Revenue Administrative Bulletin 1990-31

Approved: October 5, 1990

EXEMPTION FOR FOREIGN DIPLOMATIC PERSONNEL

RAB-90-31. This bulletin explains the exemption for foreign diplomatic personnel as it relates to Michigan sales tax, use tax, airport parking tax, and convention facility development tax. For purposes of this bulletin, foreign diplomatic personnel include diplomats, consular officers, administrative and technical employees and service staff.

BACKGROUND

Exemption from tax is one of the privileges enjoyed by foreign diplomatic and consular personnel under the provisions of the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations. These treaties have been ratified by the United States Senate and are the supreme law of the land under Article VI of the U.S. Constitution.

In 1985, the United States Department of State, Office of Foreign Missions (OFM), instituted a new tax exemption card program for foreign diplomatic and consular personnel in the United States. This program grants exemption only to eligible representatives of countries that extend reciprocal tax exemption to U.S. personnel abroad.

TAX EXEMPTION PROGRAM

Foreign officials entitled to exemption are issued a tax exemption card by the OFM. For identification purposes, the individual's name, photograph, and personal information are provided. A security seal is affixed over the left-hand corner of the bearer's photograph to officially validate the card. The seal is visible when the card is held up to the light. Samples of the cards are attached as Exhibit A. (See "NOTE" at end of Bulletin.)

There are four different types of exemption cards, designed to match the levels of exemption encountered by American embassy personnel in foreign countries. The level of tax exemption is indicated by the card markings and the written explanation on the reverse side of the card.

Cards With Blue Stripes

A card with blue stripes entitles the bearer to exemption from all sales taxes, including hotel room taxes. An individual bearing a blue card is exempt from: (1) sales tax; (2) use tax on telephone bills, hotel rooms, leases of tangible personal property, and purchases from out-of-state vendors; (3) airport parking tax; and (4) convention facility development tax.

Cards With Green Stripes

A card with green stripes entitles the bearer to exemption from all sales taxes except hotel room taxes. An individual bearing a green card is exempt from: (1) sales tax; (2) use tax on telephone bills, leases of tangible personal property and purchases from out-of-state vendors; and (3) airport parking tax. The bearer is not entitled to exemption from use tax on hotel rooms or convention facility development tax because these are hotel room taxes.

Cards With Red Stripes

Cards with red stripes require a minimum purchase amount on each transaction in order to qualify for the tax exemption. Red cards have different levels of exemption: $50, $100, $150, and $200. The total of all items purchased in a single transaction must exceed the exemption level indicated on the card. Several consecutive nights of lodging at a hotel would constitute a single transaction. Provided the minimum exemption level for a single transaction is reached, an individual bearing a red card is exempt from: (1) sales tax; (2) use tax on telephone bills, hotel rooms, leases of tangible personal property, and purchases from out-of-state vendors; (3) airport parking tax; and (4) convention facility development tax.

Mission Cards

The mission card is to be used only for the official purchases of a foreign consulate or embassy. It bears the photograph and identification of the consulate or embassy employee who is the official purchasing agent for that office. The mission card is not to be used by that individual for personal purchases. Purchases made with the mission card are exempt from: (1) sales tax; (2) use tax on telephone bills, hotel rooms, leases of tangible personal property, and purchases from out-of-state vendors; (3) airport parking tax; and (4) convention facility development tax.

AUTOMOBILE PURCHASES

Most diplomatic personnel are also entitled to exemption from sales tax on purchases of automobiles, whether or not they possess sales tax exemption cards issued by OFM. All foreign diplomatic personnel must register their automobiles with the U.S. Department of State, and not with the State of Michigan. The OFM will monitor the purchase to make sure the diplomat has adequate insurance. Michigan vehicle dealers should follow these guidelines when selling an automobile to diplomatic personnel:

Diplomatic Personnel Holding U.S.
Department of State Tax Exemption Cards

Record the individual's name, tax exemption number and card expiration date for audit purposes.

Sales of Automobiles to Diplomatic Personnel Not
Holding U.S. Department of State Tax Exemption Cards

Call OFM at (202) 895-3532 between the hours of 8 a.m. and 5 p.m., Monday through Friday, to confirm the purchaser's eligibility for tax exemption on an automobile purchase. Provide OFM with the name and date of birth of the individual, and you will receive an immediate confirmation of eligibility or non-eligibility. If the diplomat is eligible for tax exemption, you will be requested to provide the vehicle identification number (VIN) of the automobile being purchased. OFM will immediately send a letter of confirmation directly to the dealership. This letter should be retained for audit purposes.

Vehicle Registration

To register the automobile with the U.S. Department of State, the foreign diplomat must send the Manufacturer's Certificates of Origin for a new automobile and the previous title for a used automobile to:

OFM/DMVO
U.S. Department of State
3507 International Place, NW
Washington, D.C. 20008

OFM will register the automobile and will provide a Record of Legal Owner to the lien holder.

NOTE: If you have accessed this document via our website, Exhibit A (sample cards) is not attached. If you require a copy of Exhibit A, please request a complete copy of this Bulletin by contacting: