Corridors of Power

EXTRA TIME -- More on the IRS investigation of Washington's foreign embassies: The German Embassy has complained to the Revenue that the Feb. 20 deadline for embassy employees to file back taxes from 2003 through 2005 is "unreasonably short" and asked for an extension to June 30. The extra time would "afford employees the possibility to prepare" their returns, the embassy said in a letter written to the State Department for forwarding to the IRS, as protocol demands.

In November, the IRS proposed what it called a "settlement initiative" for thousands of non-diplomatic employees -- both foreign and U.S. citizens -- in Washington's 200-plus embassies and international organizations. The Revenue asserts that many have for years either under-reported their earnings, or even in some cases paid no income tax at all. Well-informed sources revealed this week that the wide variety of "irregularities" discovered by the IRS range from individuals being told by their embassy that they were exempt from U.S. taxes to others claiming unjustified exemptions.

Germany holds the rotating presidency of the European Union and the embassy took the initiative on behalf of the 27 European member states. But all foreign embassies have been holding talks to organize a common strategy. One expected retaliatory measure: a probe of non-diplomatic U.S. citizens working in American embassies overseas.

BUT WHAT DO DIPLOMATS ACTUALLY DO? -- Just in case you've often wondered what goes on behind those brass plates and foreign flags on Washington's Embassy Row, the Germans have proposed to their EU counterparts that they should mark May 5 -- Europe Day -- by holding an "open house." Ambassador Klaus Scharioth put the idea to his European colleagues at the monthly EU envoys' breakfast hosted by the current EU presidency.

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