                                           ROSEMARIE E. HARRISON, PETITIONER v. COMMISSIONER                                        OF
                                                     INTERNAL REVENUE, RESPONDENT
                                                        Docket No. 15074–10.                           Filed May 1, 2012.

                                                  P, a citizen of the Federal Republic of Germany and a resi-
                                                dent alien of the United States, was employed in the United
                                                States by the Federal Republic of Germany, Office of Defense
                                                Administration, U.S.A. and Canada and received wages
                                                during 2006–08. P claims her wages were exempt from U.S.
                                                taxation under I.R.C. sec. 893(a) and the Agreement Between
                                                the Parties to the North Atlantic Treaty Regarding the Status
                                                of Their Forces (NATO SOFA), June 19, 1951, 4 U.S.T. 1792.
                                                Held: P’s wages are not exempt from taxation under I.R.C.
                                                sec. 893(a). Held, further, P does not benefit from the provi-
                                                sions of NATO SOFA.

                                           Rosemarie E. Harrison, pro se.
                                           Matthew S. Reddington, for respondent.
                                        MARVEL, Judge: Respondent determined deficiencies in
                                      petitioner’s Federal income taxes of $18,637, $18,904, and
                                      340




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                                      $31,924 for 2006, 2007, and 2008, respectively, and an addi-
                                      tion to tax under section 6651(a)(1) 1 of $7,846 for 2008. After
                                      a concession, 2 the sole issue for decision is whether peti-
                                      tioner’s wages paid by the Federal Republic of Germany
                                      (Germany), Office of Defense Administration, U.S.A. and
                                      Canada (German Defense Administration) are exempt from
                                      taxation under section 893(a) or the Agreement Between the
                                      Parties to the North Atlantic Treaty Regarding the Status of
                                      Their Forces (NATO SOFA), June 19, 1951, 4 U.S.T. 1792.
                                                                          FINDINGS OF FACT

                                        Some of the facts have been stipulated. The stipulation of
                                      facts is incorporated herein by this reference. Petitioner
                                      resided in Virginia when she filed her petition.
                                      I. Background
                                        Petitioner came to the United States in the 1970s. During
                                      the years at issue petitioner was a citizen of Germany and
                                      a permanent resident of the United States. As a permanent
                                      resident of the United States, she held a U.S. permanent
                                      resident card (green card). See Immigration and Nationality
                                      Act (INA), ch. 477, sec. 264, 66 Stat. at 224 (1952). The green
                                      card permits petitioner to reside in the United States. The
                                      parties stipulated, and we find on the basis of the record as
                                      a whole, that during the years at issue petitioner ordinarily
                                      was resident in the United States.
                                        On January 1, 1977, petitioner began her employment with
                                      the German Defense Administration in Reston, Virginia. The
                                      German Defense Administration is a miscellaneous foreign
                                      government office (MFGO), as classified by the U.S. Depart-
                                      ment of State in its listing of German Missions dated August
                                      17, 2007. 3 The U.S. Department of State did not issue a cer-
                                         1 Unless otherwise indicated, section references are to the Internal Revenue Code (Code) in

                                      effect for the years at issue, and Rule references are to the Tax Court Rules of Practice and
                                      Procedure. Monetary amounts have been rounded to the nearest dollar.
                                         2 Respondent concedes that petitioner timely filed her return for 2008 and that therefore she

                                      is not liable for the sec. 6651(a)(1) addition to tax.
                                         3 ‘‘MFGO’’ is a designation that the U.S. Department of State uses to categorize a foreign gov-

                                      ernment entity or operation that is not part of or does not carry out diplomatic or consular oper-
                                      ations. Employees of an MFGO are not diplomats or consular employees.
                                         Petitioner’s employment contract identifies her employer as the German Armed Forces Com-
                                      mand, United States and Canada (German Armed Forces Command). Petitioner testified that
                                      her employer was the German Armed Forces Command. However, petitioner’s Forms W–2,
                                      Wage and Tax Statement, and the parties’ stipulations identify the German Defense Adminis-
                                                                                                    Continued




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                                      342                 138 UNITED STATES TAX COURT REPORTS                                      (340)


