A May 6 US Internal Revenue service proposed rulemaking on qualifying income from oil and gas and other publicly traded master limited partnerships would narrow the definition from what Congress originally intended, 23 of 24 Republican House Ways and Means Committee members warned.
“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 [Private Letter Rulings] and result in restricting the activities that could be conducted by MLPs,” they said in a Sept. 22 letter to US Treasury Sec. Jack Lew and IRS Commissioner John Koskinen.
“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,” Rep. Kevin Brady (Tex.) and 22 other GOP members of the committee maintained.
Chairman Paul Ryan’s (Wis.) signature was not on the letter.
“The US needs to spend roughly $30 billion/year on oil and gas infrastructure to keep pace with the huge leaps in US production—that’s three times as much as we’re currently investing,” Brady said on Sept 24. “The only way that will be possible is through MLPs—they’re the most efficient vehicles for raising this sort of capital. The IRS’ proposed rulemaking would severely hamper that.”
The IRS received 40 comments before the proposal’s public comment period closed on Aug. 4.
Contact Nick Snow at firstname.lastname@example.org.