Can a foreign diplomatic mission use its U.S. State Department tax exemption card to book a hotel room tax-free in New York if payment is made by the mission's check, the mission's credit card, or a credit card in the name of the mission's home government?

Plain-English summary

The U.S. Department of State's Office of Foreign Missions issues Mission Tax Exemption Cards to foreign diplomatic missions for official use only -- each mission can designate up to two employees to hold and use a card, strictly for official mission purchases, never personal ones. Depending on the card's colored stripe, it can exempt the holder from all state and local sales taxes including hotel room taxes (blue stripe), from all sales taxes except hotel taxes (green stripe), or from taxes only above a specified purchase threshold (red stripe). The Office asked the Department to confirm a practical payment question: when a mission books a hotel room for official use (conference rooms, catering, visiting national delegations) and pays not with cash but by the mission's own check, the mission's own credit card, or a credit card issued in the name of the mission's home government, does that still count as the mission being the "direct payer of record" needed to claim the hotel tax exemption?

The Department said yes to all three payment methods. New York's diplomatic exemption regulations require the mission to be both the direct occupant of record and the direct payer of record -- meaning payment must ultimately come from the mission's own funds, whether transmitted by check, the mission's own credit card, or a national-government credit card used for the visiting delegation. Because the underlying exemption is federally determined by the State Department in the first place, a mission's use of its own credit card (or its government's card, for delegation stays) to make an approved purchase counts as a direct payment by the mission, as long as the State Department itself permits that mission to use credit cards for exempt purchases. The mission still has to give the hotel operator a properly completed exemption certificate -- Form DTF-950 for cash-equivalent payments or red-stripe-card purchases, or Form DTF-951 (a blanket certificate) for charges to an in-house or third-party charge account -- and the hotel must record specific invoice details (purchaser name and address, exemption number, date) with the cardholder's signature on each invoice, keeping all documentation for at least three years.

What this means for you

Hotels booking rooms for foreign diplomatic missions or delegations

A mission's payment by its own check, its own credit card, or a credit card in its home government's name (for visiting delegations) all satisfy the "direct payer of record" requirement for the hotel tax exemption -- you don't need to insist on cash or a check specifically. But you still need the right exemption certificate (Form DTF-950 or DTF-951, matching the payment method) and must record the required invoice details and keep records for at least three years.

Foreign missions and their designated purchasing agents

Only the person named and pictured on the Tax Exemption Card can use it, only for official mission purposes, and the card's colored stripe controls exactly which taxes (and what dollar threshold) it covers -- check the reverse side before assuming hotel tax is included.

Accountants and compliance staff for hospitality businesses

Match the certificate type to the payment method: DTF-950 for cash-equivalent or red-stripe-card purchases, DTF-951 for charge-account billing (never for cash purchases or red-stripe cardholders), and keep every signed invoice and its associated certificate on file for the full retention period.

Common questions

Q: Does a diplomatic mission have to pay cash to get the hotel tax exemption?
A: No -- payment by the mission's own check, the mission's own credit card, or (for visiting national delegations) a credit card in the name of the mission's home government all qualify, as long as the State Department permits that mission to use credit cards for exempt purchases.

Q: What paperwork does the hotel need to keep?
A: A properly completed Form DTF-950 (cash-equivalent or red-stripe-card purchases) or DTF-951 (charge-account billing), with the purchaser's name, address, exemption number, and sale date recorded on the invoice and signed by the cardholder, retained for at least three years.

Q: Can any mission employee use the exemption card?
A: No -- only the specific individual whose photograph appears on the card, and only for official mission purchases; the card can't be used for personal purchases or by other mission staff.

Q: Does this ruling apply to every diplomatic mission's hotel stays?
A: The general framework (card stripes, certificate forms, recordkeeping) applies broadly under 20 NYCRR § 529.5, but the specific credit-card payment question addressed here was answered for this petitioner's facts; hotels should still verify each mission's actual card and its stripe-based limitations.

Citations and references

• 20 NYCRR § 529.1 (exempt persons/organizations; proof of exempt status)
• 20 NYCRR § 529.5 (diplomatic missions and personnel exemption, card types, certificate forms)
• Tax Exemptions For Diplomats, Diplomatic Missions and Related Diplomatic Personnel, Notice N-86-25

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a97_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(31)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S970324A

