190

1 Unless otherwise indicated, all citations of sections refer to the Internal Revenue Code (26 

U.S.C.) in effect for the years in issue, and all citations of Rules refer to the Tax Court Rules 

of Practice and Procedure.

SHOUKRI OSMAN SALEH ABDEL-FATTAH, PETITIONER v. 

COMMISSIONER OF INTERNAL REVENUE, 

RESPONDENT

Docket No. 4683–09. Filed April 27, 2010. 

In 2005–2007 P, a non-U.S. citizen, was an employee of the 

Embassy of the United Arab Emirates (UAE) in Washington, 

D.C., performing for that Embassy services of a sort that are 

performed by employees of the U.S. Embassy in the UAE. The 

UAE does not impose an income tax, so employees of the U.S. 

Embassy in the UAE incur no income tax; but the

U.S. Department of State did not certify this fact (pursuant 

to I.R.C. sec. 893(b)) until 2008. For 2005–2007 P filed tax 

returns reporting his embassy wages as income. R issued a 

notice of deficiency for those years based on adjustments 

unrelated to the embassy wages. P filed a petition in which 

he contends that the embassy wages are exempt from income 

tax under I.R.C. sec. 893. The parties agree that P satisfied 

the three requirements for exemption from income tax under 

I.R.C. sec. 893(a). Held: I.R.C. sec. 893 does not require, as a 

condition of a claim of exemption by an employee of a foreign 

government, the U.S. Department of State’s certification of 

reciprocal exemption by the foreign country under I.R.C. sec. 

893(b). Because P satisfied the three requirements of I.R.C. 

sec. 893(a), his wages from working for the UAE Embassy 

from 2005–2007 are exempt from income tax. 

Hamilton Loeb and Anne C. Loomis, for petitioner. 

Lindsey D. Stellwagen, for respondent. 

OPINION 

GUSTAFSON, Judge: The Internal Revenue Service (IRS) 

issued to petitioner Shoukri Osman Saleh Abdel-Fattah a 

notice of deficiency pursuant to section 6212, 1 showing the 

IRS’s determination of the following deficiencies in income 

tax, additions to tax for failure to file under section 

6651(a)(1), and accuracy-related penalties under section 6662 

for tax years 2005, 2006, and 2007: 

(190) ABDEL-FATTAH v. COMMISSIONER 191

2 If Mr. Abdel-Fattah’s motion were denied, then certain substantiation issues would have to 

be resolved. Because we grant his motion, those issues are moot. 

Year Deficiency

Addition to tax

sec. 6651(a)(1)

Accuracy-related 

penalty

sec. 6662

2005 $6,428 - - - $1,285.60

2006 6,465 $343.50 1,293.00

2007 6,858 - - - 1,371.60

Mr. Abdel-Fattah brings this case pursuant to section 

6213(a), asking this Court to redetermine those deficiencies. 

After various concessions, the only issue for decision is 

whether Mr. Abdel-Fattah’s wages paid by the Embassy of 

the United Arab Emirates (UAE) are exempt from income tax 

under section 893. That issue is currently before the Court 

on the parties’ cross-motions for summary judgment. For the 

reasons explained below, we will grant Mr. Abdel-Fattah’s 

motion and deny respondent’s motion. 2

Background

The following facts are based on the parties’ stipulations 

(which we incorporate herein by this reference) and on the 

assertions in the parties’ motion papers that are supported 

in accordance with Rule 121 and as to which the opposing 

party did not raise any genuine issue of material fact. At the 

time he filed his petition, Mr. Abdel-Fattah resided in Virginia. 

The UAE and taxes

The United Arab Emirates was formed as a union of separate emirates in 1971 and 1972. Since its founding, the UAE

has not imposed any income tax on individual income. This 

non-taxation applies both to UAE nationals and to foreign 

individuals who work in the UAE, including persons who are 

employed by the U.S. Embassy or consulate in the UAE. 

The UAE opened its Embassy in Washington, D.C., in 1974; 

and in 1977 it became a party to the Vienna Convention on 

Diplomatic Relations, Apr. 18, 1961, 23 U.S.T. 3227. Under 

that convention, the administrative and technical and service 

staff employed by the Embassy of the UAE was considered 

exempt from U.S. tax starting in 1977. 

192 134 UNITED STATES TAX COURT REPORTS (190) 

3 A non-resident alien like Mr. Abdel-Fattah should use Form 1040NR, U.S. Nonresident Alien 

Income Tax Return. Unlike the Form 1040NR, the Form 1040 that Mr. Abdel-Fattah filed includes certain credits for which non-resident aliens are ineligible. Mr. Abdel-Fattah concedes he 

wrongly claimed items on Form 1040, and we therefore do not address further the distinctions 

between Form 1040 and Form 1040NR. 

However, in April 1991 the U.S. Department of State 

(State Department) announced a change in its policy concerning the interpretation of the relevant provision of the 

Vienna Convention, so that A–2 visa holders were no longer 

eligible for exemption from tax under the Vienna Convention. 

In 1991 the State Department invited embassies to submit 

certificates of reciprocity (which would result in a certification of exemption under the Code—viz., section 893—

rather than under the Vienna Convention); but the UAE

Embassy did not submit a certificate of reciprocity or request 

such certification from the State Department until after the 

years at issue. 

Mr. Abdel-Fattah’s employment and tax returns

Mr. Abdel-Fattah is an Egyptian national, and he was in 

the United States as a nonresident alien on an A–2 visa 

during the years in issue. Except for six months in 2006 

during which he was unemployed, Mr. Abdel-Fattah was 

employed by the UAE Embassy from 2000 through the years 

at issue. In the three years at issue he worked for the UAE

Embassy as a security guard and as a driver. 

Employees of the U.S. Government Embassy in the UAE

performed services similar to Mr. Abdel-Fattah’s services as 

a driver and security guard. Like everyone else in the UAE, 

those U.S. employees were not subject to income tax by the 

UAE. 

For each of the years 2005, 2006, and 2007 Mr. AbdelFattah filed a Form 1040, U.S. Individual Income Tax 

Return 3—the latest in April 2008—on which he reported his 

UAE Embassy wages. His returns reported overpayments of 

tax and claimed refunds. 

