​

Revenue Ruling 73-198

1973-1 C.B. 425 Caution: Modified by Rev. Rul. 98-24 Caution: Amplified by Rev. Rul. 80-89 Caution: Modified by Rev. Rul. 78-155

​

Headnote

The exemptions from certain Federal excise taxes extended to foreign diplomatic, consular, and other officers, and agencies or commissions of foreign governments are discussed; Revenue Ruling 296 superseded.

​

Purpose

The purpose of this Revenue Ruling is to update and restate the positions of the Internal Revenue Service as set forth in Revenue Ruling 296, 1953-2 C.B. 325. Revenue Ruling 296 concerns the exemptions from certain Federal excise taxes extended to foreign diplomatic, consular, and other officers, and agencies or commissions of foreign governments.

​

Classifications of Federal Excise Taxes

For purposes of this Revenue Ruling, the Federal excise taxes are divisible into three classifications. The first classification includes those Federal excise taxes the legal incidence of which would otherwise fall upon the diplomatic or consular representatives in the absence of exemption. This classification includes the taxes with respect to communications under subchapter B of Chapter 33 of the Code; the tax on the transportation of persons by air under subchapter C of Chapter 33 with respect to amounts paid for transportation prior to July 1, 1970; the taxes relating to certain foreign insurance policies imposed under subchapter D of Chapter 34; and the taxes on the use of certain highway motor vehicles imposed under subchapter D of Chapter 36. The second classification includes those Federal excise taxes the legal incidence of which would normally fall upon a party other than the diplomatic or consular representative. Specifically, this classification includes the manufacturers excise taxes imposed under Chapter 32 of the Code and the retailers excise taxes on the sale or use of special fuels (other than the tax on aviation fuel imposed by section 4041(c)) imposed under subchapter E of Chapter 31. Public Law 91-258, 1970-1 C.B. 361, effective July 1, 1970, introduced a third classification of Federal excise taxes relative to their application to foreign diplomatic and consular personnel. These are the airway user taxes imposed (1) under subchapter E of Chapter 31 of the Code on sales of aviation fuels, (2) under subchapter C of Chapter 33 on transportation of persons and property by air, and (3) under subchapter E of Chapter 36 on the use of civil aircraft. The tax on aviation fuel is imposed by section 4041(c) of the Code; the taxes on transportation of persons and property are imposed by sections 4261 and 4271 respectively; and the tax on use of civil aircraft is imposed by section 4491. The imposts in this third classification are in the nature of user fees or charges for specific services rendered, and are distinguishable from the taxes in the other classifications on this basis. Since they are charges for services rendered, diplomats and consular officials of foreign governments are liable for payment of such taxes whether engaged in official or personal travel or business. See Rev. Rul. 72-10, 1972-1 C.B. 343.

​

Persons Entitled to Exemption

The following persons, if they are neither citizens nor permanent residents of the United States in an immigrant status, and are nationals of the country of the diplomatic mission where employed, are not required to pay the Federal excise taxes described in the first classification above; that is, those excise taxes the legal incidence of which would otherwise fall directly upon them: Ambassadors, ministers, other duly accredited diplomatic representatives of foreign governments, the members of their families living with them, members of their households (but not servants), attaches, secretaries, clerks, and also officers of missions to the United Nations and the Organization of American States serving in a representative capacity and family members living with such officers. With respect to the second classification above, if any such person purchases from the manufacturer thereof an article otherwise subject to a Federal excise tax on sales by manufacturers, or purchases from a retailer an article otherwise subject to a Federal excise tax on sales by retailers (other than aviation fuel) the transaction will not be taxed. Consular officers of foreign governments, and other officers (other than the diplomatic representatives and personnel mentioned previously), as well as agencies and commissions of foreign governments, are not required to pay Federal excise taxes, the legal incidence of which would otherwise fall upon them (the first classification above), in respect of transactions arising in the performance of their official functions for which payment is made by the foreign government. The privileges described in this paragraph are applicable irrespective of the citizenship, or the professional or business activities of the consular or other officers. It is to be noted, however, that the privileges described in this paragraph do not extend to the manufacturers and retailers excise taxes (the second classification above).

​

Treaty Provisions

The foregoing privileges are not dependent upon treaty provisions and apply irrespective of whether there is a treaty in force between the United States and the foreign government relative to its consular officers or other officers, agencies, or commissions. There are in force a number of treaties between the United States and foreign governments that confer tax exemption upon consular officers and employees. In general, consular officers and employees are exempted by these treaties from Federal excise taxes, the legal incidence of which would otherwise fall upon them (the first classification above) without regard to whether the transaction is official or personal, but subject to the conditions that the consular officers and employees are not citizens of the United States and are not engaged in professional business, trade, manufacture, or commerce within the United States. It is to be noted, therefore, that under the privileges specified in the preceding paragraphs and without regard to the existence of any treaties, consular officers and employees are not required to pay the excise taxes included in the first classification above in respect of official transactions regardless of their citizenship or their professional or business activities. In addition, by virtue of the treaty exemptions described in the preceding paragraph, certain consular officers and employees who comply with the conditions as to citizenship and as to professional or business activities are also exempt in respect of personal transactions from the excise taxes included in the first classification above.

​

Vienna Convention on Consular Relations

The Vienna Convention on Consular Relations, signed at Vienna on April 24, 1963, entered into force in the United States on December 24, 1969, and has now been ratified by more than 40 other nations. As is typical of previous treaties, the Vienna Convention restricts the exemption to those Federal excise taxes the legal incidence of which would otherwise fall upon the consular representative (the first classification above). Also, the exemption is extended without regard to whether a transaction is official or personal, provided the person involved is not a United States national or an alien permanently resident in the United States, or a person engaged in a gainful occupation in the United States. Persons entitled to exemption under the Vienna Convention include “consular officers and consular employees and members of their families forming part of their households.” “Consular officers” is defined as “any person, including the head of a consular post, entrusted in that capacity with the exercise of consular functions.” “Consular employees” means “any person employed in the administrative or technical service of the consular post.” The tax provisions of the Consular Convention between France and the United States, which are similar in scope to those of the Vienna Convention, were construed in Revenue Ruling 68-352, 1968-2 C.B. 487.

​

Additional References

See Rev. Rul. 63-150, 1963-2 C.B. 477, for additional information and procedures relating to sales of taxable articles by manufacturers to persons having diplomatic status who purchase such articles for use of a foreign embassy. Also, see Rev. Rul. 65-100, 1965-1 C.B. 452, which sets forth information necessary to substantiate exemption from the retailers excise taxes with respect to sales of taxable articles to persons having diplomatic status. Where there is doubt as to the liability for Federal excise taxes of a person entitled to diplomatic or consular status, advice should be requested from the Internal Revenue Service.

​

Supersession

Revenue Ruling 296 is hereby superseded, since the positions set forth therein are updated and restated in this Revenue Ruling.