MLPA’s top legislative and regulatory priorities are protecting the current tax status of MLPs, enacting federal legislation to improve the treatment of MLPs, and preventing states from enacting tax provisions that are harmful to MLPs or impossible for them to comply with.
Since the association was formed in 1983, it has positively affected numerous state and federal regulatory proposals. Details on MLPA’s federal and state legislative efforts can be found in this section. Further information and advocacy materials are provided in the Members’ section.
For more information, visit our MLP Laws and Regulations page.
Many characteristics of MLPs derive from federal tax law and regulations. Federal tax law has several provisions which apply specifically to MLPs and others of more general application which affect MLPs and their investors. MLPA works to impact pending and existing law relating to publicly traded partnerships. Because many states base their income tax system on the federal tax code, these rules will often apply at the state level as well. Our most recent legislative sucess was persuading Congress to expanding the energy activities in which MLPs can engage, allowing them to transport and store renewable fuels for the first time.
At this time MLPA’s federal legislative efforts are focused primarily on ensuring that MLPs are not adversely impacted by any tax reform legislation that may be passed by Congress. Discussions of comprehensive tax reform necessarily include discussions of the proper taxation of business entities and whether the current rules should be adjusted. MLPA is working to make sure that tax policy makers in Congress and the executive branch understand what MLPs do, their importance to the economy, and the need to retain their current tax treatment if they are to continue their contribution to domestic energy independence.
- Click here to see an MLPA fact sheet on MLPs and their importance to domestic energy.
- Click here to see the MLPA’s comments submitted to the Senate Finance Committee Business Income Tax Reform Working Group, April 15, 2015.
- Click here to see the MLPA’s letter to all Senators in response to the Baucus-Hatch tax reform letter, July 18, 2013.
- Click here to see the statement that the MLPA submitted to the House Ways and Means Committee Energy Tax Reform Working Group on April 15, 2013.
- Click here to see the statement that the MLPA submitted to the Senate Finance Committee on August 15, 2012.
Additional information on specific issues impacting publicly traded partnerships can be found under the Federal Regulation and State Legislation sections on this page. Updates on federal legislative developments affecting MLPs can also be found in the News section of this website.
MLPA monitors the Treasury Department and other federal agencies for regulations and other guidance affecting MLPs. Sometimes proposed regulations in the partnership area have an unfavorable impact on MLPs, often because the unique concerns of MLPs have not been considered in developing the regulations. When that happens, MLPA works to modify the regulations so that the final product will be fair and workable for MLPs as well as for other partnerships.
Below are recent federal regulatory issues that have the potential to impact MLPs on which MLPA has taken a position.
- MLPA Comments on Proposed Regulations under Section 163(j) limiting the amount of business interest expense that may be deducted by taxpayers.
- MLPA Comments on Proposed Regulations on Qualifying Income under Section 7704(d)(1)(E)
- MLPA Comments on Proposed Partnership Audit Regulations
- IRS Regulations on Automatic Extension of Time to File Partnership Returns
- FERC Rulemaking on Income Tax Allowance
- FERC Rulemaking on Inclusion of MLPs in Proxy Groups for Ratemaking
State governments have been facing overwhelming budget deficits and looking at all possible ways of raising revenue. Among the proposals frequently considered are withholding on distributions for nonresident partners and/or composite returns and, particularly in Texas, subjecting MLPs to state business taxes. MLPA has succeed in obtaining exclusions for MLPs from several of these proposals, including a model law withholding law adopted by the Multistate Tax Commission (MTC), but new legislative and regulatory efforts continue to be necessary. The MLPA also opposes other measures that would be harmful to MLPs and their investors, including gross receipts taxes.
In September 2014, MLPA (then known as NAPTP) filed an amicus brief in the U.S. Supreme Court case Comptroller of the Treasury v. Wynne, No. 13-485. The question before the Court was whether states are constitutionally required to provide a credit against their income tax for taxes paid to another state. Maryland allows a credit against its state-level, but not its county-level income tax. MLPA filed a brief in support of the taxpayers’ position that the Commerce Clause of the U.S. Constitution mandates that states provide a credit. On May 18, 2015, in a 5-4 decision, the Court ruled in favor of MLPA’s position, finding that States and localities must offer a credit to individual taxpayers for income taxes paid to other jurisdictions if the state taxes income of nonresidents sourced to the state.
MLPA members can find more information on these efforts in the Members’ Section under “State Affairs.”