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United Parcel Service

United Parcel Service v. Comm'r., T. C. Memo 1999-268 (August 9, 1999)

This case involved "excess value charges" (EVCs) that UPS collected from customers who wanted to insure packages for more than $100. Until 1984, UPS had collected the EVCs and treated them as income.

In 1984 it changed its practice by remitting the EVCs , net of claims, to an unrelated insurance company which deducted certain fees and then remitted the remainder of the EVCs as a reinsurance premium to a Bermuda insurance company owned alsmost entirely (97.33%) by UPS's shareholders.

Following the 1984 change in practice, UPS took the position that the amounts remitted to the unrelated insurance company, and then forwarded to the Bermuda near-sister corporation were not income.

Source: Alice G. Abreu* ``Selected Highlights: Federal Corporate Taxation May 1, 1999 to May 1, 2000" Penn State 54th Annual Tax Conference (May 22, 2000).

* Professor of Law, Temple University of Law, Philadelphia PA 19122

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Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 865-3271
(814) 863-8393 fax
huddart@psu.edu
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