State Department certification

As of August 2008 several UAE Embassy employees 

(including Mr. Abdel-Fattah) had received inquiries from the 

IRS. In response, on August 14, 2008, the UAE Embassy 

requested from the State Department a certification under 

(190) ABDEL-FATTAH v. COMMISSIONER 193

section 893(b). On September 26, 2008—i.e., six weeks after 

the request and nine months after the end of the latest year 

at issue—the State Department issued such a certification, 

signed by the Director of the Office of Foreign Missions, 

which read: 

Acting pursuant to Department of State Delegation of Authority 285 

(October 31, 2005), I hereby certify to the Secretary of the Treasury, in 

accordance with 26 U.S.C. § 893(b), that the government of the United 

Arab Emirates does not tax the wages, fees or salaries of employees of the 

United States Embassy and Consulate in the United Arab Emirates 

received as compensation for their official services to the United States. I 

further certify that such employees perform services of a character similar 

to those performed by employees of the Embassy of the United Arab Emirates and its consulates in the United States. 

The State Department delivered the certification to the UAE

Embassy on October 1, 2008, and delivered it to the U.S. 

Department of the Treasury on March 10, 2009.

Notice of deficiency

In June 2008 the IRS had commenced an examination of 

Mr. Abdel-Fattah’s 2006 return. Eventually the IRS examined 

all three years (2005, 2006, and 2007), and in December 2008 

the IRS issued a notice of deficiency addressing all three 

years. By that time the Secretary of State had already issued 

the certification as to the UAE, but the IRS did not treat it as 

retroactive. Consequently, the deficiency notice did not 

reduce Mr. Abdel-Fattah’s income by the amount of his UAE

Embassy wages (which he had reported) but rather made 

other adjustments, adverse to Mr. Abdel-Fattah, that 

increased his tax liability (all of which Mr. Abdel-Fattah concedes for purposes of this motion). 

Tax Court petition

In response to the IRS’s December 2008 notice of deficiency, 

Mr. Abdel-Fattah filed a timely petition in this Court. His 

petition asserts that his UAE Embassy wages are exempt 

from income tax under section 893. 

Discussion

Section 893(a) provides a tax exemption for wages that satisfy certain conditions, and Mr. Abdel-Fattah’s wages satisVerDate 0ct 09 2002 10:59 May 24, 2013 Jkt 372897 PO 20009 Frm 00004 Fmt 3851 Sfmt 3851 V:\FILES\ABDEL.134 SHEILA
194 134 UNITED STATES TAX COURT REPORTS (190) 

4 In the alternative, if the section 893(b) certification is a condition of the section 893(a) exemption, petitioner argues: that the State Department’s September 2008 certification of UAE 

reciprocity is an ‘‘administrative determination * * * relating to the internal revenue laws’’ 

under section 7805(b)(8); that the IRS made no effective prescription that it would be applied 

without retroactive effect; that there is no valid basis for non-retroactive application; and that 

non-retroactive application is inconsistent with longstanding administrative practice. Respondent disputes each of these propositions, and argues that, in any event, non-retroactive application of the certification would be reviewed for abuse of discretion—which proposition petitioner 

disputes. Respondent contends that retroactive application would perversely benefit noncompliant taxpayers and punish compliant taxpayers. Because we decide that the section 893(b) certification is not a prerequisite to the section 893(a) income tax exemption, we need not reach this 

alternative argument as to retroactive application of the State Department’s certification. Likewise, since the employment tax exemption is not before us, we do not decide whether a State 

Department certification could have retroactive effect for purposes of section 3121(b)(12)(B). 

5 Respondent stated that the only disputed facts concern alleged delay or inaction by the State 

Department; but Mr. Abdel-Fattah has made clear that he makes no such allegations, and he 

affirms that there is no factual dispute regarding the section 893 issue. 

fied all those conditions during the years in issue. Section 

893(b) requires the Secretary of State to certify two of those 

three conditions, but as of the years in suit the Secretary of 

State had not yet certified those conditions. We must decide 

whether, under section 893, the certification required in subsection (b) is a prerequisite to the exemption provided in

subsection (a). We hold that it is not, under the plain language of section 893. 4

I. Summary judgment standards

Where the pertinent facts are not in dispute, a party may 

move for summary judgment to expedite the litigation and 

avoid an unnecessary trial. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Rule 121 provides for summary judgment in terms equivalent to Rule 56 of the Federal 

Rules of Civil Procedure. Summary judgment may be granted 

where there is no genuine issue as to any material fact and 

a decision may be rendered as a matter of law. Rule 121(a) 

and (b); see Sundstrand Corp. v. Commissioner, 98 T.C. 518, 

520 (1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. 

Commissioner, 90 T.C. 753, 754 (1988). In this case the facts 

are largely stipulated, and the parties acknowledge that 

there are no genuine issues of material fact. 5

Where a motion for summary judgment involves an issue 

of foreign law (here, the UAE’s non-taxation of individual 

income), we look to Rule 146 (in pari materia with rule 44.1 

of the Federal Rules of Civil Procedure). Where ‘‘an issue 

concerning the law of a foreign country’’ is raised, ‘‘[t]he 

Court’s determination shall be treated as a ruling on a quesVerDate 0ct 09 2002 10:59 May 24, 2013 Jkt 372897 PO 20009 Frm 00005 Fmt 3851 Sfmt 3851 V:\FILES\ABDEL.134 SHEILA
(190) ABDEL-FATTAH v. COMMISSIONER 195

tion of law’’, Rule 146, rather than fact, ‘‘so that appellate 

review will not be narrowly confined by the ‘clearly erroneous’ standard’’, Fed. R. Civ. P. 44.1, Advisory Committee 

Notes (1966 amendment). However, Rule 146 permits the 

consideration of ‘‘testimony’’. Testimony about the law is normally not permitted, see O’Donnabhain v. Commissioner, 134 

T.C. 34, 56 (2010), but Rule 146 permits such testimony, in 

continuity with the former rule that foreign law was treated 

as a factual matter, see Black Diamond S.S. Corp. v. Robert 

Stewart & Sons, 336 U.S. 386, 397 (1949). Moreover, the 

Court is not required to take judicial notice of foreign law of 

which the parties have not made a showing. See Afshar v. 

