Per
Cent on Amount Paid by
Policy Holders.

According TO an opinion of Corporation
Counsel A. r. DuvaIl submitted to the
Commissioners today. the assessment m
surance associations In the District Will he
required to pay an annual tax of IL per
cent on the amount of the premiums paid
to the companies by policy holders under
their policies less the amount of profits or
dividends. II any. repaid by the companies
to the policy holders
The question as to the proper basis OF
taxation of the receipts of assessment in
surance companies has been before the de-
partment OF insurance. the corporation
counsel and Commissioner Mcfarland In
charge of the. Insurance.. department, for
several months. In fact, the question was
first raised in March 1909. and it is consid-
cred as "A question of considerable impof-
lance besides involving complications IN
the construction or the insurance laws
The District code provides that every IN
surance company shall furnish to the super
intendent of Insurance during january OF
each year a statement of It's business IN the
District. setting forth specifically the net
amount of It's premium receipts. etc. and
that all insurance companies except mu-
tual fire insurance companies. shaii pay 10
the collector OF taxes. before March 1 of
each year. a sum equal to " per cent OF
the premium receipts of the last preceding
calendar year" The question raised was
as to the meaning of the phrase met
premium receipts.
Assessment Companies Object.
The ''old line companies, it Is stated, are
required to pay the tax of IA per cent
year on the difference between their gross
receipts and the amounts returned 10 poiicy
holders The assessment companies state
that they pay nothing to policy. hoioers III
the way of profits or dividends. ana there-
fore they contend that under a proper con-
structon OF the law their receiptS are eA-
empt from taxation.
Early in 1903. II Is stated, the superih-
tendent of insurance in the eHort 10 ue-
termine an equitable method OF taxing the
receipts of the assessment associations ue-
cided to tax them on the gross receipts, less
the initial cost of procuring business or
membership In May of this year. how
ever Superintendent Drake of the lnsur-
ance department decided that change IN
the basis of taxation should be made
The assessment companies lmmedlately
entered a protest against the pFoposeu
change. which was to tax the associations
on their gross receipts less the amounts re-
paid to policy holders. if any, as profits or
dividends
Several briefs relative to the matter
have been presented to the Commissioners
by the officers of the assessment companies
and by their attorneys. They contend that
either the receipts of the company are eX-
empt from taxation. or else the department
should adhere to its former method of tax
ing the assessment companies.
The officers of one of the companies in
their brief devote several pages to the ''hu-
man interest side of the case. and set
forth the benefits and charity afforded the
poor man by means of the workings of the
companies.
Mr.. Duvalls View.
In his last opinion on the question Mr..
Duvall states that the method adopted by
the superintendent of insurance in taxing
the companies in former years was consid-
cred by the superintendent and by the cor
poration counsel. at that time, as just and
equitable. A larger experience with the
workings of these companies and more
mature consideration of the matter. says
Mr.. Duvall. have convinced both the super
intendert of insurance and the corporation
counsel that modification of the prior
ruling was not only eXpedient, but in a GER
tain sense necessary.
With regard to the briefs and arguments
of the assessment companies and their at
torneys. Mr. Duval says:
THE burden of their argument seems to
be that they are taxed on their gross pre-
MUM receipts and not upon their net pre-
miums. In other words. because they pay
nothing to their policy holders in the way
OF profits or dividends, matter entirely to
their advantage, they are entitled to favors
denied to companies which pay profits and
dividends to policy holders.
The corporation counsel maintains that
the ruling to the effect that the assessment
receipts. less amounts returned to policy
holders as profits or dividends. is correct
and should be adhered to.
Commissioner Macfarland has approved
the opinion.