## Facts

- Herbert A. Filler, a U.S. citizen and bona fide resident of France, worked in France for IBM-Europe during 1972 and 1973.
- In each year, he spent five business days in the United States performing services for his employer.
- He received compensation attributable to those U.S. workdays of $1,108 (1972) and $1,157 (1973).
- France taxed his entire annual compensation in each year, including the amounts attributable to services performed in the United States.
- In computing the foreign tax credit under I.R.C. §§ 901 and 904, the Commissioner treated the U.S.-workday compensation as U.S.-source income under I.R.C. § 861(a)(3), reducing the allowable foreign tax credit and producing deficiencies of $236 (1972) and $155 (1973).
- The case was submitted to the Tax Court on stipulated facts; the taxpayer argued the U.S.–France income tax treaty required relief from double taxation.

## Issues

1. Whether the Tax Court has jurisdiction to grant relief from double taxation under the treaty’s mutual agreement/competent authority article.
2. Whether the U.S.–France income tax treaty restricts the United States from taxing a U.S. citizen on compensation for services performed in the United States, or instead leaves U.S. taxing authority intact and assigns double-taxation relief to France.

## Decision

- The Tax Court sustained the Commissioner’s deficiency determinations.
- The court held it lacked jurisdiction to award relief under the treaty’s mutual agreement/competent authority procedure.
- The court held the treaty preserved the United States’ right to tax its citizens on compensation for services performed in the United States under U.S. law, with double-taxation relief to be provided by France through a credit mechanism.

## Legal Principles

- Mutual agreement/competent authority provisions in an income tax treaty create an intergovernmental administrative process; they do not confer Tax Court jurisdiction to grant or review relief under that process.
- Where a treaty expressly reserves to the United States the right to tax its citizens on specified income “under its own laws,” U.S. domestic taxing rules apply absent a contrary treaty limitation.
- If a treaty assigns relief from double taxation to the other contracting state (e.g., via a credit against that state’s tax), the taxpayer must seek that relief from that state rather than through expanded U.S. foreign tax credit treatment beyond what the Code permits.

## Conclusion

The Tax Court held that treaty-based relief from double taxation under the mutual agreement article was not justiciable in the Tax Court and that the U.S.–France treaty permitted the United States to tax the taxpayer’s U.S.-services compensation under domestic law, leaving any double-taxation relief to French authorities.


Filler v. Commissioner, 74 T.C. 406 (1980)