Commissioner, T.C. Memo. 1981–241, 41 T.C.M. (CCH) 1489, 

1503 (and cases cited thereat) (‘‘where neither party has 

offered any material with respect to the applicable foreign 

law, we need not take judicial notice of such law’’), affd. without published opinion 692 F.2d 751 (4th Cir. 1982). 

As a result, the procedure for establishing foreign law 

remains analogous to the procedure for establishing facts. 

For purposes of summary judgment under Rule 121, where 

the moving party (here, Mr. Abdel-Fattah) makes a credible 

showing of foreign law (the UAE’s non-taxation of individual 

income) and the non-moving party makes no dispute, we can 

determine foreign law on the basis of the movant’s showing. 

II. Taxation of foreign government employees

A. Pre-1934 income tax and customs regulations

After the income tax was enacted and until 1934, the 

Treasury Department granted an exemption from U.S. 

income tax to employees in the consular offices of any foreign 

country that granted a reciprocal exemption from its own 

income tax to U.S. consular employees who worked in that 

country. This exemption was not based on any statute but 

was granted as a matter of administrative policy. The policy 

was embodied in regulations that provided as follows: 

All foreign consular officers and employees in foreign consulates in the 

United States who are nationals of the States appointing them are exempt 

from Federal income tax with respect to the wages, fees, and salaries 

received by them in compensation for their consular services, provided the 

appointing State grants a similar exemption to citizens of the United 

196 134 UNITED STATES TAX COURT REPORTS (190) 

6 Regs. 77, art. 641 (1932), included an identical provision. 

7See H. Rept. 1759, 74th Cong., 1st Sess. 3 (1935), 1939–1 C.B. (Part 2) 891, 892 (‘‘A somewhat comparable privilege is afforded by the Customs’ Regulations of 1931, specifically articles 

425 and 426, extending special customs courtesies and free entry privileges to representatives 

of our own and foreign governments who arrive in the United States on official business’’). Because the Congress enacting the income tax exemption referred to these customs regulations as 

creating only a ‘‘somewhat comparable privilege’’ (emphasis added), we infer that the details of 

the customs regulations do not disclose the legislative intent as to the income tax exemption. 

8See letter from the Treasury Department to the Secretary of State (Aug. 7, 1934) 4–5, described in H. Rept. 1759, supra at 3, 1939–1 C.B. (Part 2) at 892. 

9See letter from State Department to the Chairman, Committee on Ways and Means (Aug. 

9, 1935), quoted in H. Rept. 1759, supra, at 2, 1939–1 C.B. (Part 2) at 892. 

States who are American consular officers or employees of the American 

consulates in such State. * * *

Regs. 65, art. 86 (1924). 6 The regulation did not state any 

requirement as to certification, by the State Department, of 

the foreign country’s reciprocal exemption. 

During the same period the Customs Regulations of 1931 

afforded a ‘‘somewhat comparable privilege’’ 7 allowing 

exemption from customs on baggage and articles imported by 

government representatives arriving in the United States. 

Article 425 is ambiguous about the necessity of State Department approval of a ‘‘privilege’’ as to baggage: It refers to 

‘‘application to the Department of State’’; but it appears to 

authorize the privilege upon a mere showing of ‘‘their credentials or other proof of identity’’. Article 426 more explicitly 

provides that a privilege as to ‘‘Imported articles’’ will be 

allowed ‘‘only when application is made therefor through the 

Department of State’’. 

B. Income tax statutes

When the Treasury Department concluded that this policy, 

though ‘‘meritorious from the standpoint of administrative 

policy or expediency’’, was ‘‘indefensible from the standpoint 

of law’’, it announced that it would cease to allow the exemption. 8 Corrective legislation was proposed, as to which the 

Department of State ‘‘hope[d] that you [the Chairman of the 

Committee on Ways and Means] will find it possible to bring 

about its passage by the House of Representatives at an 

early date.’’ 9 The Department of the Treasury had its own 

reasons to favor the proposal. The Treasury Department 

advised Congress: 

A demand has been made upon the United States Treasury attache ́ and 

several American members of his staff for the payment of income taxes to 

(190) ABDEL-FATTAH v. COMMISSIONER 197

10See letter from Treasury Department to the Chairman, Committee on Ways and Means 

(Aug. 9, 1935), quoted in H. Rept. 1759, supra at 2, 1939–1 C.B. (Part 2) at 892. 

the Austrian Government. These officers are, of course, paying income 

taxes to the United States, and payment of the Austrian taxes will impose 

a real hardship. 

If H.R. 7998 is enacted into law, however, it will be possible for our 

Department of State to advise the Government of Austria that representatives of that Government, employed in the United States and of a rank 

comparable to that of the Treasury attache ́ and his staff, would be exempt 

from taxation upon the salaries they receive in the United States from the 

Government of Austria. I am informed that the Austrian Government has 

intimated that if this advice is received taxes will not be levied upon the 

official income of our representatives in that country. 

In view of these circumstances, I urgently recommend that favorable 

consideration be given by your [Ways and Means] committee to H.R. 7998 

with a view to its enactment at the earliest practicable date.

Very truly yours,

L.W. Robert, Jr. 

Acting Secretary of the Treasury[10]

The House report explained that the proposed new statutory exemption (H.R. 7998) ‘‘was formerly covered by 

Treasury regulations.’’ H. Rept. 1759, 74th Cong., 1st Sess. 

3 (1935), 1939–1 C.B. (Part 2) 891, 892. Section 116 of the 

Revenue Act of 1934 was amended to add a new subsection 

(h), as follows: 

SEC. 116. EXCLUSIONS FROM GROSS INCOME.

In addition to the items specified in section 22(b), the following items 

shall not be included in gross income and shall be exempt from taxation 

under this title: 

* * * * * * *

(h) COMPENSATION OF EMPLOYEES OF FOREIGN GOVERNMENTS.—Wages, 

fees, or salary of an employee of a foreign government (including a consular or other officer, or a nondiplomatic representative) received as compensation for official services to such government—

(1) If such employee is not a citizen of the United States; and 

(2) If the services are of a character similar to those performed by 

employees of the Government of the United States in foreign countries; 

and

(3) If the foreign government whose employee is claiming exemption 

grants an equivalent exemption to employees of the Government of the 

United States performing similar services in such foreign country.

