Directive Directive 03-4: Room Occupancy Excise and Sales Tax Exemption For Diplomatic Personnel

Date: 04/04/2003
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Tax Administration/Sales and Use Tax

Introduction: The terms of certain treaties and conventions grant some foreign diplomatic and consular personnel exemptions from many federal, state and local taxes. This Directive updates the rules for operators and vendors presented with a diplomat's tax exemption card. To the extent that this Directive is inconsistent with Directive 88-3, it supersedes and modifies that Directive.

Discussion: The United States Department of State's Office of Foreign Missions issues an official tax exemption card as evidence that a particular diplomat or diplomatic mission is exempt from the taxes imposed by G.L. cc. 64G and 64H. The card is only for use by the bearer whose picture appears on the front of the card and only he or she may claim the exemption either personally or for the mission. The cards state that the bearer is exempt from one of the following:

(1) all sales taxes, including room occupancy taxes (hotel); or
(2) all sales taxes, excluding room occupancy taxes or other purchases listed as not exempt; or
(3) all sales taxes on purchases totaling over a specific amount, i.e., $50, $100, $150 or $200; with or without certain purchases listed as not exempt.

The room occupancy excise applies unless the tax exemption card specifically states that the bearer or the foreign mission is exempt from the rooms tax. The card may also list other invalid uses. For example, it may list as not exempt purchases of groceries, alcohol, tobacco or meals.

The exemption under (3), above applies to the entire transaction when total purchases exceed the minimum amount, i.e., if a card applies to purchases above $50.00 and the purchases in a single transaction total $50.01, there is no sales tax whatsoever imposed. The card minimum must be exceeded, however, or the entire transaction is subject to tax.

If a foreign official purchases an otherwise taxable item, he may not combine it with purchases by others under one total in order to qualify for the sales tax exemption.

D irective: diplomats must present the official Department of State card to receive an exemption from the rooms or sales tax. Massachusetts operators and vendors may not accept any other documentation from diplomats as proof that such a purchaser is exempt from these taxes.

The procedures that an operator or vendor must follow to document that a transaction is properly exempted from a tax are found in Administrative Procedures, AP 621.3.1. Failure to obtain proper documentation will render the operator or vendor liable for the tax on the transaction.

For more, information, write to: Office of Foreign Missions, U.S. Department of State, 3507 International Place NW, Washington, D.C. 20522, or call or write the Department of Revenue's Taxpayer Service Division, 200 Arlington Street, Chelsea, MA 02204, 1-617-887-MDOR (6763).

Reference: G.L. c. 64G; G.L. c. 64H; AP 621.

/s/Alan LeBovidge
Alan LeBovidge
Commissioner of Revenue


April 4, 2003

DD 03-4

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