This story is a bit esoteric but at the same time interesting from a real estate and policy wonk point of view. According to how New York City is interpreting the tax law, United Nations missions in the city do not have to pay property taxes on the parts of their mission buildings that are used as office spaces.

However, many of these buildings are serving dual roles as offices and apartment complexes for the employees. New York City wants the property taxes on the parts of the building that are used as residential housing. What is amazing is that this could be hundreds of millions of dollars to the city.

No straightforward answer emerged during the argument. But the justices appeared at least open to permitting New York’s case against India and Mongolia to proceed in federal court, even though the city’s top lawyer conceded that because of diplomatic immunity, New York will not be able to force these governments or any others, ultimately, to pay a dime. The city says the two countries owe about $25 million in back taxes and interest.

But a victory would give the city the high ground in encouraging about 190 United Nations missions to live up to their obligations to their host city. A legal judgment that the taxes were properly imposed and due would also invoke a provision of the Foreign Operations Appropriations Act, which penalizes countries with unpaid tax obligations by withholding 110 percent of the amount due from their foreign aid. Read the reat at the New York Times.

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