OGC Opinion No. 07-05-22

The Office of General Counsel issued the following opinion on May 31, 2007, representing the position of the New York State Insurance Department.

Re: Foreign Fire Tax Distribution

Question Presented:

What does the Department mean when it states, on its website, that foreign fire tax monies should be “distributed on a pro rata basis?”


Pro rata distribution of the foreign fire tax constitutes a distribution that is made on a proportionate or percentage basis.


The inquirer reports that the Town of ABC is responsible for the distribution of the 2% foreign fire tax to the volunteer fire departments of the Village of DEF and the City of ABC Fire Department. The inquirer states that, historically, the City of ABC Fire Department has received the greater portion of the fire tax. However, it is no longer expanding its volunteer firefighter force, and desires to have a paid fire department with no volunteers. The Village of DEF Fire Department, by contrast, continues to be staffed by volunteers, with the exception of a paid fire chief. The inquirer asks for an explanation of the term “distributed on a pro rata basis,” a term that the Department uses on its website to describe how the foreign fire tax should be distributed.


The distribution and use of foreign fire insurance tax moneys are governed by N.Y. Insurance Law §§ 9104 and 9105 (McKinney 2000). These provisions impose upon foreign and alien insurers a 2% tax on premiums collected for insurance against loss or damage by fire, and require that the money generated by the tax be distributed in accordance with those provisions.

The inquirer’s question results from the “Frequently Asked Questions: Foreign Fire Tax" section on the Department's website. One of the questions posed there reads as follows:

Question: How should fire tax proceeds be distributed:

Answer: The general rule for distribution of fire tax funds for a multi-company fire department is: the foreign fire tax moneys distributed should be allocated between and among fire companies proportional to the number of active members in each fire company. If a department is comprised of paid and volunteer members, each group would be entitled to fire tax proceeds and moneys should be distributed on a pro rata basis.

The inquirer asks what the Department means when it states that foreign fire tax monies should be “distributed on a pro rata basis.”

Article 91 of the Insurance Law does not specifically state that fire tax proceeds should be “distributed on a pro rata basis.” However, courts that have addressed the issue of distribution of the proceeds among paid and volunteer firefighters have held that both groups of firefighters are entitled to a pro rata share. See e.g. Zuckerman v. City of New York, 49 N.Y. 2d 557 (1980); Hahn v. Garrett, 27 A.D.3d 1103 (4th Dept. 2006); Pillig v. Strange, 239 A.D.2d 568 (2nd Dept. 1997); City of Poughkeepsie v. Poughkeepsie Associated Fire Dept., 125 A.D.2d 522 (2nd Dept. 1986).

As used on the Department’s website, the term “distributed on a pro rata basis” is not unique to fire tax distribution. Rather, the term is accorded its regular meaning - i.e., distribution on a percentage or proportionate basis. See, e.g., Renn v. Kimbark, 51 N.Y.2d 189, 195-196 (1980) (finding that “all firemen in the locality were entitled to share ratably in the funds collected….[T]he City of Kingston should share proportionately in the tax moneys generated by sections 553 and 554 [now, sections 9104 and 9105] of the Insurance Law).”

For further information you may contact Associate Attorney D. Monica Marsh at the New York City Office.