Excise Tax on Foreign Insurance Premiums Held Unconstitutional

By Kral, Kenneth H.; Alek, Elizabeth | Journal of Accountancy, October 1994 | Go to article overview

Excise Tax on Foreign Insurance Premiums Held Unconstitutional


Kral, Kenneth H., Alek, Elizabeth, Journal of Accountancy


The court of federal claims ruled that a tax imposed under IRC section 4371 on foreign insurance premiums violated the export clause of the U.S. Constitution (Article 1, Section 9, Clause 5). The court, in International Business Machines (IBM) v. U.S. (74 AFTR2d Par. 94-5029), sided with IBM because its insurance premiums were based on shipped goods' value, and the tax was therefore a tax on exported goods.

IBM insured all U.S.-manufactured products sold to foreign subsidiaries traveling between U.S. facilities and foreign customers and foreign subsidiaries' consolidation centers with casualty insurance.

The Internal Revenue Service asserted IBM was liable for excise tax under section 4371 for the casualty insurance premiums paid on U.S. goods sold to foreign subsidiaries when the insurance was purchased from a foreign insurance company. Section 4371 imposes an excise tax on insurance and reinsurance policies, indemnity bonds and annuity contracts issued by any foreign insurer, and section 4371(1) specifically imposes a 4% tax on premiums paid on casualty insurance policies and indemnity bonds.

However, the export clause of the U.S. Constitution says. "No tax or duty shall be laid on articles exported from any state." Pointing to Thames & Mersey Marine Insurance Co. v. U.S. (237 U.S. 19 [1915]), which held that the export clause prohibited the levying of stamp taxes on policies for marine insurance on exports, IBM argued that the section 4371 excise tax's application violated the export clause. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Excise Tax on Foreign Insurance Premiums Held Unconstitutional
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.