Employee of diplomatic delegation could not exclude wages

An individual who entered the United States as a Finnish citizen to work for Finland’s Permanent Mission to the United Nations could not exclude her wages from gross income, either as an employee of a foreign government or international organization or under a provision of international law. The taxpayer acquired permanent residence status and to secure this status, she waived all rights, privileges, exemptions and immunities afforded to her as a result of her employment by filing Form I-508.

The taxpayer’s argument that she did not understand the waiver or appreciate its effect was rejected. Further, the taxpayer provided no statute or judicial precedent to support the assertion that a validly executed waiver could be ignored. The taxpayer’s wages were not alternatively exempt from tax under the U.S.-Finland Tax Treaty. As a permanent resident of the United States, the taxpayer did not qualify for the exemption from the savings clause for persons who provide government service.

The taxpayer’s wages were also not exempt from tax under the Vienna Convention on Diplomatic Relations because she lacked diplomatic status or rank. Finally, her wages were not exempt under the International Organizations Immunities Act. The Act provided immunity from suit and legal process for acts performed by individuals in their official capacity. The case involved income earned by the taxpayer as a permanent resident of the United States and the earning of the income was not part of her official function. A genuine issue of material fact existed as to whether the accuracy-related penalty should be applied so summary judgment was denied on that issue. (C.A. Abrahamsen, 142 TC –, No. 22, Dec. 59,930.)

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