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IRS.gov Website
Publication 519
taxmap/pubs/p519-045.htm#en_us_publink1000222746

Chapter 10
Employees of Foreign Governments and International Organizations(p49)


taxmap/pubs/p519-045.htm#en_us_publink100041005Introduction

Employees of foreign governments (including foreign political subdivisions) may be able to exempt their foreign government wages from U.S. income tax if they satisfy the requirements of any one of the following.
  1. The applicable article in the multilateral Vienna Convention on Diplomatic Relations, the multilateral Vienna Convention on Consular Relations, or a bilateral consular convention, if one exists, between the United States and the foreign country,
  2. The applicable article in a bilateral tax treaty, if one exists, between the United States and the foreign country, or
  3. The requirements for obtaining an exemption from U.S. income tax for foreign government wages provided under U.S. tax law.
Employees of international organizations may be able to exempt their wages under a provision, if one exists, in the international agreement creating the international organization, or by satisfying the requirements for obtaining an exemption for such wages under U.S. tax law.
An international organization is an organization designated by the President of the United States through Executive Order to qualify for the privileges, exemptions, and immunities provided in the International Organizations Immunities Act.
The exemption discussed in this chapter applies only to pay received for official services performed for a foreign government or international organization. Other U.S. source income received by persons who qualify for this exemption may be fully taxable or given favorable treatment under an applicable tax treaty provision. The proper treatment of this kind of income (interest, dividends, etc.) is discussed earlier in this publication.
taxmap/pubs/p519-045.htm#en_us_publink1000222747

Employees of Foreign Governments(p49)

rule
taxmap/pubs/p519-045.htm#en_us_publink100078088

Exemption under Vienna Conventions or a bilateral consular convention.(p49)

rule
You should first look at the tax exemption provisions under the Vienna Conventions or a bilateral consular convention, if one exists, to see if your wages qualify for exemption from U.S. income tax under those provisions. Generally, you are not entitled to the income tax exemption available under either of the Vienna Conventions or a bilateral consular convention if you are a U.S. citizen or resident alien. For further information regarding the Vienna Conventions and bilateral consular conventions, email the Department of State Office of Foreign Missions at OFMAssistants@state.gov.
taxmap/pubs/p519-045.htm#en_us_publink100078089

Exemption under tax treaty.(p49)

rule
If you do not qualify for the tax exemption provided under the Vienna Conventions or a bilateral consular convention but are from a country that has a tax treaty with the United States, you should look at the tax treaty to see if there is a provision that exempts your wages from U.S. income tax. If you are a U.S. citizen or resident alien working in the United States for a foreign government, your wages usually are not exempt. For more information, see Wages and Pensions Paid by a Foreign Government in Pub. 901.
taxmap/pubs/p519-045.htm#en_us_publink100078090

Exemption under U.S. tax law.(p49)

rule
Employees of foreign governments who do not qualify under the tax exemption provisions of either of the Vienna Conventions, a bilateral consular convention, or a tax treaty may be able to exempt their foreign government wages from U.S. income tax if they satisfy the following requirements for obtaining an exemption for such wages under U.S. tax law.
EIC
The exemption under U.S. tax law applies only to current foreign government employees and not to former employees. Pensions received by former employees of foreign governments living in the United States do not qualify for the exemption discussed here.
EIC
This exemption does not apply to independent contractors. Common law rules apply to determine whether you are an employee or an independent contractor. See Pub. 1779, Independent Contractor or Employee, and Pub. 15-A, Employer’s Supplemental Tax Guide.
EIC
Your wages are not eligible for exemption under U.S. tax law if you are employed by a "controlled commercial entity" or your services are primarily in connection with a commercial activity of the foreign government (within or outside the United States). A controlled commercial entity is an entity that is 50% or more owned by a foreign government that is engaged in commercial activity within or outside the United States.
taxmap/pubs/p519-045.htm#en_us_publink100078094

Requirements.(p49)

rule
If you are not a U.S. citizen (or if you are a U.S. citizen but also a citizen of the Republic of the Philippines) and you work for a foreign government in the United States, your foreign government wages are exempt from U.S. income tax if (1) you perform services of a similar character to those performed by U.S. government employees in foreign countries and (2) the country of your foreign government employer grants an equivalent tax exemption to U.S. government employees performing similar services in its country. However, see Aliens who keep immigrant (lawful permanent resident) status, later, for a special rule that may affect your qualifying for this exemption.
To claim the tax exemption you must be able to demonstrate that you satisfy both U.S. tax law requirements.
taxmap/pubs/p519-045.htm#en_us_publink100078095

Certification. (p49)

rule
A Department of State certification, if one has been issued, is the simplest method to establish that you meet the similar services and equivalent tax exemption requirements but is not required to qualify for the U.S. tax law exemption. For information about whether a certification has been issued and whether such certification is currently valid and applicable to you, email the Department of State Office of Foreign Missions at OFMAssistants@state.gov.
Where no valid certification exists, you must establish with other written evidence that you perform services of a similar character to those performed by U.S. government employees in foreign countries and that the country of your foreign government employer grants an equivalent exemption to U.S. government employees performing similar services in its country.