On March 24, 1997, the Department of Taxation and Finance received a
Petition for Advisory Opinion from the Office of Foreign Missions, 866 United
Nations Plaza, Ste. 265, New York, NY 10017.
The issue raised by Petitioner, the Office of Foreign Missions, is for
purposes of sales tax whether a United States Department of State (hereinafter
the "USDOS") Mission Tax Exemption Card may be used to establish a foreign
mission's tax exempt status on hotel occupancy where payment is made by check of
the mission, credit card of the mission or a credit card in the name of the
mission's national government.
Petitioner submits the following facts as the basis for this Advisory
Opinion.
A USDOS Tax Exemption Card is issued only for the official purposes and the
sole benefit of the mission identified on the face of the card. Each mission may
designate two employees to make official purchases for the mission. Only the
designated agent specified on the card is authorized to use the card. The Tax
Exemption Card may not be used by other mission employees. Additionally, the
agent may not use such a card for personal purchases. All purchases must be made
in the name of the mission and paid for by mission check or credit card.
Mission exemption from hotel taxes is limited to official mission use.
These include conference room rental, catering services and visiting delegations
of national officials of the mission's home country. The mission must make the
reservations and pay for the accommodations by mission check or credit card using
official funds of the mission. In the case of visiting delegations of national
officials, payment may be made by credit cards held by the delegations in the
name of their home country's government, using funds of the home country's
government.
Petitioner furnished samples of the Tax Exemption Card issued by the
Department of State to certain foreign government mission personnel and offices.
The cards are valid nationwide. The cards are used at the point of sale for
exemption from State and local sales, restaurant, lodging, and similar taxes
normally charged to the customer. The card is not transferable and only the
person whose photograph appears on the front side of the card may use it to make
official purchases for the mission. The reverse side of the card has information
on the use of the card. For example, a card may provide that the card may be
used for all sales taxes including hotel room taxes or for sales taxes on
purchases over $200.00 including hotel room taxes.

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Sales Tax

Applicable Laws and Regulations
Section 529.1 of the Sales and Use Tax Regulations provides, in part, as
follows:
(a) Except as otherwise provided in this Title, any sale by or
to any person or organization described in this Part or any
amusement charge to such a person or organization where it is the
purchaser, or any use or occupancy by any such person or
organization is not subject to the sales or use tax imposed by
article 28 or authorized by article 29 of the Tax Law. Any sale,
amusement charge, use or
occupancy
by
or
to
any person or
organization who or which does not qualify for exemption pursuant to
the provisions of this Part may qualify for exemption as described
in other provisions of this Title.
(b) Any person or organization other than:
*

*

*

(6) diplomatic missions, diplomatic personnel and foreign
government-owned enterprises and agencies as described in section
529.5 of this Part; must establish with the Taxpayer Assistance
Bureau its exempt status before it is entitled to any of the
exemptions mentioned above.
Diplomatic missions, diplomatic
personnel and foreign government-owned enterprises and agencies
described in section 529.5 of this Part must establish their
entitlement
to
any
such
exemptions with the United States
Department of State or, in the case of certain employees of the
Coordination Council for North American Affairs, with the American
Institute in Taiwan.
The burden of proving that a person or
organization is entitled to exemption rests with the person or
organization.
Section 529.5 of the Sales and Use Tax Regulations provides, in part:
(a) Diplomatic missions. Permanent missions to the United
Nations and foreign embassies and consulates are hereinafter
referred to as diplomatic missions.
(b)
Diplomatic personnel. Foreign embassy and consular
officials, certain foreign embassy and consular employees, certain
officers and employees of the United Nations, of international
organizations and of permanent missions to the United Nations and
certain employees of the Coordination Council for North American
Affairs are hereinafter referred to as diplomatic personnel.
(c) Exemption federally determined. Diplomatic missions
and diplomatic personnel are exempt from sales and use taxes when
they are the
purchaser, consumer or user of tangible personal
property or services or when they are the occupant of hotel rooms or
a patron at a place of amusement, club, roof garden, cabaret or

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Sales Tax

similar place only to the extent of the exemption granted to them by
the United States Department of State or pursuant to the authority
granted to the American Institute in Taiwan.
(d) Nature and extent of exemption generally. (1) Diplomatic
missions and diplomatic personnel seeking exemption from State and
local sales
and
use taxes should apply to the United States
Department of State or, in the case of employees of the Coordination
Council for North American Affairs, to the American Institute in
Taiwan for the appropriate tax exemption card or other proper
documentation evidencing their entitlement to and the extent of
their exemption.
(2) The United States Department of State or the American
Institute in Taiwan will issue the appropriate tax exemption card
or other proper documentation to diplomatic missions and diplomatic
personnel evidencing their entitlement to and the extent of their
exemption.

