Request By:
Mr. Earl R. Searcy
131 Breckinridge Lane
Louisville, Kentucky 40207
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
In your recent letter to the Attorney General it is stated that one of the major political parties of Kentucky was named the residuary beneficiary of the estate of a decedent who died testate, a resident of Bourbon County, Kentucky.
An inheritance tax return has been filed by the Fiduciary of the estate, and tax was paid on the residuary interest passing to the political party. The tax return shows an exemption of $500.
The question is whether political parties are exempt from the inheritance tax as provided in KRS 140.060.
KRS 140.060 provides for exemptions to educational, religious or other institutions, societies, or associations, whose sole object and purpose are to carry on charitable, educational, or religious work, all transfers for or upon trust for any charitabre, educational, or religious purpose, and all transfers to cities, and towns or public institutions in this state for public purposes shall be exempt from the tax imposed by this chapter.
Exemptions from state tax are the exception. They are not favored and will not be presumed. Generally speaking, the statute creating the exemption is to be construed strictly against a claimant of of the exemption, and liberally in favor of the state. It will not apply unless the subject matter is plainly and clearly within its terms.
Exemptions from inheritance tax must be in such specific and certain terms as to leave no room for doubt. Noble's Estate, 80 F.2d 243, 183 Okl. 148 (1938).
"Public institutions" are those which are created and exist by law or public authority, while "private institutions" are those which are created or established by private individuals for their own private purposes. See
Mannington v. Hccking Valley Railroad Company, 183 F. 133, 153 (1910) which quotes with approval Toledo Bank v. Bond, 1 Ohio State, McCook, 623, 643 (1853).
In
Smith v. Howard, 275 Ky. 165, 120 S.W.2d 1040 (1938) it is pointed out that political parties are voluntary associations for political purposes. They are governed by their own usages, and establish their own rules. Members of such parties may form them, reorganize them, and dissolve them at their will. The voters constituting such party are, the only body who can finally determine between contending factions or contending organizations.
Since political parties are voluntary associations for political purposes being governed by their own usages and their own rules, and are not specifically mentioned in KRS 140.060 it is our opinion that they are not public institutions as that phrase is used in KRS 140.060 and therefore, are only entitled to a Class "C" exemption as provided for in KRS 140.070.