How to send email to IRS and US treasury to complain about the 10% PTPs tax?

H

huab1992

I contacted SEC and FINRA about the 10% sale tax on Publicly Traded Partnerships on foreigners, but I recieve no reply, then I contacted my broker and they told me it is from IRS and US dept of treasury, I searched their websites but couldn't find an email or help or form to fill in this regard.
I want them to do:
1) A full official and always updating list of them
2) The ability to disable trading them from the US brokers
 
  • Like
Reactions: d08
It's an insane piece of regulation, you're taxed on PROCEEDS, not profits. So immediate buy and sell registers a 10% loss.

For now, the list of unqualified PTPs can be obtained from IB:

Code: 
from selenium import webdriver

def get_ptp_list(self) -> list[str]:
    """ Withholding on Publicly Traded Partnerships (“PTPs”) Effective Jan 2023 """
    print(f"Building list of Publicly Traded Partnerships (PTPs) from IBKR...")
    symbols = []
    try:
        with webdriver.Chrome() as driver:
            driver.get("https://ibkr.info/node/4706")
            table_header = driver.find_element(By.NAME, "without_qualified_notice")
            table = table_header.find_element(By.XPATH,"./following::table[1]")
            rows = table.find_elements(By.TAG_NAME, 'tr')
            for row in rows[1:]:
                cells = row.find_elements(By.TAG_NAME, 'td')
                symbol = cells[1].text
                if symbol:
                    if symbol != "-":
                        symbols.append(symbol)
        print(f"Publicly Traded Partnerships (PTPs) list built successfully.")
    except:
        print(f"Failed to obtain PTP symbols.")
    return symbols
 
@huab1992

Your post is kind of vague, and it's not clear to me what you hope to achieve.

It sounds like you want to avoid trading PTPs that are subject to US jurisdiction, because you are foreigner, and you don't want US income tax withheld. So i am proceeding on that assumption. If I am incorrect, please tell me.

So you want the IRS to tell US brokers that they need to offer their clients the option to disable trading of US-based PTPs, so that their non-US clients can avoid "accidentally" trading one of these things, so they don't have to deal with US tax withholding?

Ummm... I don't think that's going to happen. The IRS doesn't have that kind of authority over brokers. The IRS has some power over brokers, because they have to issue 1099 Forms, and in many other ways, brokers are subject to US tax law. But that is the scope of the authority of the IRS. Their job is to enforce US tax law. They don't have the kind of power that would allow them to require a broker to add that kind of optional feature to a trading platform. There is nothing in the US tax law that would require a broker to do that. The broker is required to withhold the tax; they don't have to warn you in advance, or stop you from buying the instrument.

FINRA or the SEC could theoretically require such a feature. I know they referred you to the IRS, but I suspect that they did not understand what you wanted. As soon as their heard that you were upset about something in the US tax law, they stopped listening and told you to call the IRS.

But I don't think FINRA or the SEC will ever require such a feature. Before you buy something, you have a responsibility to know what you are buying. Determining whether something is a PTP that is subject to US tax jurisdiction should be relatively easy. You should be able to find that information on the company's website.

Like this, for example:

https://ir.globalp.com/Tax-Information/default.aspx

And you also want the IRS to publish a list of PTPs that are required to withhold tax on distributions to non-US persons.

I understand your logic, but the IRS isn't going to do that. They don't have the resources to maintain such a list and make sure it is up to date, and there is nothing in the US tax law that would require the IRS to do so. The IRS doesn't make the laws. Congress makes the laws. The IRS is responsible for enforcing the law. And they're going to tell you the same thing: If you want to know if something is a PTP that is subject to US tax law, then ask the company. And ask them before you buy it.

Most brokers are indeed warning their clients one way or another. Have a look at the attached notice from TDA.

It says:

TD Ameritrade encourages clients to research possible purchases before investing.

Caveat emptor, Dude. If you don't understand how an investment works, don't buy it.

US government agencies like the IRS, FINRA and the SEC are not required to protect you from own ignorance.

For that you have to go to the Food & Drug Administration, where they make drug manufacturers say things like "Don't take this drug if you are allergic to it."
 

Attachments

BMK said:
@huab1992

Your post is kind of vague, and it's not clear to me what you hope to achieve.

It sounds like you want to avoid trading PTPs that are subject to US jurisdiction, because you are foreigner, and you don't want US income tax withheld. So i am proceeding on that assumption. If I am incorrect, please tell me.

So you want the IRS to tell US brokers that they need to offer their clients the option to disable trading of US-based PTPs, so that their non-US clients can avoid "accidentally" trading one of these things, so they don't have to deal with US tax withholding?

Ummm... I don't think that's going to happen. The IRS doesn't have that kind of authority over brokers. The IRS has some power over brokers, because they have to issue 1099 Forms, and in many other ways, brokers are subject to US tax law. But that is the scope of the authority of the IRS. Their job is to enforce US tax law. They don't have the kind of power that would allow them to require a broker to add that kind of optional feature to a trading platform. There is nothing in the US tax law that would require a broker to do that. The broker is required to withhold the tax; they don't have to warn you in advance, or stop you from buying the instrument.

