OGC Op. No. 09-04-09

The Office of General Counsel issued the following opinion April 17, 2009, representing the position of the New York State Insurance Department.

Re: Foreign Fire Insurance Premium Tax Funds

Question Presented:

Is the Superintendent legally obligated to remit the foreign fire insurance premium tax funds to the City of Albany’s Comptroller under Insurance Law §§ 9104 and 9105?

Conclusion:

Yes. The Superintendent is legally obligated to remit the foreign fire insurance premium tax funds under Insurance Law §§ 9104 and 9105 to the City of Albany’s Comptroller, because the Albany City Comptroller also serves as the Albany Fire Department’s treasurer.

Facts:

On July 3, 2008, Assistant Corporation Counsel at the Albany Department of Law sent a letter to the Albany office of the New York State Insurance Department (the “Department”), which enclosed a check for the foreign fire insurance premium tax funds that the Department had recently mailed to the City of Albany. Assistant Corporation Counsel asked the Department to forward or reissue the check directly to the Albany Permanent Professional Firefighters Association Welfare Fund (the “Welfare Fund”). In making this request, Assistant Corporation Counsel cited a December 6, 1993 stipulation of settlement and discontinuance (“Stipulation”) between the Albany Permanent Professional Firefighters Association (the “Firefighters Association”) and various parties, including the Comptroller of the City of Albany and the Albany Fire Department.

The Stipulation requires the Firefighters Association to establish the Welfare Fund to receive and distribute all foreign fire insurance premium tax funds attributable to the City of Albany, with the exception of that share of the funds that shall go to the Firemen’s Pension Fund of the City of Albany. Indeed, according to the Stipulation, the Welfare Fund was established to be “the repository of all foreign fire insurance monies” and to have “full responsibility for investing the funds, making determinations regarding the nature and extent of benefits and other payments to be provided from the foreign fire insurance monies, eligibility of dependents and like determinations.” The Welfare Fund is administered by a Board of Trustees consisting exclusively of active professional firefighters or fire officers.

On July 7, 2008, the Deputy Director of the Department’s Taxes and Accounts Bureau sent a check in the amount of $485,388.73 to the Albany Comptroller’s Office. The check represented the annual foreign fire insurance premium tax funds, and was made payable to the “Treasurer of the Fire Department of Albany.” The Deputy Director explained in her accompanying letter that Insurance Law §§ 9104 and 9105 require the Department to distribute the fire insurance premium tax to the treasurer or other fiscal officer of the fire department affording protection to the City of Albany, or if the fire department does not have a treasurer or other fiscal officer, then to the fiscal officer of the authorities having jurisdiction and control of the fire department. On July 18, 2008, the inquirer responded to the Deputy Director’s July 7, 2008 letter and indicated that the inquirer was forwarding the check for $485,388.75 to the Welfare Fund, and explained that it is appropriate that the Welfare Fund receive the funds, not the Albany Comptroller’s Office. On March 29, 2009, Assistant Corporation Counsel forwarded another letter to the Deputy Director reiterating his previous request.

Thus, a question arises as to whether the Superintendent is legally obligated to remit the foreign fire insurance premium tax funds under Insurance Law §§ 9104 and 9105 to the City of Albany’s Comptroller, given that the Comptroller also serves as the treasurer of the Albany Fire Department.

Analysis:

Insurance Law § 9104 applies to the fire insurance premium tax on foreign and alien insurers, and reads in relevant part as follows:

(a) Except in the cities of New York and Buffalo, there shall be paid by every foreign and alien fire insurance corporation, association or individuals which insure property against loss or damage by fire, except foreign mutual fire insurance companies, on or before the first day of March the sum of one dollar and eighty cents upon the hundred dollars, and at that rate, upon the amount of all premiums which during the year, or part of a year, ending on the last preceding thirty-first day of December, shall have been received by any such insurer for any insurance against loss or damage by fire written by it upon property situated within each city, village, fire district, or fire alarm district, or fire protection district to:

(1) the treasurer or other fiscal officer of the fire department affording fire protection in such city, village, fire district, fire alarm district, or fire protection district, or

(2) if any such fire department does not have a treasurer or other fiscal officer then to the fiscal officer of the authorities having jurisdiction and control of such fire department, or

(3) to such other person or entity as shall be designated in any special law to receive the premium tax, and

(4) if such payment is made to the treasurer or other fiscal officer of a fire department or fiscal officer of authorities having jurisdiction and control of such fire department, such treasurer or fiscal officer shall on or before the fifteenth day of March in each year distribute the amount so received to the fire companies constituting the fire department if such fire department is constituted of more than one fire company.

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(d) Corporations, associations or individuals required to pay a fire insurance premium tax by this section may elect to pay such tax to the superintendent, which shall be distributed by him as prescribed in this section, except that such distribution shall be made with the distribution required by section nine thousand one hundred five of this article after adding any earnings and deducting the expenses as specified in such section.

Furthermore, Insurance Law § 9105 applies to the fire insurance premium for foreign mutual insurers, and reads in pertinent part as follows:

(d)(1) The amount of all monies which were received by the superintendent on or before the first day of April in each year under the provisions of this section or section nine thousand one hundred four of this article shall be distributed by him not later than the first day of July in such year, after adding any earnings resulting from the investment of such monies and deducting the expenses of collection and distribution. Ten percent of such remaining monies received under this section shall be paid to the treasurer of the Firemen's Association of the State of New York for the support and maintenance of the firemen's home at Hudson, New York, and the balance shall be paid as specified in paragraph two hereof, in amounts which will be that proportion of the balance so to be distributed which the total amount of fire insurance business written by foreign mutual fire insurance companies on property situated in such locality bears to the total amount of fire insurance business written by foreign mutual fire insurance companies on property situated in any and all of the protected localities in the state having treasurers or other fiscal officers as designated in paragraph two hereof afforded fire protection by a fire department or fire company and upon which the tax provided in this section has been paid.

