U.S. Code » Title 26 » Subtitle Subtitle D— Miscellaneous Excise Taxes › Chapter CHAPTER 34— TAXES ON CERTAIN INSURANCE POLICIES › Subchapter Subchapter A— Policies Issued By Foreign Insurers

26 U.S.C. § 4371

Imposition of tax

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There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates:(1) Casualty insurance and indemnity bonds

4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d);

(2) Life insurance, sickness, and accident policies, and annuity contracts

1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract; and

(3) Reinsurance

1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2).

(Aug. 16, 1954, ch. 736, 68A Stat. 521; Mar. 13, 1956, ch. 83, § 5(9), 70 Stat. 49; Pub. L. 85–859, title I, § 141(a), Sept. 2, 1958, 72 Stat. 1300; Pub. L. 86–69, § 3(f)(3), June 25, 1959, 73 Stat. 140; Pub. L. 89–44, title VIII, § 804(b), June 21, 1965, 79 Stat. 160; Pub. L. 94–455, title XIX, § 1904(a)(12), Oct. 4, 1976, 90 Stat. 1812; Pub. L. 98–369, div. A, title II, § 211(b)(23), July 18, 1984, 98 Stat. 757; Pub. L. 100–203, title X, § 10242(c)(3), Dec. 22, 1987, 101 Stat. 1330–423; Pub. L. 101–239, title VII, § 7811(i)(11), Dec. 19, 1989, 103 Stat. 2411.)Editorial NotesAmendments

1989—Par. (2). Pub. L. 101–239 struck out “, unless the insurer is subject to tax under section 842(b)” after “or annuity contract”.

1987—Par. (2). Pub. L. 100–203 substituted “section 842(b)” for “section 813”.

1984—Par. (2). Pub. L. 98–369 substituted “section 813” for “section 819”.

1976—Pub. L. 94–455 substituted in par. (1) “4 cents” for “four cents” and “premium paid” for “premium charged”, in pars. (2) and (3) “1 cent” for “one cent” and “premium paid” for “premium charged”, and struck out provision following par. (3) relating to computation of tax on premium paid in lieu of premium charged.

1965—Pub. L. 89–44 inserted last sentence relating to computation of tax on premium paid in lieu of premium charged.

1959—Par. (2). Pub. L. 86–69 substituted “section 819” for “section 816”.

1958—Pub. L. 85–859 substituted “is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax” for “shall be imposed a tax on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer”.

1956—Par. (2). Act Mar. 13, 1956, substituted “section 816” for “section 807”.

Statutory Notes and Related SubsidiariesEffective Date of 1989 Amendment

Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1987 Amendment

Amendment by Pub. L. 100–203 applicable to taxable years beginning after Dec. 31, 1987, see section 10242(d) of Pub. L. 100–203, set out as a note under section 816 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 98–369, set out as an Effective Date note under section 801 of this title.

Effective Date of 1976 Amendment

Amendment by Pub. L. 94–455 effective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1904(d) of Pub. L. 94–455, set out as a note under section 4041 of this title.

Effective Date of 1965 Amendment

Amendment by Pub. L. 89–44 applicable with respect to policies, bonds, and contracts with respect to which the tax imposed by this section is required to be paid on the basis of a return, see section 804(c) of Pub. L. 89–44, set out as a note under section 4374 of this title.

Effective Date of 1959 Amendment

Amendment by Pub. L. 86–69 applicable only with respect to taxable years beginning after Dec. 31, 1957, see section 4 of Pub. L. 86–69, set out as an Effective Date note under section 381 of this title.

Effective Date of 1958 Amendment

Amendment by Pub. L. 85–859 effective on first day of first calendar quarter which begins more than 60 days after Sept. 2, 1958, see section 1(c) of Pub. L. 85–859, Sept. 2, 1958, 72 Stat. 1275.

Effective Date of 1956 Amendment

Amendment by act Mar. 13, 1956, applicable only to taxable years beginning after Dec. 31, 1954, see section 6 of act Mar. 13, 1956, set out as a note under section 316 of this title.

Notes of Decisions
Cited in 8 cases, 1965–2015 · leading case: United States v. Int'l Bus. MacHines Corp., 517 U.S. 843 (1996).
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United States v. Int'l Bus. MacHines Corp., 517 U.S. 843 (1996). · cites it 2× “1 26 U. S. C. § 4371 (1982 ed.). International Business Machines Corporation (IBM) ships products that it manufactures in the United States to numerous foreign subsidiaries and insures those shipments against loss.”
The Neptune Mut. Ass'n, Ltd. Of Bermuda v. The United States, Defendant/cross-Appellant, 862 F.2d 1546 (Fed. Cir. 1988). · cites it 3× “The Claims Court held that Neptune was liable under 26 U.S.C. § 4371 * for Federal Excise Tax (FET) on policies it had issued for the taxable periods ending June 30 in years 1979 and 1980, and that the assessment of FET for periods ending prior to 1979 was barred by the statute…”
Validus Reinsurance, Ltd. v. United States, 19 F. Supp. 3d 225 (D.D.C. 2014). · cites it 8× “filed this case against defendant United States of America, alleging that the Internal Revenue Service (“the Service”) improperly assessed and collected excise taxes on plaintiffs foreign retrocession transactions pursuant to 26 U.S.C. § 4371 (2012). Plaintiff seeks to recover…”
Validus Reinsurance, Ltd. v. United States, 786 F.3d 1039 (D.C. Cir. 2015). · cites it 3× “, in its suit for the refund of excise taxes imposed under 26 U.S.C. § 4371 , which taxes certain types of “reinsurance.”
United States v. Northumberland Ins. Co., Ltd., 521 F. Supp. 70 (D.N.J. 1981). · cites it 4× “93 Internal Revenue Service Assessments Northumberland neither filed federal excise tax returns nor paid the federal excise tax imposed by 26 U.S.C. § 4371 on the AIM RE agreement for the calendar years 1971, 1972, and 1973.”
Am. Fid. & Cas. Co., Inc. v. The London & Edinburgh Ins. Co., Ltd., & the Dominion Ins. Co., Ltd., 354 F.2d 214 (4th Cir. 1965). “26 U.S.C.A. § 4371 . This tax is payable by any of the parties to a taxable transaction.”
Int'l Bus. MacHines Corp. v. United States, 59 F.3d 1234 (Fed. Cir. 1995). “The excise tax was assessed under the authority of 26 U.S.C. § 4371 , which imposes a four percent tax on each policy of casualty insurance issued by a foreign insurer to a domestic entity for risks or liabilities wholly or partly within the United States.”
Am. Bankers Ins. Co. of Florida & Am. Bankers Life Assurance Co. of Florida v. United States, 388 F.2d 304 (5th Cir. 1968). “PER CURIAM: The sole issue presented is whether contracts of reinsurance issued by foreign insurers to reinsure policies issued by domestic insurance companies within the United States are taxable under 26 U.S.C.A. § 4371 (3) of the 1954 Code. The Insurer-appellants concede that…”
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