FINRA or the SEC could theoretically require such a feature. I know they referred you to the IRS, but I suspect that they did not understand what you wanted. As soon as their heard that you were upset about something in the US tax law, they stopped listening and told you to call the IRS.

But I don't think FINRA or the SEC will ever require such a feature. Before you buy something, you have a responsibility to know what you are buying. Determining whether something is a PTP that is subject to US tax jurisdiction should be relatively easy. You should be able to find that information on the company's website.

Like this, for example:

https://ir.globalp.com/Tax-Information/default.aspx

And you also want the IRS to publish a list of PTPs that are required to withhold tax on distributions to non-US persons.

I understand your logic, but the IRS isn't going to do that. They don't have the resources to maintain such a list and make sure it is up to date, and there is nothing in the US tax law that would require the IRS to do so. The IRS doesn't make the laws. Congress makes the laws. The IRS is responsible for enforcing the law. And they're going to tell you the same thing: If you want to know if something is a PTP that is subject to US tax law, then ask the company. And ask them before you buy it.

Most brokers are indeed warning their clients one way or another. Have a look at the attached notice from TDA.

It says:

TD Ameritrade encourages clients to research possible purchases before investing.

Caveat emptor, Dude. If you don't understand how an investment works, don't buy it.

US government agencies like the IRS, FINRA and the SEC are not required to protect you from own ignorance.

For that you have to go to the Food & Drug Administration, where they make drug manufacturers say things like "Don't take this drug if you are allergic to it."
More...

This is not about income tax. These are extra charges on proceeds. So 10% on the total transaction value is held, not profit. I'm not aware of any taxation that works this way. It's effectively a ban without using the word "ban".
That's all fine and dandy but such information needs to be accessible online for free, either served by SEC or FINRA.
There are also "qualified" PTPs which don't fall under this charge, see the Interactive Brokers link in the code above.
 
d08 said:
This is not about income tax. These are extra charges on proceeds. So 10% on the total transaction value is held, not profit. I'm not aware of any taxation that works this way. It's effectively a ban without using the word "ban".
More...

It is a withholding tax. That means that the broker withholds that amount, and sends it to the IRS, where the tax is held in account at the IRS under the name of the taxpayer, i.e., the broker's customer.

If you file a US tax return, then the amount withheld is applied to any tax that you owe.

If the amount withheld is more than the tax you owe, you get a refund.

To get a refund, you have to file a US tax return.

You are absolutely correct that the amount withheld is calculated by multiplying the sales proceeds by 10%. But when you complete a US tax return, the amount of income tax is based on the gain.

Withholding is a compliance mechanism that is meant to force foreigners to file US tax returns and pay the tax that they owe. The withholding is not itself a tax. It is a tool that is part of the collection process.
 
BMK said:
It is a withholding tax. That means that the broker withholds that amount, and sends it to the IRS, where the tax is held in account at the IRS under the name of the taxpayer, i.e., the broker's customer.

If you file a US tax return, then the amount withheld is applied to any tax that you owe.

If the amount withheld is more than the tax you owe, you get a refund.

To get a refund, you have to file a US tax return.

You are absolutely correct that the amount withheld is calculated by multiplying the sales proceeds by 10%. But when you complete a US tax return, the amount of income tax is based on the gain.

Withholding is a compliance mechanism that is meant to force foreigners to file US tax returns and pay the tax that they owe. The withholding is not itself a tax. It is a tool that is part of the collection process.
More...
How to file the US tax return, what is the form to fill {for foreigners} ?
 
d08 said:
It's an insane piece of regulation, you're taxed on PROCEEDS, not profits. So immediate buy and sell registers a 10% loss.

For now, the list of unqualified PTPs can be obtained from IB:

Code: 
from selenium import webdriver

def get_ptp_list(self) -> list[str]:
    """ Withholding on Publicly Traded Partnerships (“PTPs”) Effective Jan 2023 """
    print(f"Building list of Publicly Traded Partnerships (PTPs) from IBKR...")
    symbols = []
    try:
        with webdriver.Chrome() as driver:
            driver.get("https://ibkr.info/node/4706")
            table_header = driver.find_element(By.NAME, "without_qualified_notice")
            table = table_header.find_element(By.XPATH,"./following::table[1]")
            rows = table.find_elements(By.TAG_NAME, 'tr')
            for row in rows[1:]:
                cells = row.find_elements(By.TAG_NAME, 'td')
                symbol = cells[1].text
                if symbol:
                    if symbol != "-":
                        symbols.append(symbol)
        print(f"Publicly Traded Partnerships (PTPs) list built successfully.")
    except:
        print(f"Failed to obtain PTP symbols.")
    return symbols
More...

Bringing selenium and python into the picture for this might be overkill. It can be done in a line or two of bash instead:
Code: 
xmllint --html --shell <(curl -s 'https://ibkr.info/node/4706') <<< \
   'cat //table[last()]/tbody/tr/td[1]/text()' | fgrep -ve ISIN -e ---- -e/
 
Last edited:
You must log in or register to reply here.
Back
Top