For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
New final regulations on master limited partnerships qualifying income and dividend equivalent payments that were thought to be automatically undone by the White House’s regulations freeze are intact—for now.
The Internal Revenue Service regulations under tax code Sections 7704(d)(1)(e) and 871(m) became effective upon their publication in the Federal Register on Jan. 24.
Final and temporary rules published in the Federal Register take legal effect, according to the register’s website. Rules can be effective at a later date if their effective date comes after the date of publication. Published regulations can only be reversed through further publication in the register.
This development came as a surprise, as many had assumed the projects would be put on hold following President Donald Trump’s regulatory freeze that was instituted by a Jan. 20 memorandum to all federal departments and agencies.
“We were surprised and disappointed to learn that the final qualifying income regulations, promulgated by the IRS, circumvented the regulatory freeze issued by the White House Chief of Staff and were published in the Federal Register this morning,” SunCoke Energy Partners LP said in a Jan. 24 news release. Under the final MLP rules, the company loses its status as a master limited partnership after a 10-year transition period because the regulations exclude cokemaking as a qualifying income-generating activity.
“It’s not the Federal Register’s role to decide they aren’t allowed to publish something or not,” said Jim Hemphill, special assistant to the director of the Federal Register. “The agencies work with the administration on that,” he told Bloomberg BNA Jan. 24.
Brian Kittle, co-leader of the tax controversy & transfer pricing practice at Mayer Brown LLP, said the rules were probably already going through the process of publication at the Federal Register when Trump issued the freeze—a process he said is tough, if not impossible, to reverse. In general, “once it’s in motion it’s hard to turn it off,” Kittle said.
If that was the scenario, “it was already a done deal,” he told Bloomberg BNA, adding it is unlikely the IRS would deliberately try to circumvent the freeze.
Kittle said he got several calls from clients who were worried about the scope of the memorandum, which he said covers all kinds of guidance in addition to regulations, such as notices and revenue procedures.
Those documents often help taxpayers understand the IRS’s thinking and positions on critical issues, and gives them a boost with technical compliance, Kittle said. “The question is, how long is this moratorium going to last? We need this guidance.”
The IRS didn’t respond to a Jan. 24 request for comment.
To contact the editor responsible for this story: Meg Shreve at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)