The Secretary of State shall certify to the Secretary of the Treasury the 

names of the foreign countries which grant an equivalent exemption to the 

198 134 UNITED STATES TAX COURT REPORTS (190) 

11Section 116(h) was amended in 1945 to exempt the income of employees of international 

organizations (such as the United Nations), in addition to employees of foreign governments. See 

Act of Dec. 29, 1945, ch. 652, sec. 4, 59 Stat. 670; Ying v. Commissioner, 25 F.3d 84, 86–87 (2d 

Cir. 1994), affg. in part and revg. in part 99 T.C. 273 (1992). 

employees of the Government of the United States performing services in 

such foreign countries, and the character of the services performed by 

employees of the Government of the United States in foreign countries. 

[Act of Aug. 27, 1935, ch. 767, 49 Stat. 908; emphasis added.] 

The flush language referring to the Secretary of State was 

thus in a single subsection with the rest of the provision, but 

was not stated as one of the numbered conditions for the 

exemption. 

The next year, when the same Congress (the 74th) enacted 

the Revenue Act of 1936, ch. 690, 49 Stat. 1648, it included 

an almost identical provision, but it divided subsection (h) 

into two paragraphs and gave them headings: 

SEC. 116. EXCLUSIONS FROM GROSS INCOME.

In addition to the items specified in section 22(b), the following items 

shall not be included in gross income and shall be exempt from taxation 

under this title: 

* * * * * * *

(h) COMPENSATION OF EMPLOYEES OF FOREIGN GOVERNMENTS.—

(1) RULE FOR EXCLUSION.—Wages, fees, or salary of an employee of a 

foreign government (including a consular or other officer, or a nondiplomatic representative) received as compensation for official services to 

such government—

(A) If such employee is not a citizen of the United States; and 

(B) If the services are of a character similar to those performed by 

employees of the Government of the United States in foreign countries; 

and

(C) If the foreign government whose employee is claiming exemption 

grants an equivalent exemption to employees of the Government of the 

United States performing similar services in such foreign country. 

(2) CERTIFICATE BY SECRETARY OF STATE.—The Secretary of State 

shall certify to the Secretary of the Treasury the names of the foreign 

countries which grant an equivalent exemption to the employees of the 

Government of the United States performing services in such foreign 

countries, and the character of the services performed by employees of 

the Government of the United States in foreign countries. 

[Emphasis added.] 

In 1939 Congress reenacted the identical income tax exemption in section 116(h) of the Internal Revenue Code of 

1939. 11

(190) ABDEL-FATTAH v. COMMISSIONER 199

12 In enacting new section 893 as a stand-alone section, Congress included in section 893 the 

introductory language from section 116 that specified that such compensation is not included 

in gross income and is exempt from income tax. 

In 1954 Congress reenacted the income tax exemption in 

section 116(h) of the 1939 Code, with no significant 

change, 12 as section 893 of the Internal Revenue Code of 

1954. It has thereafter appeared without relevant amendment as section 893, and subsections (a) and (b) thereof provide as follows: 

SEC. 893. COMPENSATION OF EMPLOYEES OF FOREIGN GOVERNMENTS OR INTERNATIONAL ORGANIZATIONS.

(a) RULE FOR EXCLUSION.—Wages, fees, or salary of any employee of a 

foreign government or of an international organization (including a consular or other officer, or a nondiplomatic representative), received as compensation for official services to such government or international 

organization shall not be included in gross income and shall be exempt 

from taxation under this subtitle if—

(1) such employee is not a citizen of the United States * * *; and 

(2) in the case of an employee of a foreign government, the services 

are of a character similar to those performed by employees of the 

Government of the United States in foreign countries; and 

(3) in the case of an employee of a foreign government, the foreign 

government grants an equivalent exemption to employees of the Government of the United States performing similar services in such foreign 

country. 

(b) CERTIFICATE BY SECRETARY OF STATE.—The Secretary of State shall 

certify to the Secretary of the Treasury the names of the foreign countries 

which grant an equivalent exemption to the employees of the Government 

of the United States performing services in such foreign countries, and the 

character of the services performed by employees of the Government of the 

United States in foreign countries. 

Thus, as has been the case since 1936, the statute provides 

the ‘‘Rule for Exclusion’’ in subsection (a) and instructs the 

Secretary of State to certify reciprocity in a separate subsection (b). That certification is not presented in subsection 

(a) as one of the conditions for the exemption; and section 

893 does not explicitly provide that the wages shall be 

exempt only ‘‘if ’’ the Secretary certifies reciprocity (unlike 

the social security tax provisions, discussed next). 

C. Employment tax statutes

The income tax provision in section 893 may be contrasted 

with the corresponding employment tax provisions. In the 

200 134 UNITED STATES TAX COURT REPORTS (190) 

13 Respondent explains, ‘‘the U.S. Government is not authorized under the U.S. Constitution 

to pay foreign employment taxes on behalf of its employees. At the time of enactment and today, 

foreign governments did not pay U.S. employment taxes based on claims of foreign sovereignty. 

As a matter of reciprocity and practicality, Congress relieved foreign governments from payment 

of the employer’s portion of U.S. social [security] taxes.’’