                                      tification under section 893(b), see infra p. 344, to the Ger-
                                      man Defense Administration.
                                         Petitioner was employed by the German Defense Adminis-
                                      tration as a local hire personnel; her place of work was at
                                      Dulles International Airport in Sterling, Virginia. During the
                                      last 15 years of her employment, she held the position of
                                      administrative analyst and transportation specialist. 4 Peti-
                                      tioner received wages from the German Defense Administra-
                                      tion of $83,249, $85,275, and $126,863 for 2006, 2007, and
                                      2008, respectively. Germany did not impose a tax on the
                                      wages that petitioner received from the German Defense
                                      Administration for the years at issue.
                                         Petitioner did not sign a waiver under section 247(b) of the
                                      INA. 5 Petitioner was retired as of the date of trial.

                                      II. Procedural History
                                        Petitioner timely filed her 2006–08 Federal income tax
                                      returns and attached to the returns letters stating that her
                                      salary was tax exempt under section 893. In her letters to
                                      the Internal Revenue Service (IRS), she stated that the IRS
                                      had ruled on her tax-exempt status in a letter dated June 8,
                                      1981. 6 In the notice of deficiency respondent determined that
                                      petitioner’s wages were taxable.

                                                                                  OPINION

                                      I. Burden of Proof
                                         Generally, the Commissioner’s determinations in the notice
                                      of deficiency are presumed correct, and the taxpayer bears
                                      the burden of proving that they are erroneous. See Rule
                                      142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Peti-
                                      tioner does not contend that section 7491(a) shifts the burden
                                      of proof to respondent. In any case, we need not decide
                                      tration as her employer. According to the listing of German Missions of the U.S. Department
                                      of State dated August 17, 2007, the German Armed Forces Command is a mission separate from
                                      the German Defense Administration. However, both are classified as MFGOs, and our resolution
                                      of the issues in this case is unaffected by the different references to petitioner’s employer in
                                      the record.
                                        4 Petitioner’s employment contract refers to her position title as ‘‘expeditor’’.
                                        5 If an employee of a foreign government executes and files with the Attorney General the

                                      waiver under sec. 247(b) of the INA, the employee waives the exemption under sec. 893 effective
                                      from the date of the waiver. See sec. 1.893–1(a)(5), Income Tax Regs.
                                        6 In the June 8, 1981, letter, the IRS informed petitioner that the examination of her tax re-

                                      turn for 1978 resulted in no change in the tax reported.




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                                      whether section 7491(a) applies to the material factual issues
                                      in this case because our resolution of the issues is based on
                                      the preponderance of the evidence rather than on the alloca-
                                      tion of the burden of proof. See Knudsen v. Commissioner,
                                      131 T.C. 185, 189 (2008).
                                      II. Taxation of Petitioner’s Wages
                                        As described above, petitioner is a permanent resident of
                                      the United States. ‘‘A lawful permanent resident is an indi-
                                      vidual who has been lawfully granted the privilege of
                                      residing permanently in the United States as an immigrant
                                      in accordance with the immigration laws.’’ Sec. 301.7701(b)–
                                      1(b)(1), Proced. & Admin. Regs. Because petitioner is a law-
                                      ful permanent resident of the United States, she is treated
                                      as a ‘‘resident alien’’ for Federal income tax purposes. See
                                      sec. 7701(b)(1)(A)(i); sec. 301.7701(b)–1(b)(1), Proced. &
                                      Admin. Regs. Resident aliens, like other individual tax-
                                      payers, must include compensation for services, such as
                                      wages, in their gross income. See sec. 61(a).
                                        Petitioner, however, contends that her wages are exempt
                                      from taxation. First, she contends that her wages are exempt
                                      from tax under section 893. Pursuant to section 893, com-
                                      pensation of employees of a foreign government or inter-
                                      national organization received for official services is exempt
                                      from tax if (1) the employee is not a citizen of the United
                                      States; 7 (2) in the case of an employee of a foreign govern-
                                      ment, the services are of a character similar to those per-
                                      formed by U.S. Government employees in foreign countries;
                                      and (3) in the case of an employee of a foreign government,
                                      the foreign government grants an equivalent exemption to
                                      U.S. Government employees performing similar services in
                                      the foreign country. See also sec. 1.893–1(a)(1), Income Tax
                                      Regs. Section 893(b) requires the Secretary of State to certify
                                      to the Secretary of the Treasury information with respect to
                                      the second and third conditions. See also sec. 1.893–1(a)(2),
                                      Income Tax Regs. However, in Abdel-Fattah v. Commis-
                                      sioner, 134 T.C. 190, 211 (2010), we held that section 893
                                      does not require the U.S. Department of State’s certification
                                        7 Respondent concedes that petitioner meets the first condition in that she is not a citizen of

