Persons Employed by a Foreign Government or International Organization - FUTA
Employees of a Foreign Government
Compensation for services performed as an employee of a foreign government, without regard to citizenship, residence, or where services are performed, is not considered to be wages for Federal Unemployment Tax (FUTA) purposes. This includes services performed by ambassadors, other diplomatic and consular officers and employees, and nondiplomatic representatives.
Compensation for services performed as an employee of a wholly owned instrumentality of a foreign government, without regard to citizenship, residence, or where services are performed is not considered to be wages for Federal Unemployment Tax (FUTA) purposes if:
- The instrumentality is wholly owned by the foreign government;
- The services are of a character similar to those performed in foreign countries by employees of the United States Government or of an instrumentality thereof; and
- The Secretary of States certifies to the Secretary of the Treasury that the foreign government, with respect to whose instrumentality exemption is claimed, grants an equivalent exemption with respect to services performed in the foreign country by employees of the United States Government and of instrumentalities thereof.
Employees of an International Organization
Compensation for services performed within or outside the United States by an employee or officer (regardless of citizenship or residence) of an international organization is not considered to be wages for FUTA tax purposes. The term "international organization" means a public international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288-288f).
Section 1 of the International Organizations Immunities Act provides as follows:
Sec. 1. [International Organizations Immunities Act.] For the purposes of this title [International Organizations Immunities Act], the term "international organization" means a public international organization in which the United States participates pursuant to any treaty or under the authority of any Act of Congress authorizing such participation or making an appropriation for such participation, and which shall have been designated by the President through appropriate Executive order as being entitled to enjoy the privileges, exemptions, and immunities herein provided. The President shall be authorized, in the light of the functions performed by any such international organization, by appropriate Executive order to withhold or withdraw from any such organization or its officers or employees any of the privileges, exemptions, and immunities provided for in this title (including the amendments made by this title) or to condition or limit the enjoyment by any such organization or its officers or employees of any such privilege, exemption, or immunity. The President shall be authorized, if in his judgment such action should be justified by reason of the abuse by an international organization or its officers and employees of the privileges, exemptions, and immunities herein provided or for any other reason, at any time to revoke the designation of any international organization under this section, whereupon the international organization in question shall cease to be classed as an international organization for the purposes of this title. [Income Tax Reg. §31.3306(c)(16)-1.]
- Federal Unemployment Tax
- Internal Revenue Code section 3306 (c)(11), (c)(12), and (c)(16)
- Income Tax Regulations 31.3306(c)(11)-1; 31.3306(c)(12)-1; and 31.3306(c)(16)-1.
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.