The United States tax body (i.e. the IRS) has released a new Internal Revenue Code - Section 1446(f). All Publicly Traded Partnerships (PTPs) must pay withholding tax on any income paid out to foreign partners.
This code is now effective and will impact proceeds from sales of some PTPs held by non-U.S. tax residents, such as Chipper stocks investors. This means sales of the affected PTP assets will become subject to a 10% withholding tax. You can read the official IRS statement here.
What is a PTP?
A publicly traded partnership (PTP) is a business organisation owned by two or more co-owners whose shares are regularly traded on an established securities market. Below is a list of the affected PTP assets currently listed on Chipper Cash:
ENERGY TRANSFER L P COM UT LTD PTN
ENTERPRISE PRODS PARTNERS L P COM
MPLX LP COM UNIT REP LTD
ICAHN ENTERPRISES LP DEPOSITARY UNIT
PLAINS ALL AMERN PIPELINE L P UNIT LTD PARTN
TEUCRIUM COMMODITY TR WHEAT FD
MAGELLAN MIDSTREAM PRTNRS LP COM UNIT RP LP
TEUCRIUM COMMODITY TR CORN FD SHS
ALLIANCE RESOURCE PARTNERS L P UT LTD PART
ALLIANCEBERNSTEIN HLDG L P UNIT LTD PARTN
NGL ENERGY PARTNERS LP COM UNIT REPST
BLACK STONE MINERALS L P COM UNIT
TEUCRIUM COMMODITY TR SOYBEAN FD
CRESTWOOD EQUITY PARTNERS LP UNIT LTD PARTNER
USA COMPRESSION PARTNERS LP COMUNIT LTDPAR
GENESIS ENERGY L P UNIT LTD PARTN
GLOBAL PARTNERS LP COM UNITS
NUSTAR ENERGY LP UNIT COM
SUNOCO LP/SUNOCO FIN CORP COM UT REP LP
CHENIERE ENERGY PARTNERS LP COM UNIT
CVR PARTNERS LP COM
FORTRESS TRANS INFRST INVS LLC CL A COM SHS
SUBURBAN PROPANE PARTNERS L P UNIT LTD PARTN
DCP MIDSTREAM LP COM UT LTD PTN
WESTERN MIDSTREAM PARTNERS LP COM UNIT LP INT
SUMMIT MIDSTREAM PARTNERS LP COM UNIT LTD
WESTLAKE CHEM PARTNERS LP COM UNIT RP LP
HOLLY ENERGY PARTNERS L P COM UT LTD PTN
DORCHESTER MINERALS LP COM UNIT
SISECAM RESOURCES LP COM UNIT LTD
DELEK LOGISTICS PARTNERS LP COM UNT RP INT
CROSSAMERICA PARTNERS LP UT LTD PTN INT
CEDAR FAIR L P DEPOSITRY UNIT
STEEL PARTNERS HLDGS L P LTD PRTRSHIP U
GREYSTONE HOUSING IMPACT INVES BEN UNIT CTF
CALUMET SPECIALTY PRODS PARTNE UT LTD PARTNER
GLOBAL INDEMNITY GROUP LLC COM CL A
Please note that this list of PTPs may be updated from time to time and is subject to change without notice.
When will this Withholding Tax be deducted?
This tax will be deducted from the sell amount whenever you sell stocks of any of the PTP companies listed above.
What does this mean?
Let’s say you sell a position worth $100 in a PTP, even if no profit is generated; there will be a $10 withholding tax. As a result, you’ll receive $90.
Can I trade PTPs now?
As this Withholding Tax is a new regulation, we are working with our compliance partners to implement some measures. At this time, you cannot execute a buy order for PTPs. We will let you know once this is back on.
In the meantime, if you own a PTP and want to liquidate, you can request a sale via our Support channels. Simply reach out to our support team with the name and quantity of the PTP you would like to sell.
Do you need further assistance?