New York City Loses $50 Million Tax Fight With India, Mongolia

New York City Loses $50 Million Tax Fight With India, Mongolia

New York: The U.S. Supreme Court rejected New York City’s bid to collect more than $50 million from India and Mongolia in a dispute over unpaid property taxes on those countries’ missions to the United Nations.

The justices today left intact a federal appeals court ruling that threw out judgments the city had won against the two countries. The appeals court pointed to a 2009 State Department notice that said UN missions were exempt from local property taxes.

The city sought to tax the parts of foreign diplomatic missions used to house employees and their families. In India’s case, that meant the top 20 floors of its 26-floor building on East 43rd Street. Mongolia’s mission occupies five floors on East 77th Street, with two used for employee housing.

A federal trial judge had awarded New York $42.5 million in taxes, charges and interest against India and $4.4 million against Mongolia. Those figures would have grown with additional interest.

After the trial court ruling, the State Department issued its notice. The New York-based 2nd U.S. Circuit Court of Appeals then reversed the judge’s decision, rejecting the city’s contention that the State Department lacked authority to pre- empt local tax laws.

New York sued India, Mongolia, Turkey and the Philippines to collect claimed taxes in 2003. Turkey and the Philippines settled with the city, agreeing to pay a total of $12 million.

The Supreme Court ruled in 2007 that the city’s suit could go forward, rejecting India’s contention that it was immune.

The case is City of New York v. Permanent Mission of India, 10-627.