January 14, 2023 - Douglas Myser


Publicly traded partnership tax relief. In IRS Notice 2023-8, they announced that they intend to propose regulations which would give some relief to brokers who are required to withhold on the transfer of an interest in a publicly traded partnership. Under the relief listed out in the notice, a broker that consumates a sale of an interest in a foreign traded entity can generally presume that the entity is not a Publicly Traded Partnership for U.S. tax purposes. Section 864(c)(8) states that the gain or loss of a foreign person on the sale or exchange of an interest in a partnership engaged in a U.S. trade or business is treated as effectively connected to gain or loss and , therefore, is subject to U.S. tax. Under Section 1446(f)(1), a transferee of a partnership interest must withhold 10% of the amount realized if any portion of the gain on the disposition would be treated under Sec. 864(c)(8) as effectively connected with the conduct of a trade or business within the U.S.. Publicly traded partnership tax relief.

In 2020, the IRS issued final regulations that generally require withholding on the sale of a Publicly Traded Partnership interest unless the PTP represents on a qualified notice that the Regulations Section 1.1446(f)-(b)(3)(2) 10% exception applies, or the transferor provides a certification claiming another exception to withholding. If a broker cannot determine the classification of an entity, it may be required to withhold on each sale of an interest in the entity. People raised concerns about the difficulty brokers would have in determining the correct withholding under the proposal by the IRS. They stated that determining whether an organization organized outside the U.S. fit into that classification would be difficult under the proposal.


If you are a Publicly Traded Partnership and have questions about filing your Unfiled Tax Returns, or a have a back tax debt, call today for Tax Resolution Services.