14The unconditional character of the exception for employees of foreign governments is quite 

clear in the legislative history. The House Report (H. Rept. 728, 76th Cong., 1st Sess. 61 (1939)), 

explains the amendments to section 1426(b)(11) and (12) in the Social Security tax statute by 

a cross-reference to the corresponding amendments to the Social Security benefits provisions, 

1930s as now, the income tax and employment taxes were 

distinct; and though the compensation of foreign government 

employees was made exempt from income tax by section 

116(h), no equivalent exemption from Social Security tax had 

yet been enacted. 13 Congress addressed that gap in the 

Social Security Act Amendments of 1939, ch. 666, sec. 606, 

53 Stat. 1383, which revised the definition of ‘‘employment’’ 

in section 1426(b) of the 1939 Code by adding new exceptions 

in paragraphs (11) and (12): 

(11) Service performed in the employ of a foreign government (including 

service as a consular or other officer or employee or a nondiplomatic representative); 

(12) Service performed in the employ of an instrumentality wholly owned 

by a foreign government—

(A) If the service is of a character similar to that performed in foreign 

countries by employees of the United States Government or of an 

instrumentality thereof; and 

(B) If the Secretary of State shall certify to the Secretary of the 

Treasury that the foreign government, with respect to whose instrumentality and employees thereof exemption is claimed, grants an equivalent 

exemption with respect to similar service performed in the foreign 

country by employees of the United States Government and of 

instrumentalities thereof * * *. 

[Emphasis added.] 

These employment tax exceptions survive verbatim in current section 3121(b)(11) and (12) (and in identical exceptions 

to the Federal Unemployment Tax in current section 

3306(c)(11) and (12)), and they are incorporated by reference 

into an exemption from self-employment tax, section 

1402(c)(2)(C). These employment tax provisions bear two 

obvious differences from the income tax provision in section 

116(h) (now section 893). First, service performed in the 

direct employ of a foreign government is simply stated in 

paragraph (11) to be excepted from the Social Security tax—

without any stated conditions involving citizenship or the 

reciprocity of the foreign government’s employment taxes. 14

(190) ABDEL-FATTAH v. COMMISSIONER 201

section 209(b)(11) and (12). The benefits amendment is explained as follows: ‘‘Paragraph (11) 

excepts service performed in the employ of a foreign government, and paragraph (12) similarly 

excepts, on a basis of reciprocity, service performed in the employ of an instrumentality wholly 

owned by a foreign government.’’ Id. at 48–49. To the same effect, see S. Rept. 734, 76th Cong., 

1st Sess. 58, 74 (1939). 

Second, certification by the Secretary of State is made one of 

two explicit conditions for the exception for service performed 

for an instrumentality of the foreign government (i.e., ‘‘If the 

Secretary of State shall certify’’ reciprocity (emphasis 

added)). 

In 1943, when employers began to be required to withhold 

income tax from employee wages, Congress exempted wages 

for services that U.S. citizens and residents performed for a 

foreign government and wages earned by certain nonresident 

aliens. See former sec. 1621(a)(5), (6), and (7), enacted by the 

Current Tax Payment Act of 1943, ch. 120, sec. 2(a), 57 Stat. 

126. Under current section 3401(a)(5), foreign governments 

are unconditionally exempted from the duty to withhold 

income tax from the compensation of U.S. citizens and residents. Under section 3401(a)(6), foreign governments are 

exempted from the duty to withhold income tax from the 

compensation of nonresident aliens only ‘‘as may be designated by regulations prescribed by the Secretary’’, but 

those regulations make the exemption unconditional. See 26 

C.F.R. sec. 31.3401(a)(5)–1(a)(2), Employment Tax Regs. That 

is, foreign governments are exempt from income tax withholding whether or not the State Department has certified 

reciprocity. 

III. Lack of regulatory guidance on the income tax exemption

The income tax regulations promulgated under section 

893—26 C.F.R. section 1.893–1, Income Tax Regs.—shed no 

light on our issue, because they simply restate the statute. 

Mr. Abdel-Fattah stresses that section 1.893–1(a) puts the 

conditions for the exemption in a subparagraph (1) (‘‘Exempt 

from tax’’) and sets out the duty of the Secretary of State to 

certify reciprocity in the separate subparagraph (2) (‘‘Certificate by Secretary of State’’). However, in this regard the 

regulation simply mirrors the statute, and if the wording of 

the provisions in the regulation is meaningful, it is meaningful only because the corresponding wording of the statute is 

meaningful. If the corresponding wording of the statute does 

202 134 UNITED STATES TAX COURT REPORTS (190) 

15 By regulation, taxpayers are permitted to cite and rely on published Revenue Rulings. See 

26 C.F.R. sec. 601.601(d)(2)(v)(d), Statement of Procedural Rules (‘‘Revenue Rulings * * * are 

published to provide precedents to be used in the disposition of other cases, and may be cited 

and relied on for that purpose’’ (emphasis added)). However, the regulations applicable to any 

other ‘‘written determination’’ (including a ‘‘ruling’’ that is ‘‘issued to a taxpayer’’), see 26 C.F.R. 

sec. 301.6110–2(a), (d), Proced. & Admin. Regs., provide the default rule that a ‘‘written determination may not be used or cited as precedent’’, 26 C.F.R. sec. 301.6110–7(b), Proced. & Admin. 

Regs.

not have the significance that Mr. Abdel-Fattah urges, then 

the regulation likewise does not have that significance. Thus, 

the regulation does not add anything on this point. 

The parties cite no published guidance of the IRS (such as 

revenue rulings) that address the issue in this case. Rather, 

Mr. Abdel-Fattah asks us to consider several private letter 

rulings in support of his position. We decline to do so in light 

of section 6110(k)(3), which provides: 

(3) PRECEDENTIAL STATUS.—Unless the Secretary otherwise establishes 

by regulations,[15] a written determination may not be used or cited as 

precedent. [Emphasis added.] 

We will not consider the private letter rulings that Mr. 

Abdel-Fattah proffers. 

IV. Interpretation of section 893

A. Two forms of certification statutes

Where a tax statute provides a benefit, states conditions 

for its application, and provides that a government official 

shall certify the fulfillment of those conditions, that certification may take one of two alternative characters. We find 

that, to be better able to put section 893 into perspective, it 

is helpful to consider examples of statutory provisions of both 

kinds. 