(2) Such payment shall be made (A) in the city of New York to the fire commissioner as treasurer of the fire department of the city of New York, and

(B) to the treasurer or other fiscal officer of the fire department affording fire protection in each city, village, fire district, fire alarm district, or fire protection district, or

(C) if any such fire department does not have a treasurer or other fiscal officer then to the fiscal officer of the authorities having jurisdiction and control of such fire department, or

(D) to such other person or entity as shall be designated in any special law to receive such tax, and

(E) if such payment is received by the treasurer or other fiscal officer of a fire department or fiscal officer of authorities having jurisdiction and control of such fire department, such treasurer or fiscal officer shall on or before the fifteenth day of July in each year distribute the amount so received to the fire companies constituting the fire department if such fire department is constituted of more than one fire company.

Insurance Law §§ 9104 and 9105 thus require foreign and alien stock and mutual insurers that are authorized to transact fire insurance business in New York to pay annually a two percent tax on the fire insurance premiums written on New York risks. See OGC Opinion 08-04-10 (Apr. 7, 2008). Ninety percent of the fire tax monies collected must be redistributed to the fire departments providing fire protection to the cities, villages, fire districts, fire alarm districts, or fire protection districts where the fire insurance was written. Id.

In addition, as a general rule,¹ Insurance Law §§ 9104 and 9105 require the fire insurance premium tax funds to be remitted to the treasurer or other fiscal officer of the fire department affording fire protection. If the fire department does not have a treasurer or other fiscal officer, then payment must be remitted to the fiscal officer of the authorities having jurisdiction and control of the fire department, or to any other person or entity as designated in any special law to receive the funds. See, e.g., Watt v. Richardson, 6 A.D.3d 1117, 1118 (4th Dep’t 2004) (stating that section 3 of chapter 497 of the Laws of 1945 designates the Greece-Ridge Exempt Firemen’s Association as the entity entitled to receive the funds collected pursuant to Insurance Law §§ 9104 and 9105); Town of Mamaroneck Prof’l Firefighters Ass’n v. Volunteer & Exempt Firemen’s Benevolent Ass’n, 292 A.D.2d 375, 376 (2d Dep’t 2002) (stating that section 8 of chapter 39 of the Laws of 1955 designates the Volunteer and Exempt Firemen’s Benevolent Association as the entity to receive all taxes collected pursuant to Insurance Law § 9104 and the share of the tax imposed by Insurance Law § 9105 based upon the business written in the territory).

Moreover, section 42-61(B) of Albany’s Municipal Code states that “[i]n the case the revenues received from the tax on foreign fire insurance companies exceed the demands upon the [firemen’s] pension fund, the Board of Trustees shall be authorized to pay over said excess funds to the Comptroller in his capacity as Treasurer of the Fire Department, to be used for use and benefit of the Fire Department, pursuant to the provisions of the Insurance Law of the State of New York.” (Emphasis added.) Likewise, section 42-62 of Albany’s Municipal Code states that:

The Mayor, Comptroller and Chief of Fire of the City of Albany and their successors in office are hereby constituted the Board of Trustees, who shall have the control, management and distribution of the funds provided for in this article. One of the Trustees shall be elected President, and the Comptroller shall be ex officio Treasurer of the Board and custodian of such funds. The Treasurer of the Board of Trustees is hereby declared to be the Treasurer of the Fire Department of the City of Albany for the purpose of receiving and collecting the taxes on foreign insurance companies or agents within the scope and meaning of § 133 (now, § 2201) of the Insurance Law. (Emphasis added.)

Accordingly, under the Insurance Law, the Superintendent is legally obligated to remit the foreign fire insurance premium tax funds to a fire department’s treasurer or other fiscal officer, unless there is another person or entity designated in any special law to receive the funds. The Department is not aware of any “special law” that designates the Welfare Fund as the appropriate person to receive the funds in the situation presented here, nor has the Department located any authority to support the notion that the Stipulation, which is not a legislative enactment, constitutes a “special law” within the meaning of Insurance Law § 9105(d)(2)(D). Cf. Watt, 6 A.D.3d at 1118; Town of Mamaroneck, 292 A.D.2d at 376. Thus, based upon the plain text of sections 42-61(B) and 42-62 of Albany’s Municipal Code, which designate the Albany City Comptroller as the treasurer of the Albany Fire Department, the Superintendent is legally obligated under Insurance Law §§ 9104 and 9105 to remit the foreign fire insurance premium tax funds to the Albany City Comptroller.

The inquirer suggests that since the treasurer of the Welfare Fund acts as treasurer of the Albany Fire Department for reporting purposes pursuant to N.Y. Gen. Mun. Law § 30-a (McKinney 2007), it is appropriate for the Superintendent to remit foreign fire insurance premium tax funds to the Welfare Fund. However, there is no indication that the Welfare Fund is designated in any special law to receive the funds.

In sum, the express language of Insurance Law §§ 9104 and 9105 requires the Superintendent to remit the foreign fire insurance premium tax funds to the City of Albany’s Comptroller, given his role as treasurer of the Albany Fire Department.

For further information, you may contact Senior Attorney Joana Lucashuk at the New York City Office.

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¹ There are separate rules for the cities of New York and Buffalo. See Ins. Law §§ 9104(a), 9105(d)(2)(A).