[Enclosure]
The Acting Secretary of the Treasury
(Ballantine) to the
Secretary of State
Sir: I have Assistant Secretary Carr’s
letter dated April 10, 1933 (FA 702.0641/73),33 transmitting a copy of
despatch No. 747 of March 21, 1933, together with enclosure,
received by your office from the American Embassy at London,
England, subject: “Assessment of British Tax on Private Incomes
of American consuls.”
It is stated that the substance of the instructions issued to the
Embassy under date of July 28, 1932,33 directing a conveyance
of the view of the American Government with respect to the
taxation of the private incomes of American consular officers in
Great Britain, was transmitted to the Foreign Office; that in
reply thereto the Foreign Office on March 11, 1933, expressed
its inability to grant foreign consular officers wider exemption
than the Finance Act of 1930 accords to them where income tax is
concerned; and that no claim could be made for the British
consuls in the United States for privileges which could not be
conceded to the American consular officers.
It is further stated that the contention that American consular
officers should be accorded exemption on the basis of
reciprocity has apparently had no weight with the British
Government; that it is not believed that all possible arguments
in favor of granting exemption have been exhausted; and that
perhaps, after protracted discussions, the British authorities
might be disposed to take a more generous view of the
subject.
In reply you are advised that it has been the consistent policy
of this Department to treat foreign consular officers in the
United States, who are nationals of the states appointing them,
as nonresident aliens and, therefore, to tax them only with
respect to their income from sources within the United States
other than their official compensation received for services
rendered in the United States, which compensation is exempt from
the Federal income tax on the basis of reciprocity. It would
appear, therefore, that the responsible officer in the Foreign
Office is unaware of the status accorded British consuls in this
country; and that the consistent policy of the Department to
treat foreign consular officers in the United States, who are
nationals of the states appointing them, as nonresident aliens,
eliminates from taxation any income which such consular officers
may receive from sources outside of the United States.
It is possible that, if the policy of this Department is made
clear to the British Foreign Office, the Government of Great
Britain will adopt
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a
more liberal treatment of American consular officers with
respect to the taxing of income derived by them from sources
outside Great Britain.
Respectfully,