1. Statutes in which certification is a prerequisite

Certification is sometimes required as a prerequisite to a 

tax benefit provided in the Code. Where a statute is of this 

sort, the absence of the certification precludes the claiming 

of the benefit. For example, the employment tax exemption 

of section 3121(b)(12)(B), by its terms, applies only ‘‘if the 

Secretary of State shall certify * * * that the foreign government * * * grants an equivalent exemption’’. (Emphasis 

added.) Thus, certification is made an explicit condition of 

the exemption. Respondent contends that section 893 is a 

(190) ABDEL-FATTAH v. COMMISSIONER 203

16See also, e.g., Nielsen-True Pship. v. Commissioner, 109 T.C. 112, 120–125 (1997) (former 

sec. 29(c)(2)(A) required a determination as a prerequisite for the credit), affd. sub nom. True 

Oil Co. v. Commissioner, 170 F.3d 1294 (10th Cir. 1999); Manor Care, Inc. v. United States, 89 

Fed. Cl. 618, 623 (2009) (certification by a State employment security agency is a prerequisite 

to the work opportunity credit under sec. 38(b)(2) for wages paid to ‘‘a qualified SSI recipient’’ 

under sec. 51(d)(1)(H)). 

17See also, e.g., sec. 7428 (declaratory remedy by which an organization claiming tax-exempt 

Continued

provision of this sort and that the Secretary of State’s certification of reciprocity is a prerequisite to the exemption benefit. 

Statutes of this sort—requiring certification as a prerequisite 16—have certain advantages of convenience and 

administrability. Rather than assigning to the tax collector 

the task of making, in the first instance, difficult determinations that may be well outside his knowledge or expertise, 

such a statute commits the determination to the agency with 

the relevant subject-matter expertise. However, such statutes 

may also have corresponding disadvantages. The tax benefit 

may be denied, even in a circumstance clearly within 

Congress’s intention to grant the benefit, because a certification is lacking as a result of the certifying official’s delay 

or error, or of a taxpayer’s failure to comply with the official’s 

rules for requesting certification, or (depending on the 

statute) of a third party’s failure to make the certification 

request. 

2. Statutes in which certification is not a prerequisite

Mr. Abdel-Fattah contends that section 893(b) is a provision of a different sort—i.e., one in which the absence of the 

certification does not preclude the claiming of the benefit. 

For example, taxes on firearms are not imposed on devices 

that ‘‘the Secretary finds’’ have certain characteristics, sec. 

5845(a), (f). Pursuant to 27 C.F.R. sections 479.24 and 479.25 

(2009), a taxpayer requests such a determination from the 

Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), 

but before ATF makes any ruling, the manufacturer may 

claim and sue for a refund of firearms tax. See, e.g., Blakley 

v. United States, 593 F.3d 1337 (Fed. Cir. 2010); 27 C.F.R. 

sec. 70.123 (2009). Congress certainly committed to ATF the 

duty of classifying firearms, but ATF’s ruling is not a prerequisite to a taxpayer’s claim and is not immune from the 

taxpayer’s challenge. 17

204 134 UNITED STATES TAX COURT REPORTS (190) 

status under sec. 501(c)(3) may challenge the IRS’s adverse ruling or failure to rule on the organization’s application for recognition of exempt status); sec. 7478 (declaratory remedy by which 

a State or city that claims that interest on its bonds qualifies for exclusion under sec. 103 may 

challenge the IRS’s adverse determination or failure to determine). 

18 However, certification, when present, will dramatically simplify a taxpayer’s proof of section 

893(a)(2) and (3). 

A statute that allows a tax benefit without certification 

may have advantages and disadvantages that are converse to 

those of the first sort of statute. That is, this latter sort of 

statute may require the tax collector or a reviewing court to 

decide, without prior ventilation by subject-matter experts in 

an agency, matters that may be outside the tax specialist’s 

expertise (such as firearms classification); but on the other 

hand these statutes assure that the vagaries of a certification 

process do not block the intended benefit of the statute. 

Thus, both of these approaches appear in different provisions in the Internal Revenue Code. We now examine section 

893 to see which approach is reflected there. 

B. Analysis of certification in section 893

1. The language of section 893 does not condition the 

income tax exemption on State Department certification. 

In section 893 the exemption is not explicitly described as 

conditional, as if it depended on certification by the Secretary 

of State; it does not create the exemption only ‘‘if the Secretary of State shall certify’’ as does section 3121(b)(12)(B). 

Certification is not explicitly stated to be part of the exemption qualification (as in section 51(d)(9) (‘‘ ‘qualified SSI

recipient’ means any individual who is certified’’)). Rather, 

section 893(a) provides for an exemption ‘‘if ’’ three conditions 

are met (not including certification) and then comes to a full 

stop. Certification is not a fourth ‘‘if ’’ in the list but instead 

is addressed thereafter in subsection (b). Section 893(a) provides an exemption, and section 893(b) requires action by the 

Secretary of State but does not purport to qualify the exemption or to take it away in any instance. We conclude, therefore, that under the plain language of the statute, certification is not a condition or prerequisite of the exemption. 18

Mr. Abdel-Fattah’s argument about the language of the 

statute stresses that the certification provision is in a subsection after and separate from the subsection imposing 

(190) ABDEL-FATTAH v. COMMISSIONER 205

three express conditions for the exemption and stresses that 

the heading ‘‘Rule for Exclusion’’ is assigned to subsection (a) 

only. We should not exaggerate the significance of the subdivision and the placement of the heading since, as the 

Supreme Court explained in Bhd. of R.R. Trainmen v. Balt. 

& Ohio R.R., 331 U.S. 519, 528–529 (1947), 

headings and titles are not meant to take the place of the detailed provisions of the text. Nor are they necessarily designed to be a reference guide 

or a synopsis. Where the text is complicated and prolific, headings and 

titles can do no more than indicate the provisions in a most general 

manner; to attempt to refer to each specific provision would often be 

ungainly as well as useless. As a result, matters in the text which deviate 

from those falling within the general pattern are frequently unreflected in 

the headings and titles. Factors of this type have led to the wise rule that 

the title of a statute and the heading of a section cannot limit the plain 

meaning of the text. * * * For interpretative purposes, they are of use 

only when they shed light on some ambiguous word or phrase. They are 

but tools available for the resolution of a doubt. But they cannot undo or 

limit that which the text makes plain. 