                                      the United States.




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                                      344                 138 UNITED STATES TAX COURT REPORTS                                      (340)


                                      as a condition of a claim of exemption by an employee of a
                                      foreign government.
                                         On June 25, 2007, the U.S. Department of State issued a
                                      certification under section 893(b) for the Embassy of Ger-
                                      many, but the certification does not address German MFGOs. 8
                                      Neither the Embassy of Germany nor the German Defense
                                      Administration requested the U.S. Department of State to
                                      issue a section 893(b) certification for the German Defense
                                      Administration, and the U.S. Department of State did not
                                      issue a certification with respect to the German Defense
                                      Administration.
                                         Although the U.S. Department of State did not issue a cer-
                                      tification with respect to the German Defense Administration
                                      as section 893(b) provides, under Abdel-Fattah v. Commis-
                                      sioner, 134 T.C. at 211, petitioner may still claim the exemp-
                                      tion under section 893(a) if she establishes that she per-
                                      formed services of a character similar to those performed by
                                      U.S. Government employees in foreign countries and that the
                                      German Government grants an equivalent exemption to U.S.
                                      Government employees performing similar services in Ger-
                                      many.
                                         The record does not establish that the third condition for
                                      exemption, the reciprocity condition, is met with respect to
                                      petitioner. The parties stipulated:
                                        German income tax law, Einkommensteuergesetz (‘‘EStG’’), does not pro-
                                      vide an income tax exemption for U.S. Government employees who are
                                      permanent residents of Germany, as defined in Sections 8 and 9 of the
                                      Fiscal Code of Germany or ‘‘Abgabenordnung,’’ or for U.S. Government
                                      employees working in Germany who do not have diplomatic or consular
                                      ranking, regardless of their residence status in Germany.

                                      The parties stipulated the relevant provisions of the German
                                      law. The first relevant provision, paragraph 29 of section 3
                                      of the German income tax law, Einkommensteuergesetz
                                      (EStG), provides that tax-exempt income includes:
                                        8 The certification issued for the Embassy of Germany states that the Government of Germany

                                      exempts from taxation the salary and emoluments of employees of the U.S. Government who
                                      are:
                                        1. diplomatic representatives of the United States, an official assigned to them, or persons in
                                      their service and are not German citizens or permanent residents; or
                                        2. career consuls, consulate employees or part of their staff that are U.S. citizens and either
                                      not permanent residents in Germany or not engaged in trade or other remunerative activity out-
                                      side their official duties.




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                                      (340)                        HARRISON v. COMMISSIONER                                            345


                                      the salary and the payments
                                        a) made to the diplomatic representatives of foreign States, the officials
                                      assigned to them and persons in their service. This shall not be applicable
                                      to German citizens or to persons permanently resident in their national
                                      territory;[9]
                                        b) made to professional consular officers, consular employees and their
                                      staff, to the extent that they are members of the Sending State. This shall
                                      not be applicable to persons who are permanently resident in their
                                      national territory or practice a profession, trade or other gainful occupation
                                      outside their office or service * * *

