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Can the tax treaty apply to a US permanent resident working in US as a foreign government employee?


In a legal advice, the IRS Office of Chief Counsel has concluded that compensation paid to a U.S. permanent resident employed by a foreign government is not exempt from tax under the Belgium-U.S. income tax treaty.

The facts provide that a taxpayer lives and works in the U.S. as an employee of Belgium. The taxpayer, although not a U.S. citizen, is a lawful permanent resident (i.e. a green card holder).

In general, U.S. income tax treaties contain a “savings clause” that provides that a treaty will not affect the taxation by the U.S. of its residents and citizens (see e.g. Article 1(4) of U.S. Model  Income Tax treaty.)

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