                                             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:



                                         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.


                                      190




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                                                                                                              Accuracy-related
                                                                                  Addition to tax                 penalty
                                              Year           Deficiency           sec. 6651(a)(1)                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 Vir-
                                      ginia.
                                      The UAE and taxes
                                        The United Arab Emirates was formed as a union of sepa-
                                      rate 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.
                                        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.




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                                         However, in April 1991 the U.S. Department of State
                                      (State Department) announced a change in its policy con-
                                      cerning 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 certifi-
                                      cation 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. Abdel-
                                      Fattah 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
                                        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 in-
                                      cludes 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.




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                                      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 Emir-
                                      ates 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 con-
                                      cedes 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 sat-
                                      isfy certain conditions, and Mr. Abdel-Fattah’s wages satis-




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                                      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 sub-
                                      section (b) is a prerequisite to the exemption provided in
                                      subsection (a). We hold that it is not, under the plain lan-
                                      guage 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. Commis-
                                      sioner, 90 T.C. 678, 681 (1988). Rule 121 provides for sum-
                                      mary 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 ques-
                                         4 In the alternative, if the section 893(b) certification is a condition of the section 893(a) ex-

                                      emption, 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. Respond-
                                      ent disputes each of these propositions, and argues that, in any event, non-retroactive applica-
                                      tion of the certification would be reviewed for abuse of discretion—which proposition petitioner
                                      disputes. Respondent contends that retroactive application would perversely benefit noncompli-
                                      ant taxpayers and punish compliant taxpayers. Because we decide that the section 893(b) certifi-
                                      cation 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. Like-
                                      wise, 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.




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                                      tion of law’’, Rule 146, rather than fact, ‘‘so that appellate
                                      review will not be narrowly confined by the ‘clearly erro-
                                      neous’ 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 nor-
                                      mally 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. with-
                                      out 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




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                                      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 Depart-
                                      ment 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 creden-
                                      tials 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 exemp-
                                      tion. 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
                                           6 Regs.
                                                 77, art. 641 (1932), included an identical provision.
                                           7 See
                                               H. Rept. 1759, 74th Cong., 1st Sess. 3 (1935), 1939–1 C.B. (Part 2) 891, 892 (‘‘A some-
                                      what 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’’). Be-
                                      cause 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.
                                         8 See letter from the Treasury Department to the Secretary of State (Aug. 7, 1934) 4–5, de-

                                      scribed in H. Rept. 1759, supra at 3, 1939–1 C.B. (Part 2) at 892.
                                         9 See 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.




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                                      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 representa-
                                      tives 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 statu-
                                      tory 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 con-
                                      sular or other officer, or a nondiplomatic representative) received as com-
                                      pensation 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
                                        10 See 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.




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                                      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 nondiplo-
                                           matic 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 exemp-
                                      tion in section 116(h) of the Internal Revenue Code of
                                      1939. 11
                                        11 Section 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).




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                                        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 amend-
                                      ment as section 893, and subsections (a) and (b) thereof pro-
                                      vide as follows:
                                      SEC. 893. COMPENSATION OF EMPLOYEES OF FOREIGN GOVERN-
                                                MENTS 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 con-
                                      sular or other officer, or a nondiplomatic representative), received as com-
                                      pensation 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 Govern-
                                        ment 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 sub-
                                      section (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
                                        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.




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                                      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 rep-
                                      resentative);
                                        (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 instrumen-
                                        tality 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 cur-
                                      rent 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
                                         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.’’
                                         14 The 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,




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                                      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 resi-
                                      dents. 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 des-
                                      ignated 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 with-
                                      holding 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) (‘‘Certifi-
                                      cate 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 meaning-
                                      ful only because the corresponding wording of the statute is
                                      meaningful. If the corresponding wording of the statute does
                                      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).




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                                      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 certifi-
                                      cation 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 govern-
                                      ment * * * grants an equivalent exemption’’. (Emphasis
                                      added.) Thus, certification is made an explicit condition of
                                      the exemption. Respondent contends that section 893 is a
                                        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 deter-
                                      mination may not be used or cited as precedent’’, 26 C.F.R. sec. 301.6110–7(b), Proced. & Admin.
                                      Regs.




