IRS Lifts Moratorium on MLP Private Letter Rulings on Qualifying Income

The IRS resumed its processing of requests for private letter rulings that concern the income of master limited partnerships ("MLPs") derived from minerals and other natural resources and whether such income constitutes "qualifying income" for purposes of determining if the MLP is a publicly traded partnership under section 7704 of the Internal Revenue Code. Previously in March 2014, the IRS issued a moratorium for such rulings, except for "down the middle" facts, pending a guidance project that involved engineers and would provide workable standards moving forward.

At a meeting of tax practitioners, an IRS official indicated that the IRS had made "significant progress" in its section 7704 guidance project, and that proposed regulations would be released "in the near future." The proposed regulations will address qualifying income derived from the exploration, development, processing, refining, transportation, mining and production, and marketing of minerals and natural resources, as well as services provided by contractors to the oil and gas industry. The proposed regulations will not address other forms of qualifying income.

See also: FATCA Specialty Page (available to Cabinet subscribers only).