Designation and Determination Under the Foreign Missions Act
Pursuant to the authority vested in the Secretary of State by the laws of the United States, including the Foreign Missions Act, 22 U.S.C. 4301 et seq., and delegated by the Secretary to me as one of the President’s principal officers for foreign affairs by Delegation of Authority No. 245-1 of February 13, 2009, and at the direction of the Secretary of State, and after due consideration of the benefits, privileges, and immunities provided to missions of the United States abroad, as well as matters related to the protection of the interests of the United States, and at the request of foreign missions, I hereby designate exemption from real property taxes on property owned by foreign governments and used to house staff of permanent missions to the United Nations or the Organization of American States or of consular posts as a benefit for purposes of the Foreign Missions Act. I further determine that such exemption shall be provided to such foreign missions on such terms and conditions as may be approved by the Office of Foreign Missions and that any state or local laws to the contrary are hereby preempted. Prior inconsistent guidance is hereby rescinded. This action is in accord with the tax treatment of foreign government-owned property in the United States used as residences for staff of bilateral diplomatic missions, see Department of State, Notice: Property Owned by Diplomatic Missions and Used to House the Staff of Those Missions is Exempt from General Property Taxes, 51 FR 27303 (July 30, 1986), and conforms to the general practice abroad of exempting government-owned property used for bilateral or multilateral diplomatic and consular mission housing.
This action is necessary to facilitate relations between the UnitedStates and foreign states, to protect the interests of the UnitedStates, to allow for a more cost effective approach to obtainingbenefits for U.S. missions abroad, and to assist in resolving a disputeaffecting U.S. interests and involving foreign governments which assertthat international law requires the exemption from taxation of suchdiplomatic and consular properties. The dispute has become a majorirritant in the United States’ bilateral relations and threatens tocost the United States hundreds of millions of dollars in reciprocaltaxation. As the largest foreign-government property owner overseas,the United States benefits financially much more than other countriesfrom an international practice exempting staff residences from realproperty taxes, and it stands to lose the most if the practice isundermined. Responsive measures taken against the United States becauseof the dispute also have impeded significantly the State Department’sability to implement urgent and congressionally mandated securityimprovements to our Nation’s diplomatic and consular facilities abroad,imposing unacceptable risks to the personnel working in thosefacilities. This action will allow the United States to press forwardwith improvements that will protect those who represent the Nation’sinterests abroad.
The exemption from real property taxes provided by this designationand determination shall apply to taxes that have been or will beassessed against any foreign government with respect to propertysubject to this determination, and shall operate to nullify anyexisting tax liens with respect to such property, but shall not operateto require refund of any taxes previously paid by any foreigngovernment regarding such property. These actions are not exclusive andare independent of alternative legal grounds that support the taxexemption afforded herein.
June 23, 2009.
Jacob J. Lew,
Deputy Secretary of State for Management and Resources, Department of State.