In the case of section 893, however, the headings are not at 

any variance with the text. Section 116(h) was originally 

drafted in 1934 in such a way—with the State Department 

certification being stated after, and distinctly from, the three 

‘‘if ’’ conditions—that it was susceptible of being split neatly 

and easily into two paragraphs (in 1936), without any rewording whatsoever. The headings added in 1936 correspond 

to the text, in that the text of paragraph (1) with its three 

explicit conditions does describe (as the heading indicates) 

the ‘‘Rule for exclusion’’; and the text of paragraph (2) does 

separately call for a ‘‘Certificate by Secretary of State’’. This 

is an instance in which the headings ‘‘are of some use for 

interpretative purposes’’, Wallace v. Commissioner, 128 T.C. 

132, 140–141 (2007), and they confirm our reading of the text 

of the statute. 

2. The language of section 893 differs from that of comparable contemporaneous provisions.

This reading of the income tax statute—i.e., that the certification in section 893(b) is not a prerequisite to the benefit 

provided in section 893(a)—is confirmed by comparison to the 

different language Congress used five years later in 1939 

when it provided a reciprocal exception from Social Security 

206 134 UNITED STATES TAX COURT REPORTS (190) 

tax. Then-section 1426(b)(12)(B) (now section 3121(b)(12)(B)) 

excepted certain service for foreign instrumentalities—

If the Secretary of State shall certify to the Secretary of the Treasury that 

the foreign government, with respect to whose instrumentality and 

employees thereof exemption is claimed, grants an equivalent exemption 

* * *. [Emphasis added.] 

That language (unlike the language of section 893) plainly 

makes the certification a condition of the exception. Congress 

could have used such language in section 893, but it did not. 

To read the statute as if it had been so worded would be not 

to interpret it but to correct it, and we decline to do so. 

The Congress that enacted the statute in 1934 had before 

it both (1) the existing income tax regulations, which had not 

explicitly required State Department certification of reciprocity, and (2) the customs regulations that provided a 

‘‘somewhat comparable privilege’’ (see supra note 7) that, in 

some particulars, was available ‘‘only when application is 

made therefor through the Department of State’’. In creating 

the income tax exemption, Congress followed the model of 

the income tax regulation and did not make the exemption 

available ‘‘only when’’ the State Department had certified 

reciprocity. Instead, the language (now in section 893(a)) that 

creates the exemption is silent about the State Department. 

Respondent defends his different interpretation by arguing 

that section 893 is simply ‘‘less precisely drafted’’ than section 3121(b)(12), but that begs the question. That is, the 

argument assumes (without showing) that certification was 

intended to be a condition of the exemption and then 

explains the distance between that intention and the actual 

statutory language as a lack of precision. If instead we look 

first at what the statute says and attempt to learn from that 

language what the legislative intention was, we find that 

Congress precisely stated three conditions for the exemption 

in what is now section 893(a) and then precisely stated, in 

what is now section 893(b), a distinct obligation of the Secretary of State. The text gives no indication of the intention 

that respondent assumes, and bears no imprecision in 

expressing its evident intention.

(190) ABDEL-FATTAH v. COMMISSIONER 207

19 In form, the State Department’s eventual certification as to the UAE was—consistent with 

section 893(b)—directed to Treasury (‘‘I hereby certify to the Secretary of the Treasury’’). However, the certification (signed September 26, 2008) was promptly provided to the UAE on October 1, 2008, but was not transmitted to the Department of the Treasury until five months later, 

on March 10, 2009. In substance, the State Department seems to treat the certification as granted to the foreign country upon its application. 

3. Treating State Department certification as a prerequisite 

to the exemption is at odds with the purpose of the 

statute. 

Respondent argues that allowing a qualifying employee to 

obtain the exemption without State Department certification 

makes that certification ‘‘non-mandatory’’, whereas the 

statute does admittedly use mandatory language (i.e., ‘‘The 

Secretary of State shall certify to the Secretary of the 

Treasury’’ (emphasis added)). However, the only mandate in 

the statute is directed to the Secretary of State. That is, 

there is no language in the statute mandating that the taxpayer ‘‘shall obtain’’ a certification before claiming the 

exemption, or mandating that the IRS ‘‘shall require’’ a certification before allowing the exemption. Rather, to facilitate 

claims of exemption, Congress mandated action by the Secretary of State, who ‘‘shall certify’’. 

Our record shows that the Secretary of State certifies reciprocity only upon the application by a foreign country for 

such certification. That is, the State Department follows the 

mandate of section 893(b) only when a foreign country first 

applies for certification. It should be noted that the statute 

makes no provision for a foreign country to apply for such 

certification; that the statute does not conceive of a certification being issued to a foreign country; 19 and that the 

statute certainly does not condition the issuance of a certification upon an application. We assume that, in view of the 

complexity of the task of certifying income tax reciprocity of 

all the countries in which U.S. citizens work for U.S. consulates, the expedient of waiting for an application is practical—perhaps even inevitable. And even if this implementation of the mandate effectively permits the State Department 

to fail indefinitely to do what section 893(b) says it ‘‘shall’’ do, 

the income tax exemption of section 893(a) is not frustrated 

as long as certification is not treated as a prerequisite. But 

if certification were a prerequisite, and if an otherwise valid 

claim for exemption failed for the lack of certification, then 

208 134 UNITED STATES TAX COURT REPORTS (190) 

20Since respondent admits that Mr. Abdel-Fattah did meet the qualifications of section 893(a) 

during the years in suit, we need not decide what standard of review would be adopted if one 

or both of the qualifications of section 893(a)(2) and (3) were in dispute. Likewise, we need not 

decide by what standard we would review a taxpayer’s challenge of an actual certification of 

non-reciprocity—if in fact the State Department ever issues such negative certifications, which 

our record does not disclose. Neither do we decide whether the Commissioner could deny section 

893(a) treatment by disputing the correctness of a section 893(b) certification that had been 

made by the State Department and had been relied on by an embassy employee. 

the failure of the State Department to make a certification 

unless and until it received a (non-statutory) application 

would preclude the exemption. 

