Does the Texas Comptroller issue sales tax exemption certificates or letters directly to foreign diplomats stationed in Texas?

Plain-English summary

Someone wrote to the Texas Comptroller's office asking for copies of any exemption certificates or letters the Comptroller had issued to foreign diplomats stationed in Texas. The Tax Policy Division's answer was straightforward: the Comptroller's office does not issue exemption certificates or letters of exemption to diplomats at all. Instead, the office advises diplomats to contact the U.S. Department of State and obtain a Tax Exemption Card, and it sends diplomats an informational glossy about that program.

The letter notes that prior to 1970, Texas did exempt foreign diplomats directly, but the exempt-organization section no longer had records reaching back that far — the letter's author recalled doing so personally in the late 1960s, but those old files had since been discarded.

Attached to the letter was a description of the "Diplomatic Tax Exemption Program": the Department of State issues Tax Exemption Cards to certain foreign government personnel (diplomats, consular officers, and staff of embassies, consulates, and organizations like the United Nations) under the authority of the Foreign Missions Act (22 U.S.C. Sec. 4301 et seq.). These cards are valid nationwide and are used at the point of sale to claim exemption from state and local sales, restaurant, lodging, and similar taxes normally charged to the customer. Some cards — described as red-striped or green-striped — carry restrictions on tax-free purchases, because certain foreign governments restrict the tax exemption privileges of U.S. missions and personnel stationed overseas (a reciprocity-based restriction). The letter explains that this tax exemption is treated as a treaty obligation of the United States under Article VI of the Constitution, pointing to the Vienna Convention on Diplomatic Relations (VCDR), the Vienna Convention on Consular Relations (VCCR), the United Nations Headquarters Agreement (UNHQ), and the International Organizations Immunities Act (22 U.S.C. Sec. 288 et seq. (1946)) as the legal bases recognizing diplomats' tax-exempt status.

What this means for you

Retailers and sellers in Texas

If a customer presents a Department of State Tax Exemption Card, that card — not a letter from the Texas Comptroller — is the document that establishes the customer's exemption from sales, restaurant, lodging, and similar taxes. Check whether the card has restrictions (the letter mentions red-striped and green-striped cards limit what can be bought tax-free) before treating the entire purchase as exempt.

Foreign diplomats and mission staff stationed in Texas

Don't expect the Texas Comptroller to issue you a personal exemption certificate or letter. Under this letter, the Comptroller directs diplomats to the U.S. Department of State to obtain a Tax Exemption Card, which is what you present at the point of sale.

Accountants and tax professionals

This letter is useful mainly as confirmation that Texas has no state-issued exemption paperwork for diplomats — exemption is administered entirely through the federal Department of State card program, grounded in the Foreign Missions Act, the International Organizations Immunities Act, and applicable treaties (VCDR, VCCR, UNHQ Agreement).

Common questions

Q: Does the Texas Comptroller issue exemption letters or certificates to foreign diplomats?
A: No. The letter states plainly that the Comptroller's office does not issue exemption certificates or letters of exemption to diplomats.

Q: How do foreign diplomats claim a sales tax exemption in Texas, then?
A: By obtaining a Tax Exemption Card from the U.S. Department of State and presenting it at the point of sale.

Q: Are all Department of State Tax Exemption Cards the same?
A: No. The letter describes red-striped and green-striped cards that restrict the exemption, imposed because some foreign governments restrict tax exemption privileges for U.S. missions and personnel overseas.

Q: Did Texas ever exempt diplomats directly, without the federal card program?
A: The letter says that prior to 1970 Texas did exempt foreign diplomats, but records from that period no longer exist in the exempt-organization section's files.

Q: What legal authority underlies the diplomatic tax exemption?
A: The letter cites the Foreign Missions Act (22 U.S.C. Sec. 4301 et seq.), the International Organizations Immunities Act (22 U.S.C. Sec. 288 et seq. (1946)), and treaty obligations under Article VI of the U.S. Constitution, referencing the Vienna Convention on Diplomatic Relations, the Vienna Convention on Consular Relations, and the United Nations Headquarters Agreement.

Citations and references

Statutes and authorities:

• Foreign Missions Act, 22 U.S.C. Sec. 4301 et seq.
• International Organizations Immunities Act, 22 U.S.C. Sec. 288 et seq. (1946)
• U.S. Constitution, Article VI (treaty obligations)
• Vienna Convention on Diplomatic Relations (VCDR)
• Vienna Convention on Consular Relations (VCCR)
• United Nations Headquarters Agreement (UNHQ)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9509199L

Original ruling text

September 29, 1995

Dear Ms. **:

Recently, you asked for copies of any exemption certificates or letters we have
issued to foreign diplomats stationed in Texas. We do not issue exemption
certificates or letters of exemption. Instead, we advise the diplomat that they
should contact the Department of State and obtain an exemption card. We send
the enclosed glossy to them.

Prior to 1970, I can tell you we did exempt foreign diplomats, but I regret
that our exempt organization section no longer has records regarding this issue
going back that far. I was in the office in the late 1960's and remember doing
so, but my files from those years have also been discarded.

I hope this is helpful to you.

Sincerely,

Wade Anderson
Director, Tax Policy

cc: Billy Hamilton
Deputy Comptroller

DIPLOMATIC TAX EXEMPTION PROGRAM

These are samples of the Tax Exemption Cards issued by the Department of State
to certain foreign government personnel and offices. The cards are valid
nationwide. 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. Some cards have restrictions on tax free purchases. See explanation
below.

NOTE: Examples of cards cannot be scanned.

Under the authority of the Foreign Missions Act (22 USC 4301 et seq.), TAX
EXEMPTION CARDS are issued to certain official personnel from foreign countries
who are stationed in the United States while working as diplomats, consular
officers, or staff members at foreign embassies and consulates, and other
organizations such as the United Nations.

The red-striped and green-striped TAX EXEMPTION Cards restrict the entitlement
to sales tax exemption.

This restriction is imposed because certain foreign governments restrict the
tax exemption privileges of United States Missions and personnel overseas. Tax
exemption is a treaty obligation of the United States under Article VI of the
Constitution. The United States is a party to various treaties and agreements
which recognize diplomats as official, duly accredited representatives of
foreign sovereign countries. Under international law, sovereign countries
cannot impose certain taxes on accredited diplomats or other representatives of
foreign countries. The treaties referred to above are the Vienna Convention on
Diplomatic Relations (VCDR), The Vienna Convention on Consular Relations
(VCCR), and the United Nations Headquarters Agreement (UNHQ). Also, the
International Organizations Immunities Act, 22 U.S.C. Sec. 288 et seq (1946),
mandates tax exemption for representatives to certain international
organizations.