TheIRS' final decision on a set of revised rules governing master limitedpartnerships may have taken a back seat to other projects on the agency'spriority list, and legal sources said they are not banking on it coming soon.
ThroughJune, the IRS also hopes to focus on projects addressing issues ofinternational taxation, health care and the implementation of legislativechanges, among others, according to its priority guidance plan, updated inFebruary. The plan lists updates toSection 7704, which governs qualifications for MLP status, at the end of the"partnerships" set of project priorities.
TheIRS proposed updatingthe MLP rules in May 2015 and had issued private-letter rulings to variouscompanies, drawing lines of distinction around what types of businesses qualifyto register as MLPs. The industry was previously expecting the IRS to announceits final decision in January.
"Theissue [of a final decision] is extremely complicated because there are lots ofconstituencies … with different views. The Treasury is more concerned aboutrecently enacted statutes that Congress has called for. What's going on is moreprioritization," said David Burton, a New York-based partner at Akin GumpStrauss Hauer & Feld LLP.
Burtonsaid the prolonged time taken for a decision on the MLP regulations could havean impact on the shareholders of fracking service providers and truckingcompanies.
TheIRS will likely push back its decision on the regulations till the end ofsummer, according to a source with inside knowledge of the situation.
However,the IRS Associate Chief Counsel Curtis Wilson hopes a decision on theregulations will come by the end of May, said the source, speaking on thecondition of anonymity because the status of the IRS' decision-making processis not public. Details were affirmed with other sources close to the situation.
InJanuary, Wilson saidhe had yet to receive recommendations from the drafting team, which has beenreviewing an influx of comments filed by energy companies and other interests opposed tothe proposed regulations.
Wilsonwas not immediately available to comment on the latest status, and BruceFriedland, a spokesman for the IRS, declined to comment.
RyanDaniels, a tax policy spokesman at the U.S. Department of the Treasury, saidofficials at the department are working with the IRS to finalize theregulations as soon as possible. He declined to comment on the status of thatprocess.
"Theydo want to get this done before the elections happen and Washington turns itsfocus to different areas," said Ryan Carney, a tax partner at Vinson &Elkins LLP, which filed comments in 2015 highlighting areas of concern,including the IRS' revocation of rules in previously issued private-letterrulings.
BarbaraSpudis de Marigny, a Houston-based partner at Orrick Herrington & SutcliffeLLP, is optimistic that the IRS is giving serious thought to revising theproposed regulations, keeping in view concerns in the comment letter she filedon behalf of the American Bar Association on Jan. 5 as a partner at McGuireWoods.
"Everyone'simpatient to get an answer," she said. "But I think [the time the IRSis taking for a final decision] is a good thing as there was a lot of work thatneeded to be done both in areas of the draft [comments] and in their approachto the regulations."