Ways and Means Members Press Treasury and IRS on Constraints Placed on MLP’s

House Ways and Means member Kevin Brady, R-Tex., along with all Republican members of the committee are pressing the Treasury and the IRS over its recently released Notice of Proposed Rulemaking REG-132634-14, regarding qualifying income of publicly traded partnerships from certain activities with respect to minerals or natural resources (TAXDAY, 2015/05/06, I.1). In a recent letter to Treasury Secretary Jack Lew and IRS Commissioner John Koskinen, Brady clarified congressional intent on what activities qualify for Master Limited Partnership (MLP) status.

When Congress first considered the tax treatment of MLPs, a House bill provided partnership treatment to MLPs engaged in the exploration, development, mining or production, refining, transportation or marketing of minerals and natural resources. The Senate had no provision, but in conference the list of qualified activities was expanded.

“We understand that the proposed regulations articulate much narrower definitions of processing and refining that, if adopted without changes, would effectively revoke previously issued and relied upon PLRs {private letter rulings} and result in restricting the activities that could be conducted by MLPs,” wrote Brady. “This approach is not consistent with the legislative intent in providing partnership treatment to MLPs engaged in the many activities that constitute the processing and refining of minerals and natural resources and must be reconsidered.”

Brady said that Congress intended MLP status to apply to all income derived from the exploration, development, mining or production, refining, transportation or marketing of minerals and natural resources.

Congress letter to Lew

 

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