The Internal Revenue Code (Tax Code) provides for a special tax regime for employees of foreign governments and of international organizations. Under certain circumstances, such individuals are exempt from U.S. federal income taxes. Employees of foreign governments need not be diplomats or enjoy “diplomatic status” in order to qualify for tax exemption. Exemption from U.S. taxes, however, only applies to official compensation of foreign government employees. Therefore, the official salary of an employee of a foreign embassy in Washington, D.C. or of a consulate elsewhere may qualify for tax exemption.
The immigration status of an employee of a foreign government may affect his or her tax exemption status. For example, if a nonresident alien employee of a foreign government has adjusted his or her immigration status from an A-1, A-2 or A-3 diplomatic visa holder and has become a permanent resident by receiving a “green card”, he or she may no longer be eligible for tax exemption. A holder of a “green card”, however, may still enjoy exemption from U.S. taxes under certain circumstances.
In addition to the Tax Code, bilateral agreements, tax treaties or international conventions may also provide exemption from U.S. taxes to employees of foreign governments. As a general rule, members of the diplomatic staff, administrative staff, technical staff and service staff of most foreign missions to the U.S. are exempt from federal and state taxes. An embassy or consulate worker does not need to be a diplomat or enjoy “diplomatic status” in order to be immune from U.S. taxes under such bilateral or international agreements.
If you are employed by a foreign embassy in Washington, D.C. or a consulate elsewhere, and the IRS has sent you notices regarding any tax debt or tax delinquency, contact Kamyar Mehdiyoun, tax and IRS attorney in Rockville, Maryland. We have extensive experience representing employees of foreign governments before the IRS and state taxing agencies.