HOUSTON, June 3, 2015 /PRNewswire/ -- Westlake Chemical Partners LP (NYSE: WLKP) today issued a statement regarding the Internal Revenue Service's and U.S. Department of Treasury's recent issuance of Proposed Regulations which define qualifying income from the processing, refining and transportation of minerals or natural resources for purposes of being treated as a "publicly traded partnership" for U.S. federal tax purposes.
Westlake Chemical Partners LP (Partnership) has been actively engaged, and will continue to be in dialogue with, the IRS and U.S. Department of Treasury to encourage them to revise the Proposed Regulations and their application to WLKP. Further, the Partnership is reviewing available alternatives in light of the proposed changes in tax regulations related to publicly traded partnerships' qualifying income activities.
The Partnership believes that the IRS was correct in providing a favorable PLR as a basis for and in advance of WLKP's initial public offering (which was completed on August 4, 2014). That PLR concluded that the Partnership's activities generate "qualifying income" within the meaning of the Code. The IRS' new Proposed Regulations, announced on May 5, 2015, however, would reverse the PLR, and would provide the Partnership a ten-year transition period. Notwithstanding this transition period, we believe this reversal is unfair to both our WLKP investors who purchased units in reliance, in part, on the favorable PLR, as well as shareholders of WLK, who have also seen the value of their investment adversely impacted as a result of the publication of the Proposed Regulations.
We believe our views regarding the PLR are consistent both with the "plain meaning" of the Code and with the reasoning reflected in the PLR: that natural gas liquids are clearly natural resources and that the processing of natural gas liquids into ethylene constitutes the "processing" and/or "refining" of a natural resource. We further believe the Proposed Regulations result in unequal treatment between oil refineries, whose ethylene production would generate qualifying income, and natural gas processors, whose ethylene production would not.
WLKP has met with both IRS and Treasury officials, appreciates their willingness to discuss its questions and concerns, and hopes to have an ongoing dialogue with both offices as it prepares its comments on the Proposed Regulations, which it expects to submit in advance of the submission deadline of August 4, 2015. WLKP will encourage the IRS to revise the Proposed Regulations either to be consistent with the Partnership's original PLR or, alternatively, to extend or permanently grandfather that ruling, which would be consistent with the legislative history in similar matters.
Given that investors and other interested parties have contacted WLKP expressing an interest in commenting on the Proposed Regulations, they may contact the IRS by mailing submissions to: CC:PA:LPD:PR (REG-132634-14), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
Submissions may also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-132634-14), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically, via the Federal Rulemaking Portal at www.regulations.gov (IRS REG-132634-14).
All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, projects, believes or anticipates will or may occur in the future, including but not limited to the Partnership's plan to comment on the Proposed Regulations, its intention to grow distributions and the effect the Proposed Regulations might have on the Partnership's ability to satisfy the "qualifying income" requirements of Section 7704 of the Code, are forward-looking statements. Forward-looking statements can be identified by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expects," "will" or comparable terminology, or by discussions of strategies or trends. Although the Partnership believes that the expectations reflected in such forward-looking statements are reasonable, the Partnership cannot give any assurances that these expectations will prove to be correct.
Westlake Chemical Partners LP (WLKP)
Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, TX, the Partnership owns a 13.3% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana, and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com/.
SOURCE Westlake Chemical Partners LP