                                      Article 8 of the Fiscal Code of Germany states that persons
                                      are considered ‘‘resident at the place at which they maintain
                                      a dwelling under circumstances from which it may be
                                      inferred that they will maintain and use such dwelling.’’ The
                                      German law, therefore, does not grant tax exemption to
                                      employees of foreign governments if the employees reside in
                                      Germany permanently. Moreover, the certification issued to
                                      the Embassy of Germany, see supra note 8, confirms the lack
                                      of reciprocity. Petitioner cites no other provision of the Ger-
                                      man law that would permit exemption of wages of U.S.
                                      Government employees from German income tax if the
                                      employees reside permanently in Germany.
                                         Petitioner does not dispute that she is a U.S. permanent
                                      resident. She moved to the United States in the 1970s and
                                      during the years at issue resided in the United States. Under
                                      German tax law, a U.S. Government employee in her situa-
                                      tion, i.e., a person employed by the U.S. Government in Ger-
                                      many who permanently resides in Germany, would not be
                                      able to treat her wages from the U.S. Government as exempt
                                      from German tax. We conclude that the reciprocity condition
                                      of section 893 is not met with respect to petitioner, and
                                      therefore her wages from the German Defense Administra-
                                      tion are not tax exempt under section 893.
                                         9 The translation of the phrase rendered supra as ‘‘to persons permanently resident in their

                                      national territory’’ in the stipulated version of EStG appears inaccurate and ambiguous. This
                                      phrase should properly read as ‘‘to persons residing permanently in Germany’’. We conclude so
                                      on the basis of an unofficial translation of sec. 3, para. 29(a) of EStG by the Translating Divi-
                                      sion, Office of Language Services of the U.S. Department of State (Translating Division) which
                                      is also in the record and to which petitioner did not object. The translation by the Translating
                                      Division is attached to the Action Memo for Deputy Assistant Secretary Nebel-DS/OFM dated
                                      June 25, 2007, which was prepared during the certification process for the German Embassy
                                      (also in the record). The second sentence of para. 29(a) in the translation by the Translating
                                      Division reads as follows: ‘‘This does not apply to German nationals or to persons residing per-
                                      manently in Germany’’.




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                                      346                 138 UNITED STATES TAX COURT REPORTS                                      (340)


                                        Petitioner also contends that her wages are exempt from
                                      Federal income tax under NATO SOFA. 10 Petitioner asserts
                                      that she was a member of the civilian component of the Ger-
                                      man military stationed in the United States and that under
                                      article X, paragraph 1 of NATO SOFA her wages were tax
                                      exempt. We disagree.
                                        Generally, the Code applies to a taxpayer with due regard
                                      to any applicable treaty obligation of the United States. Sec.
                                      894(a)(1). The United States and Germany are parties to
                                      NATO SOFA, and we therefore consider whether petitioner is
                                      entitled to any tax benefits under NATO SOFA.
                                        Article X, paragraph 1 of NATO SOFA provides in relevant
                                      part:
                                      Where the legal incidence of any form of taxation in the receiving State
                                      depends upon residence or domicile, periods during which a member of a
                                      force or civilian component is in the territory of that State by reason solely
                                      of his being a member of such force or civilian component shall not be
                                      considered as periods of residence therein, or as creating a change of resi-
                                      dence or domicile, for the purposes of such taxation. Members of a force
                                      or civilian component shall be exempt from taxation in the receiving State
                                      on the salary and emoluments paid to them as such members by the
                                      sending State or on any tangible movable property the presence of which
                                      in the receiving State is due solely to their temporary presence there.

                                      NATO SOFA    defines civilian component as ‘‘the civilian per-
                                      sonnel accompanying a force of a Contracting Party who are
                                      in the employ of an armed service of that Contracting Party,
                                      and who are not stateless persons, nor nationals of any State
                                      which is not a Party to the North Atlantic Treaty, nor
                                      nationals of, nor ordinarily resident in, the State in which
                                      the force is located’’. NATO SOFA, art. I, sec. 1(b). The German
                                      force is located in the United States, and petitioner, a green
                                      card holder, was ‘‘ordinarily resident’’ in the state in which
                                      the German force is located, namely, the United States,
                                        10 The parties agree that the following treaties do not permit petitioner to exclude her wages

