A federal appeals court has ruled against New York City in its bid to collect about $47 million in property taxes from two foreign governments that have been using parts of their United Nations missions for non-diplomatic purposes.
The appeals court reversed a lower court ruling that found the government of India owed $42.5 million and Mongolia owed $4.4 million to the city. India uses 20 of the 26 floors of its mission for employee apartments, while Mongolia reserves two of the six stories of its building for residences.
New York City Mayor Michael Bloomberg has been trying to force the U.N. missions to pay property taxes and has sued several other foreign governments, which traditionally have been exempt from property taxes on their embassy buildings.
In 2003, the government of Turkey agreed to pay a $5 million settlement, and in January of this year the Philippines arrived at a $9 million settlement with the city. The city even won on a jurisdictional issue with the U.S. Supreme Court. However, last year, the State Department issued a notice that granted a tax exemption to property owned by foreign governments and used as residences for U.N. or consular diplomats and staff and their families.
The appeals court ruled Tuesday, The citys tax liens are invalid and no taxes on property owned by foreign governments and used to house permanent staff missions to the United Nations or of consular posts are due and owing.
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