[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3401(a)(5)-1]

[Page 197-198]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
              Subpart E_Collection of Income Tax at Source
 
Sec. 31.3401(a)(5)-1  Remuneration for services for foreign government 
or international organization.

    (a) Services for foreign government. (1) Remuneration paid for 
services performed as an employee of a foreign government is excepted 
from wages and hence is not subject to withholding. The exception 
includes not only remuneration paid for services performed by 
ambassadors, ministers, and other diplomatic officers and employees but 
also remuneration paid for services performed as a consular or other 
officer or employee of a foreign government or as a nondiplomatic 
representative of such a government. However, the exception does not 
include remuneration for services performed for a corporation created or 
organized in the United States or under the laws of the United States or 
any State (including the District of Columbia or the Territory of Alaska 
or Hawaii) or of Puerto Rico even though such corporation is wholly 
owned by such a government.
    (2) The citizenship or residence of the employee and the place where 
the services are performed are immaterial for purposes of the exception.
    (b) Services for international organization. (1) Subject to the 
provisions of section 1 of the International Organizations Immunities 
Act (22 U.S.C. 288), remuneration paid for services performed within or 
without the United States by an employee for an international 
organization as defined in section 7701(a)(18) is excepted from wages 
and hence is not subject to withholding. The term ``employee'' as used 
in the preceding sentence includes not only an employee who is a citizen 
or resident of the United States but also an employee who is a 
nonresident alien individual. The term ``employee'' also includes an 
officer. An organization designated by the President through appropriate 
Executive order as entitled to enjoy the privileges, exemptions, and 
immunities provided in the International Organizations Immunities Act 
may enjoy the benefits of the exclusion from wages with respect to 
remuneration paid for services performed for such organization prior to 
the date of the issuance of such Executive order, if (i) the Executive 
order does not provide otherwise and (ii) the organization is a public 
international organization in which the United States participates, 
pursuant to a treaty or under the authority of an act of Congress 
authorizing such participation or making an appropriation for such 
participation, at the time such services are performed.
    (2) Section 7701(a)(18) provides as follows:

    Sec. 7701. Definitions. (a) When used in this title, where not 
otherwise distinctly expressed or manifestly incompatible with the 
intent thereof--

                                * * * * *

    (18) International organization. The term ``international 
organization'' means a public international organization entitled to 
enjoy privileges, exemptions, and immunities as an international 
organization under the International Organizations Immunities Act (22 
U.S.C. 288-288f).

    (3) Section 1 of the International Organizations Immunities Act 
provides as follows:

    Section 1. [International Organizations Immunities Act.] For the 
purposes of this title [International Organizations Immunities Act], the 
term ``international organization'' means a public international 
organization in which the United States participates pursuant to any 
treaty or under the authority of

[[Page 198]]

any Act of Congress authorizing such participation or making an 
appropriation for such participation, and which shall have been 
designated by the President through appropriate Executive order as being 
entitled to enjoy the privileges, exemptions, and immunities herein 
provided. The President shall be authorized, in the light of the 
functions performed by any such international organization, by 
appropriate Executive order to withhold or withdraw from any such 
organization or its officers or employees any of the privileges, 
exemption, and immunities provided for in this title (including the 
amendments made by this title) or to condition or limit the enjoyment by 
any such organization or its officers or employees of any such 
privilege, exemption, or immunity. The President shall be authorized, if 
in his judgment such action should be justified by reason of the abuse 
by an international organization or its officers and employees of the 
privileges, exemptions, and immunities herein provided or for any other 
reason, at any time to revoke the designation of any international 
organization under this section, whereupon the international 
organization in question shall cease to be classed as an international 
organization for the purposes of this title.