A US Appeals Court ruled on Tuesday against New York City in its long-running dispute with foreign governments over whether they should pay taxes on property housing staff assigned to consulates and United Nations missions.
In its decision in cases brought by India and Mongolia, a three-judge panel cited a June 2009 US Department of State notice granting an exemption from property taxes on property owned by foreign governments and used to accommodate their personnel.
"Under the Notice, the City's tax liens are invalid and no taxes on property owned by foreign governments and used to house staff of permanent missions to the United Nations or of consular posts are due and owing," said the written ruling by the US Court of Appeals for the 2nd Circuit in New York.
A spokeswoman for the City's counsel said lawyers were reviewing the decision and could not immediately comment.
In 2008, a Manhattan federal court judge ordered India to pay more than $42.4 million and Mongolia more than $4.3 million to the City. The governments appealed, contending that their entire embassy buildings are tax exempt, not just the space used for diplomatic offices.
"The (State Department) Notice states that the benefit determination preempts all inconsistent state and local laws, and also applies to all property taxes that 'have been or will be assessed' on such property," the panel wrote.
The city began its litigation against several foreign missions in 2003, seeking judgments for unpaid property taxes, other unpaid charges, plus interest. The City also sued Turkey, which settled for $6 million and the Philippines, which settled for $9 million, according to court records.
The cases are The City of New York v The Permanent Mission of India to the United Nations et al, US Court of Appeals for the 2nd Circuit, No. 08-1805.
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