Rev. Rul. 54-551

Advice has been requested whether section 146(e) of the Internal Revenue Code of 1939, or any other applicable law or regulations requiring exit permits for aliens wishing to leave the United States, applies to diplomatic and other employees of foreign governments and their dependents, and whether, if any such exit permit is required, it could be waived in return for an agreement by the X Government to issue multiple entry and exit visas to nondiplomatic as well as diplomatic personnel and the dependents of both.

The express terms of section 146(e) are applicable to all aliens, including diplomatic and other employees of foreign governments. However, ambassadors and ministers accredited to the United States enjoy privileges and immunities which prevent the Government from detaining them at the port of embarkation, or otherwise, for the purpose of compliance with income tax obligations. It is the practice of the Revenue Service to permit ambassadors and public ministers and other holders of diplomatic passports, together with members of their households, to depart from the United States without obtaining certificates of compliance. See O.D. 271, C.B. 1, 252. If a foreign government does not issue diplomatic passports but merely indicates on passports issued to the members of its diplomatic and consular services the rank of the bearer in the service in question, such passports are considered diplomatic passports for the purpose of the Federal income tax. Servants in diplomatic households not accompanied by a bearer of a diplomatic passport are permitted to depart from the country without examination for income tax purposes provided a letter is obtained from the chief of the mission concerned certifying that no tax is due from such servants and that their names appear on the White List. In this connection, it is to be noted that the compensation of household employees of diplomatic officers of a foreign government may properly be certified as exempt from United States income tax under the provisions of section 116(h) of the Internal Revenue Code of 1939 only where such employees, in addition to meeting the other requirements of that section, are specifically provided for and paid by the foreign government, or paid from funds or allowances granted by the foreign government for the specific purpose of hiring household employees.

The provisions of section 146(e) of the Internal Revenue Code of 1939 are express, and without legislative change thereof there appears to be no basis for waiving those provisions with respect to employees of foreign governments who do not bear diplomatic passports and are not members of diplomatic households. Accordingly, ambassadors and public ministers and other holders of diplomatic passports, together with members of their households, may depart from the United States without obtaining certificates of compliance required by section 146(e) of the Internal Revenue Code of 1939. However, employees of foreign governments who do not bear diplomatic passports and are not members of diplomatic households must procure from the District Director of Internal Revenue certificates that they have complied with all the obligations imposed upon them by the income, war profits and excess-profits tax laws.