Background
The MLPA has been active for a number of years in advocating an exemption for MLPs from requirements that partnerships and other pass-through entities withhold tax from distributions to nonresident partners, file composite returns and pay tax for nonresidents, or otherwise pay state income tax owed by their limited partners. In 2003 we were successful in persuading the Multistate Tax Commission to include a provision in its model nonresident withholding statute exempting MLPs as long as they provide states with a list of partners with more than $100 of partnership income in the state.
To date the MLPA has obtained exclusions from composite return/withholding legislation in states including Alabama, Arkansas, California, Colorado, Connecticut, Georgia, Iowa, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Carolina, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, Vermont, Virginia, and Wisconsin as well as provisions for exemption by request in Louisiana.
The MLPA continues to monitor and work to address new or remaining states with composite return and withholding requirements, as well as to counter new and more dangerous efforts to make MLPs pay tax for their partners. MLPA members who become aware of such an effort in any state should notify Lindsay Sander or Mary Lyman immediately so that we can take steps to counter them.
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