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. § 4373

Exemptions

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The tax imposed by section 4371 shall not apply to—(1) Effectively connected items

Any amount which is effectively connected with the conduct of a trade or business within the United States unless such amount is exempt from the application of section 882(a) pursuant to a treaty obligation of the United States.

(2) Indemnity bond

Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant or check, issued by the United States.

(Aug. 16, 1954, ch. 736, 68A Stat. 522; Pub. L. 85–859, title I, § 141(a), Sept. 2, 1958, 72 Stat. 1301; Pub. L. 94–455, title XIX, § 1904(a)(12), Oct. 4, 1976, 90 Stat. 1813; Pub. L. 100–647, title I, § 1012(q)(13)(A), Nov. 10, 1988, 102 Stat. 3525.)Editorial NotesAmendments

1988—Par. (1). Pub. L. 100–647 amended par. (1) generally, substituting provisions relating to effectively connected items for provisions relating to domestic agent.

1976—Par. (1). Pub. L. 94–455 substituted “State, or in the District of Columbia, within” for “State, Territory, or District of the United States within”.

1958—Pub. L. 85–859 reenacted section without change.

Statutory Notes and Related SubsidiariesEffective Date of 1988 Amendment

Pub. L. 100–647, title I, § 1012(q)(13)(B), Nov. 10, 1988, 102 Stat. 3525, provided that: “The amendment made by subparagraph (A) [amending this section] shall apply with respect to premiums paid after the date 30 days after the date of the enactment of this Act [Nov. 10, 1988].”

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.

Notes of Decisions
Cited in 4 cases, 1981–2015 · leading case: Neptune Mut. Ass'n v. United States, 862 F.2d 1546 (Fed. Cir. 1988).
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Neptune Mut. Ass'n v. United States, 862 F.2d 1546 (Fed. Cir. 1988). · cites it 4× “The court further held that Neptune did not satisfy the criteria of 26 U.S.C. § 4373 (1) which grants an exemption from the FET imposed by section 4371.”
United States v. Int'l Bus. MacHines Corp., 517 U.S. 843 (1996). · cites it 2× “” 26 U. S. C. §4373 (1) (1982 ed.). The Commerce Clause is an express grant of power to Congress to “regulate Commerce .”
United States v. Northumberland Ins. Co., 521 F. Supp. 70 (D.N.J. 1981). · cites it 4× “Specifically, Northumberland requested tax status as a company authorized to do business in the United States in order to fall under the exemption from the excise tax provided in 26 U.S.C. § 4373 (1). 10 In response to a request for advice on this matter by the District Director…”
Validus Reinsurance, Ltd. v. United States, 786 F.3d 1039 (D.C. Cir. 2015). “The government interprets the plain text to rebut the presumption against extraterritorial effect because it views the excise tax to have only extraterritorial effect, applying solely to transactions not “effectively connected with the conduct of a trade or business within the…”
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