158 Misc. 789 | N.Y. Sur. Ct. | 1936
This is an appeal by the State Tax Commission from the pro forma order of August 19, 1935, entered on motion fixing the estate tax.- The ground of appeal is that there was erroneously deducted from the gross estate the sum of $11,150, the amount received from the Teachers Retirement System of the City of New York. This sum was paid directly to Florence R. Fitzsimmons, a sister of the decedent, in accordance with the decedent’s designation
The question now presented is whether moneys payable to a designated beneficiary from the Teachers Retirement System of the City of New York may be classified as insurance. Insurance payable to a designated beneficiary to the extent of $40,000 is exempt from taxation under section 249-r, subdivision 9, of the Estate Tax Law and the Federal statute to which it refers (Federal Revenue Act of 1926, § 302, subd. g; U. S. Code, tit. 26, § 1094, subd. g). The amount involved in the pending estate is less than the maximum statutory exemption.
In the footnote to subdivision 9 of section 249-r the State Tax Commission and the Commission to Investigate the Defects in the Law of Estates which jointly recommended the new legislation stated that the purpose of this section “ is intended to carry out the policy of New York state not to tax insurance payable to specified beneficiaries. It only imposes a tax on such insurance in cases where the same is taxed under the federal estate tax act where, of course, the tax would be payable to the federal government if New York did not take it.” (Legis. Doc. 1930, No. 69, p. 206.)
A review of the provisions of the Teachers Retirement Law (Greater New York Charter, § 1092, as amd.) and its operation disc ose a close similarity of the benefits to ordinary insurance. The use of mortality tables is authorized and an actuary is employed to compute the contributions to be made by a member of the system
Section 39 of the Insurance Law requires the Superintendent of Insurance to examine the affairs of insurance companies generally or an “ association, society, pension fund, retirement system, or order, required to make reports to, or subject to examination by, the superintendent of insurance, at least once in five years.” Section 45 requires the furnishing by the Superintendent of Insurance of forms for reports from “ every insurance corporation or other insurer, pension fund or retirement system required by any law to report to him.” Pursuant to these sections a yearly report is submitted by the Teachers Retirement System to the Superintendent of Insurance and every five years a complete examination of the operation, management and investments of the system is made by examiners representing the State Insurance Department. That this particular system was enacted by provisions of the Greater New York Charter and not under section 229 of the Insurance Law, which authorizes pension and retirement systems, in no way detracts from its character as insurance. The moneys received by Florence R. Fitzsimmons from the Teachers Retirement System of the City of New York are, therefore, exempt from taxation and the appeal of the State Tax Commission is denied.
Submit order on notice in accordance with this decision.