Citations
- 44 F. Supp. 575
Full opinion text
GIBSON, District Judge.
The court, after hearing and consideration, makes the following findings of fact and conclusions of law:
Findings of Fact.
The court finds the facts as per stipulation, filed October 20, 1941, now referred to and made part hereof.
Conclusions of Law.
I. The plaintiff is not a life insurance company within the meaning of Section 201 of the Revenue Act of 1932 and Section 201 of the Revenue Act of 1934, 26 U.S.C.A. Int.Rev.Acts, pages 546 and 729.
II. The plaintiff can not be heard to contend in this suit that it is a mutual insurance company other than life insurance within the meaning of Section 208 of the Revenue Act of 1932, and Section 207 of the Revenue Act of 1934, 26 U.S.C.A. Int. Rev.Acts, pages 550 and 735.
III. The plaintiff is not a mutual insurance company other than life insurance within the meaning of Section 208 of the Revenue Act of 1932 and Section 207 of the Revenue Act of 1934.
IV. The dues paid the plaintiff constitute income to the plaintiff and do not constitute capital contributions.
V. The plaintiff can not be heard to contend in this suit that the dues paid by its members constitute capital contributions and not income in its claim for the recovery of taxes paid for the year 1933 for the reason that no such contention was made in the claim for refund filed by the plaintiff for that year.
VI. The plaintiff’s recovery for 1932 and 1933 is limited to the amount of tax paid within two years prior to the filing of the claims for refund filed for those years.
VII. The plaintiff has failed to prove that the premium deposits were retained for the payment of “losses, expenses, and reinsurance reserves” within the meaning of Section 208 (c) (3) of the Revenue Act of 1932 and Section 207 (c) (3) of the Revenue Act of 1934 and the amount thereof.
VIII. The taxes in question were legally assessed and lawfully collected.
IX. The plaintiff has failed to prove a cause of action against the defendant.
X. The defendant is entitled to judgment dismissing plaintiff’s Complaint.
Discussion.
Complainant seeks to recover income taxes paid by it for the years 1932, 1933, 1934 and 1935.
It is a voluntary unincorporated Association whose membership consists of employees of certain affiliated companies of Western Pennsylvania. Its purpose is to relieve sick and injured members and the beneficiaries of deceased members. The Association has no paid officers or employees, and has disbursed no moneys except for the purposes of its organization. Prior to the tax years in question it was exempt from tax, Section 103 (16) of the Revenue Act of 1928, 26 U.S.C.A. Int. Rev.Acts, page 374, as 85% of its income consisted of amounts collected from members for the purpose of meeting obligations. In the years under consideration the amounts so collected amounted to less that 85% of its income, and therefore exemption is not claimed under Section 103 (16) of the Revenue Act of 1932 or Section 101 (16) of the Act of 1934, 26 U.S.C.A. Int.Rev.Acts, pages 508, 688, each of which is practically identical with Section 103 (16) of the Act of 1928.
On behalf of the Complainant it is contended that the Commissioner had no authority to assess the taxes under Section 204 of the Revenue Acts of 1932 and 1934, 26 U.S.C.A. Int.Rev.Acts, pages 548 and 732, and that the Association was subject as to tax to the provisions of Section 201 to 203, inclusive, of the Revenue Acts of 1932 and 1934, 26 U.S.C.A. Int.Rev.Acts pages 546, 547 and 729, 730, or, if not to those sections, to Section 208 of the Revenue Act of 1932 and Section 207 of the Revenue Act of 1934, 26 U.S.C.A. Int.Rev. Acts, pages 550 and 735; and, if not technically to be assessed under those sections, that the $1.00 per month premium paid to the Association by its members was but a capital contribution and as such not taxable as income under either of the Revenue Acts of 1932 and 1934.
Sections 201, 202, 203 and 204 of the Acts of 1932 and 1934 are identical, 26 U.S.C.A. Int.Rev.Acts, pages 546-548 and 729-732. An examination of them will disclose that the Complainant is not the Life Insurance Company defined by Sections 201-203, and considered by them. By the definition (Section 201) the Company considered is one “the reserve funds of which held for the fulfillment of such contracts [life, health and accident] comprise more than 50 per centum -of its total reserve funds.” By Section 202(a) “gross income” means the gross amount of income received from interest, dividends and rents; and by paragraph (b) of said Section the “reserve funds required by law” are asserted to include, in the case