                                      from income: Protocol Amending the Convention for the Avoidance of Double Taxation and the
                                      Prevention of Fiscal Evasion With Respect to Taxes on Income and Capital and to Certain Other
                                      Taxes, U.S.-Ger., June 1, 2006, Tax Treaties (CCH) para. 3209; Convention for the Avoidance
                                      of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and
                                      Capital and to Certain Other Taxes, U.S.-Ger., Aug. 29, 1989, Tax Treaties (CCH) para. 3203.01;
                                      Vienna Convention on Consular Relations and Optional Protocol on Disputes, Apr. 24, 1963, 21
                                      U.S.T. 77; Vienna Convention on Diplomatic Relations and Optional Protocol on Disputes, Apr.
                                      18, 1961, 23 U.S.T. 3227; Treaty of Friendship, Commerce and Navigation, U.S.-Ger., Oct. 29,
                                      1954, 7 U.S.T. 1839; Agreement Concerning Friendship, Commerce and Consular Rights, U.S.-
                                      Ger., June 3, 1953, 5 U.S.T. 1939; Treaty of Friendship, Commerce and Consular Rights, U.S.-
                                      Ger., Dec. 8, 1923, 44 Stat. 2132.




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                                      (340)                        HARRISON v. COMMISSIONER                                            347


                                      during the years at issue. Accordingly, she is not a part of
                                      the civilian component within the meaning of NATO SOFA, and
                                      article X section 1 of NATO SOFA does not apply to her.
                                         Petitioner also contends that she is entitled to relief
                                      because in cases that involved other employees of the Ger-
                                      man Defense Administration, the IRS has conceded that their
                                      wages were not taxable. Petitioner introduced into evidence
                                      various correspondence which IRS agents allegedly relied on
                                      in concluding that other taxpayers’ wages were not taxable.
                                      Petitioner also introduced into evidence stipulated decisions
                                      in two dockets in which her coworkers settled with the IRS
                                      favorably in this Court. It is not clear, however, whether the
                                      taxpayers in those cases were also permanent residents of
                                      the United States.
                                         Generally, tax laws must be applied as uniformly as pos-
                                      sible. See Sunday Lake Iron Co. v. Wakefield Tp., 247 U.S.
                                      350 (1918). However, the Commissioner is not required to
                                      offer a settlement to one taxpayer consistent with that
                                      offered to other similarly situated taxpayers, absent proof
                                      that the taxpayer has been singled out for adverse treatment
                                      on the basis of impermissible considerations, such as race or
                                      religion, and absent contractual agreements to the contrary.
                                      Estate of Campion v. Commissioner, 110 T.C. 165, 170 (1998),
                                      aff ’d without published opinion sub nom. Tucek v. Commis-
                                      sioner, 198 F.3d 259 (10th Cir. 1999), and Drake Oil Tech.
                                      Partners v. Commissioner, 211 F.3d 1277 (10th Cir. 2000). In
                                      addition, we apply the law to the facts of the case before us
                                      to determine the tax liability of the taxpayer in the current
                                      case. Davis v. Commissioner, 65 T.C. 1014, 1022 (1976).
                                      ‘‘[H]ow the Commissioner may have treated other taxpayers
                                      has generally been considered irrelevant in making that
                                      determination.’’ Id. We therefore reject petitioner’s argument
                                      that the IRS’ concessions in other cases or audits require us
                                      to hold for petitioner.
                                         Lastly, petitioner contends that the IRS audited several of
                                      her prior-year Federal income tax returns and that in all
                                      prior audits the IRS agreed with her position that her wages
                                      are tax exempt. Generally, the Commissioner is not estopped
                                      from adopting a different position for later years. See Rose v.
                                      Commissioner, 55 T.C. 28, 32 (1970). Accordingly, we con-
                                      clude that respondent’s position in prior audits does not bar




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                                      348                 138 UNITED STATES TAX COURT REPORTS                                      (340)


                                      him from later taking a different position regarding the tax-
                                      ability of petitioner’s wages in later years.
                                        We have considered the remaining arguments made by the
                                      parties, and to the extent not discussed above, we conclude
                                      those arguments are irrelevant, moot, or without merit.
                                        To reflect the foregoing,
                                                                          Decision will be entered under Rule 155.

                                                                               f




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