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India, Mongolia Win New York Tax Ruling

by Mike Godfrey, Tax-News.com, Washington

19 August 2010


The United States Court of Appeals has given a ruling in favour of India and Mongolia who had challenged the City of New York in its attempt to collect some USD47m in property taxes, plus interest, on property in Manhattan used to house their UN permanent missions.

The City had argued originally that, with the buildings containing foreign embassies already exempt from property tax, the same could not be true for buildings used (sometimes only in part) for housing their staff. Claims for unpaid tax were issued against India, Mongolia, the Philippines and Turkey.

The District Court originally ruled in favour of the City, and the latter two countries paid settlement amounts. India and Mongolia, however, persisted with an appeal.

While the appeal was pending, in June 2009, the US Department of State issued a notice pursuant to the Foreign Missions Act, designating as a “benefit” under the Act an exemption from property taxes on property owned by foreign governments and used to house the staff of permanent missions to, inter alia, the United Nations.

The notice stated that the benefit determination pre-empted all inconsistent state and local laws, and also applied to all property taxes that “have been or will be assessed” on such property. The Court of Appeals therefore held that the notice operated to render the City’s tax demands invalid and that India and Mongolia are exempt from the property taxes that the City had tried to impose.

TAGS: court | tax | India | property tax | law | real-estate | Mongolia | United States

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