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State Departments of Revenue - Diplomatic Tax Exemption Information


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Diplomatic Tax Exemption Program

 

Information for Departments of Revenue

 

Pursuant to international law and under domestic authority of the 1982 Foreign Missions Act (22 USC 4301, et seq.), the Diplomatic Tax Exemption Program administered by the Office of Foreign Missions (OFM) provides sales, gasoline, utility, and personal property tax exemption to eligible foreign missions and their personnel in the United States and its territories on the basis of reciprocity.

 

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Sales Tax Exemption   

The Office of Foreign Missions issues tax exemption cards to eligible foreign missions, mission personnel and their family members consistent with international law, domestic statute, and the underlying principle of reciprocity.  Tax cards provide point-of-sale exemption from sales tax throughout the United States.  This system provides immediate relief from taxes without the administrative burdens, costs, and delays commonly associated with rebate systems.

                                     

 

Levels of Exemption

OFM is directed to restrict the level of, or withdraw entirely, the tax exemptions granted to a mission or its personnel in such cases where the sending state does not provide full tax exemption.  To accomplish this, benefits provided by tax cards may be extended or restricted in several ways:

                                   

1.                  Minimum Purchase Requirement- If a minimum purchase requirement is identified on the card; the sale must meet or exceed this amount in order to be eligible for the tax exemption.  The minimum purchase amount must be specified in a yellow stripe on the face of the card.

2.                   

Excluded Categories- The card may limit the applicability of the tax exemption to or from certain categories of goods or services.  These restrictions may be specified in a yellow stripe on the face of the card.

                                   

3.                  Withdrawal of Privileges- Tax exemption cards may be temporarily or completely withdrawn, eliminating the benefit of sales tax exemption.

 

4.                  Full Exemption- A blue-stripe on a tax exemption card indicates full exemption from taxes on the purchase of all goods or services.

 

These benefits and restrictions may occur singularly or in tandem, as required to achieve reciprocity.

 

 

Who is Eligible

                                      The following categories of accredited foreign government personnel qualify for tax exemption cards:

                                               

                                                          Diplomatic Officers and eligible family members who are not citizens or residents of the United States.

 

                                                          Consular officers and eligible family members who are not citizens or residents of the United States.

 

                                                          Mission administrative and technical staff and eligible family members who are not residents of the United States.

                                               

                                                          Other staff that qualifies based on bilateral treaties between the U.S. and certain countries.

 

 

Use of Sales Tax Exemption Cards

                                                The diplomatic sales tax exemption cards are valid nationwide and are directly binding on all state and local jurisdictions.

                                                           

                                                            Sales tax exemption cards are valid at the point of sale.  To fully derive the benefits of sales tax exemption, the cardholder must exercise a certain degree of planning.  Since hotel bills are the most common source of problems, cardholders must make reservations and notify the hotel of the tax-exempt status in advance.  If a hotel fails to agree to accommodate the traveler on such a tax-exempt basis, another hotel that will recognize the tax exemption should be selected.  Cardholders who travel outside the Washington, DC metropolitan area may find themselves in the position of informing hotels and other vendors of their tax exemption privileges.  The cardholders is entitled to politely but firmly insist on sales tax exemption from hotel and sales taxes in all state, and may further offer the innkeeper or vendor a copy of the Department's Diplomatic Note 89-193 (dated April 27, 1989) as additional explanation of the tax exemption program.

                                               

                                                            Cardholders should allow sufficient time to resolve tax exemption questions at hotels.  A cardholder who checks out of a hotel at the last minute under pressure to make an airline flight or business meeting may not have sufficient time to obtain tax exemption, since the question is often referred to the hotel management, local government authorities, or OFM.

 

                                                            Should the business or hotel management have questions concerning bookkeeping requirements, they may be directed to the appropriate city or state Department of Revenue.  Any questions regarding the eligibility of foreign diplomatic, consular, or other officers for sales and use tax exemption should be directed to OFM at 202 895-3563 or the nearest OFM Regional Office.  The mailing address is:

  

 Office of Foreign Missions, Tax Program

                U.S. Department of State

            3507 International Place, NW,

             Washington, DC 20522-3303.

    Office of Foreign Missions, Tax Program

                U.S. Department of State

            3507 International Place, NW,

             Washington, DC 20522-3303.

 

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Misuse of Tax Cards

The department reminds all missions and personnel that misuse of tax exemption privileges is a serious offense.  Both the personal and mission sales tax exemption cards are nontransferable; only the person whose photograph appears on the card may use it.  In addition, mission cards are valid only for official purchases of the mission—any attempt to use a mission tax exemption card for a personal purchase is considered abuse and the card will be recalled.

 



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