The Secretary of State to the Chargé in Great Britain (Atherton)

No. 520

Sir: Referring to the Department’s instruction of April 10, 1933,32 there is enclosed a copy of a letter of May 6, 1933, from the Treasury Department, in connection with the assessment of British tax on private incomes of American consular officers. Your especial attention is directed to the fourth paragraph concerning the status accorded British consuls in the United States.

Very truly yours,

For the Secretary of State:
Wilbur J. Carr
[Page 32]

The Acting Secretary of the Treasury (Ballantine) to the Secretary of State

Sir: I have Assistant Secretary Carr’s letter dated April 10, 1933 (FA 702.0641/73),33 transmitting a copy of despatch No. 747 of March 21, 1933, together with enclosure, received by your office from the American Embassy at London, England, subject: “Assessment of British Tax on Private Incomes of American consuls.”

It is stated that the substance of the instructions issued to the Embassy under date of July 28, 1932,33 directing a conveyance of the view of the American Government with respect to the taxation of the private incomes of American consular officers in Great Britain, was transmitted to the Foreign Office; that in reply thereto the Foreign Office on March 11, 1933, expressed its inability to grant foreign consular officers wider exemption than the Finance Act of 1930 accords to them where income tax is concerned; and that no claim could be made for the British consuls in the United States for privileges which could not be conceded to the American consular officers.

It is further stated that the contention that American consular officers should be accorded exemption on the basis of reciprocity has apparently had no weight with the British Government; that it is not believed that all possible arguments in favor of granting exemption have been exhausted; and that perhaps, after protracted discussions, the British authorities might be disposed to take a more generous view of the subject.

In reply you are advised that it has been the consistent policy of this Department to treat foreign consular officers in the United States, who are nationals of the states appointing them, as nonresident aliens and, therefore, to tax them only with respect to their income from sources within the United States other than their official compensation received for services rendered in the United States, which compensation is exempt from the Federal income tax on the basis of reciprocity. It would appear, therefore, that the responsible officer in the Foreign Office is unaware of the status accorded British consuls in this country; and that the consistent policy of the Department to treat foreign consular officers in the United States, who are nationals of the states appointing them, as nonresident aliens, eliminates from taxation any income which such consular officers may receive from sources outside of the United States.

It is possible that, if the policy of this Department is made clear to the British Foreign Office, the Government of Great Britain will adopt [Page 33] a more liberal treatment of American consular officers with respect to the taxing of income derived by them from sources outside Great Britain.


A. A. Ballantine
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