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                                      (190)                   ABDEL-FATTAH v. COMMISSIONER                                          203


                                      provision of this sort and that the Secretary of State’s certifi-
                                      cation of reciprocity is a prerequisite to the exemption ben-
                                      efit.
                                         Statutes of this sort—requiring certification as a pre-
                                      requisite 16—have certain advantages of convenience and
                                      administrability. Rather than assigning to the tax collector
                                      the task of making, in the first instance, difficult determina-
                                      tions 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 certifi-
                                      cation 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 provi-
                                      sion 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 pre-
                                      requisite to a taxpayer’s claim and is not immune from the
                                      taxpayer’s challenge. 17
                                        16 See 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)).
                                        17 See also, e.g., sec. 7428 (declaratory remedy by which an organization claiming tax-exempt

                                                                                                   Continued




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                                      204                134 UNITED STATES TAX COURT REPORTS                                        (190)


                                        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 provi-
                                      sions 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 certi-
                                              fication.
                                         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 Sec-
                                      retary of State shall certify’’ as does section 3121(b)(12)(B).
                                      Certification is not explicitly stated to be part of the exemp-
                                      tion 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) pro-
                                      vides an exemption, and section 893(b) requires action by the
                                      Secretary of State but does not purport to qualify the exemp-
                                      tion or to take it away in any instance. We conclude, there-
                                      fore, that under the plain language of the statute, certifi-
                                      cation 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 sub-
                                      section after and separate from the subsection imposing
                                      status under sec. 501(c)(3) may challenge the IRS’s adverse ruling or failure to rule on the orga-
                                      nization’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).




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                                      (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 sub-
                                      division 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 provi-
                                      sions 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 re-
                                      wording 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 com-
                                              parable contemporaneous provisions.
                                         This reading of the income tax statute—i.e., that the cer-
                                      tification 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




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                                      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 reci-
                                      procity, 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 sec-
                                      tion 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 Sec-
                                      retary of State. The text gives no indication of the intention
                                      that respondent assumes, and bears no imprecision in
                                      expressing its evident intention.




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                                           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 tax-
                                      payer ‘‘shall obtain’’ a certification before claiming the
                                      exemption, or mandating that the IRS ‘‘shall require’’ a cer-
                                      tification before allowing the exemption. Rather, to facilitate
                                      claims of exemption, Congress mandated action by the Sec-
                                      retary of State, who ‘‘shall certify’’.
                                         Our record shows that the Secretary of State certifies reci-
                                      procity 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 certifi-
                                      cation being issued to a foreign country; 19 and that the
                                      statute certainly does not condition the issuance of a certifi-
                                      cation 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. con-
                                      sulates, the expedient of waiting for an application is prac-
                                      tical—perhaps even inevitable. And even if this implementa-
                                      tion 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
                                        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’’). How-
                                      ever, the certification (signed September 26, 2008) was promptly provided to the UAE on Octo-
                                      ber 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 grant-
                                      ed to the foreign country upon its application.




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                                      208                134 UNITED STATES TAX COURT REPORTS                                        (190)


                                      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 initi-
                                      ated and completed an exemption application process. The
                                      impulse behind the statute was not to reign in an overly gen-
                                      erous 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 statu-
                                      tory 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 sub-
                                      section (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, Con-
                                      gress 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 reci-
                                      procity will be the last word in virtually every case, 20 but
                                      also that the State Department’s certification will greatly
                                        20 Since 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.




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                                      (190)                   ABDEL-FATTAH v. COMMISSIONER                                           209


                                      simplify an embassy employee’s claim of exemption and the
                                      IRS’s ruling on that claim. Only where there is no certifi-
                                      cation 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 cir-
                                      cumstances where there is no State Department certification,
                                      the statute as we interpret it—
                                         • requires section 893 to be administered without the ben-
                                      efit of ‘‘State’s expertise in the arena of international affairs’’;
                                         • commits the reciprocity issue to the judgments of tax-
                                      payers 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
                                         21 We 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 re-
                                      solved 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 coun-
                                      try 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 De-
                                      partment’s conclusion and will rule adversely on claims by employees of that country’s con-
                                      sulate.




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                                      210                    134 UNITED STATES TAX COURT REPORTS                                       (190)


                                      These issues of diplomacy and tax administration might be
                                      reasons to prefer a rule that required State Department cer-
                                      tification 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 execu-
                                      tive 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 prac-
                                      tice, but is one which involves the constitutional authority of this Depart-
                                      ment to grant exemptions from taxation except as directed by the law-
                                      making branches of the government.[23]

                                      Now at issue is not the granting but the denying of the
                                      exemption. Denying the exemption where the State Depart-
                                      ment 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.
                                           23 Letter   from Treasury Department to the Secretary of State 4–5 (Aug. 7, 1934).




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                                      (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. Abdel-
                                      Fattah.
                                        To reflect the foregoing,
                                                                     An appropriate order will be issued, and
                                                                   decision will be entered under Rule 155.

                                                                               f




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