Where Does the Diplomatic/Consular Community Go for Information
on State and Federal Income Tax?
As the members of the foreign diplomatic and consular community are aware, the Vienna Conventions exempt them from United States income taxes on the salaries or wages they are paid for their official duties by their home governments.
However, the Office of Foreign Missions (OFM) would like to remind the members of the community that this exemption does not extend to income or earnings earned in the United States from sources other than the home government. Therefore, any diplomat/consular officer/A&T staff member or family member who earns other income in the United States may incur U.S. federal and state/district tax liability. Income from interest-bearing accounts, profits from the sale of property, gambling winnings, investment income, and wages from part-time or spousal/dependent employment are examples of earnings that may result in a U.S. tax liability for diplomatic agents, consular officers, and their family members.
If a bilateral tax agreement exists between the United States and a foreign country, it may provide for exemption or reduced rates of U.S. federal income tax for certain income earned by foreign nationals working in the United States. Individuals interested in determining if such an agreement exists for their home country, and whether it reduces their liability for U. S. income tax, should contact the administrative or economic sections of that country's mission, the Internal Revenue Service (IRS), or a tax professional. For general information, see IRS Publication 901 (U.S. Tax Treaties, revised April 2001) which is available on-line at the IRS website -
http://www.irs.gov/pub/irs-pdf/p901.pdf.
For the complete texts of the income tax treaties which the United States has entered into with other countries, visit the IRS website - http://www.irs.gov/businesses/corporations/article/0,,id=96739,00.html.
If an individual is found to have a U.S. federal income tax liability, then generally this individual may also have an income tax liability to the state/district where he or she resides. OFM is not qualified or authorized to give advice regarding income tax related issues. If you have questions regarding federal income tax liabilities you should contact a tax professional or the IRS by phone at 1-800-829-1040, in person, or through the IRS website at www.irs.gov. For questions concerning state/district income tax liability, contact the appropriate state/district department or office of taxation or revenue.
Locally Hired Staff of Foreign Missions & International Organizations
Non-accredited/locally hired U.S. citizen and resident alien (green cardholder) employees of foreign missions and international organizations generally do not enjoy exemption from income taxation on the salaries or wages they are paid as employees of a foreign government or international organization, even though such salaries or wages are not subject to wage withholding of income taxes. For more information please visit the IRS website - http://www.irs.gov/businesses/small/international/article/0,,id=105252,00.html.
In general, such employees are regarded as "self employed." Therefore, the payment of self-employment tax is required in such situations. For more information please visit the IRS website - http://www.irs.gov/businesses/small/international/article/0,,id=105255,00.html.
See also Chapter 10 of IRS Publication 519 (U.S. Tax Guide for Aliens) which is available on-line at the IRS website - http://www.irs.gov/pub/irs-pdf/p519.pdf.
This notice is available on the OFM website - www.state.gov/ofm.
March 22, 2004
