Opinion 2004 - 5


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FOREIGN FIRE INSURANCE TAXES -- Particular Uses (annuities for volunteer firefighters)

INSURANCE LAW 9104, 9105: Foreign fire insurance tax monies may not be expended to purchase annuities for the benefit of members of a volunteer fire company.

You ask whether foreign fire insurance tax monies may be expended to purchase annuities for the benefit of members of a volunteer fire company.

The distribution and use of foreign fire insurance tax monies is governed by sections 9104 and 9105 of the Insurance Law, unless a special law enacted by the State Legislature provides otherwise.1 In general, these sections of the Insurance Law provide that foreign fire insurance tax monies must be paid to the treasurer or other fiscal officer of the fire department, or if the fire department does not have a treasurer or other fiscal officer, to the fiscal officer of the authority having jurisdiction and control of the fire department which, in the case of a village fire department, will generally be the village treasurer (Insurance Law 9104[a][1]-[3]; 9105[d][2][B]-[D]; Not-For-Profit Corporations Law 1402[e]; Village Law, article 10; Village Law 4-408). In a multi-company fire department, the initial recipient of the foreign fire insurance tax monies is required, in turn, to distribute the amount received to the fire companies constituting the fire department (Insurance Law 9104[a][4]; 9105[d][2][E]; see also 1989 Opns St Comp No. 89-53, p 120).

Sections 9104 and 9105 provide that the foreign fire insurance tax monies of a fire department or fire company must be used for the benefit of the department or company as determined by the members thereof (Insurance Law 9104[f]; 9105[d][3]).2 This Office has expressed the opinion that, except as otherwise provided by special act, foreign fire insurance tax monies may be expended for any purpose, other than an illegal purpose or a purpose contrary to public policy, that the members of the fire department or company, as the case may be, determine to be for the use and benefit of the department or company (see, e.g., 2000 Opns St Comp No. 2000-6, p16; 1989 Opns St Comp No. 89-16, p 34; 1987 Opns St Comp No. 87-88, p 130; 1982 Opns St Comp No. 82-10, p 12; 1981 Opns St Comp No. 81-49, p 51; 1981 Opns St Comp No. 81-146, p 151; 1979 Opns St Comp No. 79-627, p 120). We have also concluded that the treasurer having custody of foreign fire insurance tax monies should not permit such monies to be expended for a purpose which the treasurer, in good faith, believes to be illegal or improper, even if the expenditure has been approved by a majority of the membership, because the treasurer could be held liable for the expenditure of such monies for an illegal improper purpose (see, e.g., 1997 Opns St Comp No. 97-20, p 38).

Inasmuch as it has been held that tax monies under sections 9104 and 9105 may not be made available for the personal use of individual firefighters (Wilcox v Schenck, 52 AD2d 349, 383 NYS2d 918; but see MacIsaac v City of Poughkeepsie, 158 AD2d 140, 558 NYS2d 667, lv denied 76 NY2d 714, 564 NYS2d 717, appeal dismissed 80 NY2d 891, 587 NYS2d 901), we have concluded that it would be improper to use these monies to make direct cash payments to firefighters (Opn No. 2000-6, supra; Opn No. 87-88, supra; Opn No. 82-10, supra ). Since the purpose of the proposed annuity would be to provide direct cash payments to individual volunteer firefighters (see Insurance Law 1113[a][2]), using foreign fire insurance tax monies to purchase the annuity would be tantamount to making a direct cash payment. Accordingly, it is our opinion that foreign fire insurance tax monies may not be used to purchase such annuities (1977 Opns St Comp No. 77-379, unreported).

April 29, 2004

Wayne D. Esannason, Esq., Village Attorney
Village of Scarsdale

1 Typically, such special laws incorporate an exempt volunteer firefighters' benevolent association and authorize that association to receive and expend foreign fire insurance tax monies. For purposes of this opinion, we assume no special act is applicable here.

2 This requirement, however, does not preclude a company from paying all or a portion of the tax to the fire department of which it is part.