(The Partnership) is a master limited partnership with over 24,000 partners and 33 million publicly traded partnership units which provides services in virtually all states. It has amended its Partnership Agreement to provide that limited partners, by owning partnership units, shall be deemed to have authorized a designated partner to file a composite tax return under certain circumstances. It requests certain rulings about the filing of composite Massachusetts income tax returns. We conclude that only non-resident limited partners of the Partnership who comply with the principles of accountability and responsibility set forth in 830 CMR 62.5A.1.12(f) may be treated as qualified electing partners and may file a composite return, for 1987 and until further notice, under the following conditions:
- The limited partner must be an individual;
- The limited partner must be a non-resident for the limited partner's entire taxable year;
- The limited partner must have no other Massachusetts source income nor may the limited partner's spouse have other Massachusetts source income, if the partner is married and filing jointly;
- The terms of the Partnership Agreement must provide that the limited partner included in the composite return:
a. Authorizes a designated partner to represent the qualified electing non-resident limited partner in making, executing, and filing the composite returns, tax payments, and estimated tax payments, and
b. Acknowledges the limited partner's obligation to file a tax return, make estimated tax payments, if required, and pay the limited partner's share of any penalty and interest on any underpayment of estimated taxes; and
c. Waives the right to claim any deductions, exemptions, and credit allowable under M.G.L. c. 62; and
- A limited partner who files a separate return in Massachusetts cannot participate in filing a composite return.
- A statement, signed by the designated partner under penalties of perjury, identifying the designated partner by name, address, tax identification number, and source of authority;
- A copy of the Partnership Agreement containing the authorization and acknowledgment, described in paragraph 4.a. and 4.b. above, to file a composite return, and the waiver of any deductions, exemptions or credits allowable under M.G.L. c. 62, described in paragraph 4.c. above;
- A schedule identifying each qualified electing non-resident limited partner by name, tax identification number, principal place of residence, and distributive share of Massachusetts source partnership income; and
- A copy of the Massachusetts Form 3, including attachments, filed by the Partnership for the taxable year ending during the qualified electing non-resident partner's taxable year reported on the composite return.
The provisions of 830 CMR 62.5A.1.12(f), to the extent not modified in this ruling, shall otherwise apply to the filing of the composite tax returns. Namely, the composite return, composite payments of estimated taxes, and requests for extension shall be filed as described in 830 CMR 62.5A.1.12(f)4 and 6-9. The special rules described in 830 CMR 62.5A.1.12(f)10 shall apply. This ruling is limited to the questions you asked. The questions assumed that the partnership is a partnership for Massachusetts tax purposes. We do not address here the issue of whether a master limited partnership with publicly traded partnership units should be treated as a corporate trust under M.G.L. c. 62, § 1(j).
Very truly yours,
Stephen W. Kidder
Commissioner of Revenue
February 18, 1988