This dynamic is hard to reconcile with the congressional 

intention in 1935. There is no evidence of a congressional 

purpose to deny exemption until a foreign country had initiated and completed an exemption application process. The 

impulse behind the statute was not to reign in an overly generous IRS and use a State Department certification process to 

restrict exemptions. On the contrary, the subject of real 

interest to the Congress (and to both the State Department 

and the Department of the Treasury) (see supra pp. 196–197) 

was the adverse foreign tax consequences to U.S. consular 

employees that was resulting from the lack of a reciprocal 

U.S. income tax exemption. The congressional impulse was to 

loosen the situation, not to tighten it—i.e., to create a statutory exemption so that the prior administrative practice 

could continue and U.S. workers in foreign countries would 

not become subject to foreign taxes. It is possible that a 

legislature creating such an exemption would nonetheless 

establish procedures to limit it (e.g., requiring an application, 

and denying an exemption not duly applied for and granted); 

but the statute and the legislative history show no signs of 

that contrary impulse. 

Treating the State Department’s certification as separate 

from the conditions for exemption hardly ‘‘relegates subsection (b) to a mere administrative ‘helpful hint’ ’’, as 

respondent suggests. On the contrary, in a matter concerning 

the application of U.S. law to foreign embassy staffs, Congress sensibly charged the State Department (not the IRS) 

with the front-line diplomatic responsibility of determining 

the reciprocity of foreign tax law; and it seems fair to assume 

not only that the State Department’s certification of reciprocity will be the last word in virtually every case, 20 but 

also that the State Department’s certification will greatly 

(190) ABDEL-FATTAH v. COMMISSIONER 209

21We assume arguendo that such difficulties exist, though they are not demonstrated on our 

record. All that section 893 requires is a determination of ‘‘an equivalent exemption’’. Sec. 

893(a)(2), (b). For this purpose, ‘‘an equivalent exemption’’ is an exemption equivalent to an 

‘‘exempt[ion] from taxation under this subtitle’’. Sec. 893(a) (emphasis added). ‘‘[T]his subtitle’’ 

(of title 26, the Internal Revenue Code) is subtitle A, ‘‘Income Taxes’’. Inquiry into reciprocity 

as to other taxes would therefore appear to be unnecessary. And where information necessary 

to a determination of reciprocity is not accessible, then the outcome would presumably be resolved by the operation of the burden of proof. 

22 Again, we assume arguendo that our interpretation has this disadvantage that respondent 

describes—i.e., it diminishes the role of section 893 certification as a means for ensuring tax 

exemption for U.S. consular employees in foreign countries. However, neither of the competing 

interpretations of section 893 bars the State Department from determining how a foreign country treats U.S. consular employees and informing the IRS. Rather, the State Department may 

do so on whatever schedule and by whatever means it desires; and if it finds non-reciprocity 

in a given country and so advises the IRS, then presumably the IRS will follow the State Department’s conclusion and will rule adversely on claims by employees of that country’s consulate. 

simplify an embassy employee’s claim of exemption and the 

IRS’s ruling on that claim. Only where there is no certification will a dispute on the matter be at all likely. 

4. Potential difficulties with the statute as written do not 

warrant judicial correction of the statute.

Respondent contends that several difficulties may result 

from this interpretation of section 893. He urges that in some 

circumstances the reciprocity determination may be difficult 

(for example, where the foreign country has a value added 

tax or user fees from which U.S. Embassy employees are not 

exempted, or where the determination requires treaty 

interpretation, or where the information necessary to make 

the determination may not be accessible to IRS agents or 

even to the taxpayer). 21 Respondent suggests that, in circumstances where there is no State Department certification, 

the statute as we interpret it—

• requires section 893 to be administered without the benefit of ‘‘State’s expertise in the arena of international affairs’’; 

• commits the reciprocity issue to the judgments of taxpayers as they file returns, to IRS personnel as they examine 

them, and to the several courts as the issues are litigated, so 

that uniformity of outcome among foreign employees from 

the same country is not assured; and 

• fails to create an occasion for the State Department ‘‘to 

ensure that Americans working at embassies abroad receive 

equivalent exemptions * * * in their host countries’’ and 

‘‘undercuts State’s ability to ensure reciprocity’’. 22

210 134 UNITED STATES TAX COURT REPORTS (190) 

23Letter from Treasury Department to the Secretary of State 4–5 (Aug. 7, 1934). 

These issues of diplomacy and tax administration might be 

reasons to prefer a rule that required State Department certification as a prerequisite to the income tax exemption. 

However, these considerations would be properly addressed 

to Congress as reasons to enact such a rule; and in the 

absence of such a rule, these considerations cannot alter our 

interpretation of the different rule that Congress actually 

enacted. If the rule that Congress enacted—which does not 

require State Department certification as a condition for 

claiming the exemption—is problematic for these reasons, 

then the problems can be addressed not by corrective 

interpretation but only by legislative amendment. 

Respondent’s position here has an ironic resemblance to 

the situation that existed in 1934. The Treasury Department 

had administratively granted an exemption that the statute 

did not provide, but Treasury came to realize the impropriety 

of its having done so. Resisting the State Department’s 

urging that the administrative exemption be perpetuated, 

Treasury explained: 

The formulation of such policies is not within the province of the executive department of the government. * * *

* * * * * * *

This Department fully appreciates the difficulties and possible loss of 

revenue, to which you refer, as the result of any change in the practice 

heretofore adopted * * *. The question, however, is not one which 

addresses itself to administrative solution or which may properly be 

considered or determined by this Department on the basis of the benefits 

which might accrue to the United States by a continuation of such practice, but is one which involves the constitutional authority of this Department to grant exemptions from taxation except as directed by the lawmaking branches of the government.[23]

Now at issue is not the granting but the denying of the 

exemption. Denying the exemption where the State Department has not certified reciprocity could again be defended 

‘‘on the basis of the benefits which might accrue to the 

United States’’, but that action must again be said to be ‘‘not 

within the province of the executive department of the 

government’’. The IRS can no more deny now an exemption 

on a condition that Congress did not impose than it could 

allow then an exemption that Congress had not granted. 

(190) ABDEL-FATTAH v. COMMISSIONER 211

The statute as it stands does not require State Department 

certification, and we therefore hold in favor of Mr. AbdelFattah. 

To reflect the foregoing, 

An appropriate order will be issued, and 

decision will be entered under Rule 155. 

f