(3) Tax exemption cards and other documentation evidencing
entitlement to exemption issued to diplomatic missions and
diplomatic personnel by the United States Department of State or
the American Institute in Taiwan will specifically identify the
extent of the exemption to be allowed. In general:
(i) A tax exemption card with a blue stripe will entitle the
individual authorized thereon to exemption at time of purchase from
all sales and use taxes, including hotel room taxes.
(ii) A tax exemption card with a green stripe will entitle
the individual authorized thereupon to exemption at time of purchase
from all sales and use taxes except hotel room taxes.
(iii) A tax exemption card with a red stripe will entitle the
individual authorized thereon to exemption at time of purchase from
sales and use taxes, including hotel room taxes, on purchases
greater than the amount specified on the card (e.g., $50, $100,
$150, $200, etc.).
(iv)
Tax exemption cards may not be used by diplomatic
missions and diplomatic personnel to purchase motor fuel or diesel
motor fuel exempt from State and local sales and use taxes and motor
fuel or diesel motor fuel tax at the time of purchase. Diplomatic
missions and diplomatic personnel entitled to exemption from such
taxes will receive exemption as described in subdivision (i) of this
section.
(4) Diplomatic missions and diplomatic personnel who are not
holders of tax exemption cards but who are otherwise determined by
the United States Department of State or American Institute in
Taiwan to be eligible for exemption from sales and use taxes

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imposed upon purchase of certain tangible personal property or
services shall pay tax at the time of purchase and apply directly to
the New York State Department of Taxation and Finance for a
refund of such taxes paid. See subdivision (k) of this section
concerning refund procedures.
(e) Purchases of tangible personal property and services
by diplomatic missions and diplomatic personnel. (1) Except as
otherwise specifically provided in subdivision (i) of this section
with respect to the purchase of motor fuel and diesel motor fuel and
in subdivision (j) with respect to the purchase of utility
services, the following rules are applicable to purchases of
tangible personal property and services by diplomatic missions and
diplomatic personnel.
(2) Diplomatic missions and diplomatic personnel must
be the direct purchaser, occupant or patron of record and payer of
record in order to exercise their entitlement to exemption from
sales and use taxes. Direct purchaser, occupant or patron of record
for purposes of this section means:
(i) the holder of a valid tax exemption card issued by the
United States Department of State; or the American Institute in
Taiwan and whose photograph appears on such card; or
(ii) the holder of such other proper documentation evidencing
entitlement to exemption as provided by the United States Department
of State if any such other documentation is so provided, and does
not include any agent or employee of either such cardholder or
holder of other proper documentation.
A diplomatic mission or the diplomatic personnel is the direct
payer of record where payment is made by the holder of such card
or
other
proper documentation or by the diplomatic mission to
which the holder is attached, if any, or from the mission's funds,
directly to the vendor.
Opinion
Pursuant to Section 529.1 and 529.5 of the Sales and Use Tax Regulations,
where a foreign mission receives a valid USDOS tax exemption card which provides
exemption from sales and use taxes, including hotel room taxes, the mission may
rent hotel rooms exempt from payment of tax subject to the limitations on the
back of the card, provided that the mission is the direct occupant of record of
the hotel rooms, and the direct payer of record. Payment should be made by the
mission, or from the mission's funds, directly to the hotel. In the instant
case, for purposes of the exemption, a mission which has been issued a valid
USDOS tax exemption card will be considered the direct payer of record where
payment is made by check of the mission, credit card of the mission or a credit
card in the name of the mission's national government. Given that the exemption

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Sales Tax

is federally determined (see Section 529.5(c)), a mission's use of its own credit
card to make approved exempt purchases is considered to be a direct payment by
the mission so long as the USDOS permits such mission to make such purchases with
credit cards.
It is further noted that for hotel occupancy or when a qualified mission
makes a purchase of property or services, the mission is required to give the
hotel operator or vendor a properly completed Certificate of Sales Tax Exemption
for Diplomatic Missions and Personnel, Form DTF-950 or DTF-951. Form DTF-950 is
for use (with a valid tax exemption card) when a cash or cash equivalent (check,
traveler's check, money order, etc.) purchase is made or for any exempt purchase
made by the holder of a valid USDOS tax exemption card with a red stripe. Form
DTF-951 is a Blanket Purchase Certificate for use when the method of payment is
by a charge to an in-house or third party charge account. It may not be used to
make an exempt cash purchase, and may not be used by a holder of a USDOS tax
exemption card with a red stripe.
The vendor or hotel operator must record the
following information on every invoice of every sale covered by the exemption
document: name and address of the purchaser, tax exemption number of purchaser,
and the date of sale. The purchaser (in this case, the person whose picture
appears on the USDOS Mission Tax Exemption Card) must sign each invoice at the
time of sale in the presence of the vendor or hotel operator. Vendors or hotel
operators must keep copies of invoices, sales slips, statements, and any other
original sales documents, along with all related exemption certificates for at
least three years after the due date of the last return to which they relate or
the date when the return was filed, if later. Every vendor or hotel operator
must also maintain a method of associating exempt sales transactions with the
certificates on file. See Tax Exemptions For Diplomats, Diplomatic Missions and
Related Diplomatic Personnel, Notice N-86-25.

DATED:

May 28, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.