ACCESS Act
- Sponsor
- Rep. Carey, Mike [R-OH-15]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 22, 2026
Bottom line
The ACCESS Act aims to make investments in publicly traded partnerships, particularly those in critical energy sectors, more attractive to a broader range of investors by simplifying tax rules and reducing certain tax burdens.
What it actually does
This bill, known as the ACCESS Act, amends several sections of the Internal Revenue Code of 1986 to modify the tax treatment of publicly traded partnerships (PTPs). It excludes certain income from PTP units from unrelated business taxable income (UBTI) for beneficial owners holding less than 5% of the partnership, relaxes the 25% asset test for regulated investment companies (RICs) investing in PTPs, eliminates separate passive activity rules for PTPs, and creates an exception for certain PTP interests from being treated as effectively connected income (ECI) for foreign partners, alongside related withholding requirements.
Proponents argue
Proponents argue that modernizing these tax rules will unlock significant capital for investment in critical energy infrastructure and other essential sectors that often utilize the PTP structure. They contend that the current tax treatment creates unnecessary complexity and disincentives for institutional and foreign investors, hindering economic growth and energy security. By streamlining these rules, the bill will foster greater liquidity and efficiency in capital markets.
Opponents contend
Opponents might argue that these changes could create new tax loopholes, disproportionately benefiting wealthy investors and large corporations at the expense of federal tax revenue. They may contend that easing restrictions on PTP investments, especially regarding UBTI and ECI, could lead to a less equitable tax system and potentially encourage tax avoidance strategies, without guaranteeing that the freed-up capital will genuinely flow into critical energy projects as intended.
The bill is short but highly technical, requiring a reader with a strong understanding of tax law to fully grasp its implications. A casual reader would struggle to understand the nuances of the proposed changes within the typical time allotted for legislative review.
Section 2(a)
Exclusion of Certain Publicly Traded Partnership Units from Unrelated Business Taxable Income (UBTI)
This provision amends Section 512(b) of the Internal Revenue Code to exclude income, gain, deduction, loss, or credit from publicly traded classes of units of a publicly traded partnership (PTP) from being treated as unrelated business taxable income (UBTI). This exclusion applies only if the beneficial owner holds less than 5% of the capital or profits of the PTP. This change primarily benefits tax-exempt organizations, such as pension funds and university endowments, which currently face UBTI on their PTP investments.
Supporters argue
Supporters argue this change removes a significant disincentive for tax-exempt organizations to invest in PTPs, particularly those in energy and infrastructure. This will free up substantial capital for these critical sectors without compromising the tax-exempt status of these organizations, aligning PTP investments with other passive investment vehicles.
Critics contend
Critics might contend that this provision creates a new tax preference that could lead to revenue loss for the federal government. They may argue that the UBTI rules serve an important purpose in ensuring fair competition between tax-exempt and taxable entities, and this carve-out could be seen as an undue advantage for certain investment structures.
Tradeoffs
The provision balances the goal of encouraging investment in PTPs by tax-exempt entities against potential federal revenue loss and concerns about creating new tax preferences.
Section 2(b)
Modification of 25 Percent Asset Test for Regulated Investment Companies (RICs)
This provision amends Section 851(b)(3)(B) of the Internal Revenue Code by striking clause (iii), which currently limits a regulated investment company (RIC) from holding more than 25% of its total assets in the securities of one or more publicly traded partnerships (PTPs). By removing this clause, the bill allows RICs to invest a greater proportion of their assets in PTPs, potentially increasing the flow of capital from mutual funds and other RICs into PTPs.
Section 2(c)
Elimination of Separate Application of Passive Activity Rules in Case of Publicly Traded Partnerships
This provision amends Section 469 of the Internal Revenue Code by striking subsection (k), which currently applies passive activity loss rules separately to each publicly traded partnership (PTP). This means that losses from one PTP could only offset income from the same PTP. By eliminating this separate application, investors will be able to aggregate income and losses from all their PTP investments, allowing losses from one PTP to offset income from another, consistent with how passive activity rules apply to other types of passive investments.
Section 2(d)
Exception for Certain Interests in Publicly Traded Partnerships from Effectively Connected Income (ECI) Rules and Withholding
This provision creates an exception to the rule that treats gain or loss from the sale or exchange of a partnership interest by a foreign partner as effectively connected income (ECI). Specifically, it exempts a class of partnership interest that is regularly traded on an established securities exchange, provided the foreign partner held not more than 10% of such class during the 5-year period ending on the date of sale or exchange. Concurrently, it amends Section 1446(f)(1) to exempt these same publicly traded interests from the 10% withholding requirement on the sale of a partnership interest by a foreign person.
The exclusion of PTP income from UBTI is limited to beneficial owners who own (or are considered as owning within the meaning of section 318) less than 5 percent of the capital or profits of such publicly traded partnership.
Section 2(a), amending Section 512(b)(20)
Why it matters:This is standard legislative practice for defining the applicability of a tax provision, ensuring it targets specific types of investors (e.g., passive institutional investors) rather than active, controlling interests.
Case for: This threshold ensures that the UBTI exclusion primarily benefits passive, smaller-stake investors, such as pension funds, without extending to large, potentially controlling interests that might be more akin to active business participation.
Case against: Some might argue that any arbitrary percentage threshold can be gamed or may not fully capture the intent, potentially excluding some beneficial investors or including others who should not qualify. The reference to Section 318 (constructive ownership) adds complexity.
Estimated impact: This threshold significantly narrows the scope of the UBTI exclusion, focusing its benefits on a broad base of smaller, passive tax-exempt investors rather than large, potentially controlling entities.
The exception for certain PTP interests from ECI treatment for foreign partners is limited to those who held not more than 10 percent of such class at all times during the 5-year period ending on the date of sale or exchange.
Section 2(d)(1), amending Section 864(c)(8)(C)
Why it matters:This is a standard legislative technique to prevent tax avoidance by large, active foreign investors while facilitating portfolio investment by smaller, passive foreign investors. The 5-year lookback period adds a layer of anti-abuse protection.
Case for: This 10% ownership limit and 5-year lookback ensure that the ECI exception is targeted at passive portfolio investors, not foreign entities with substantial, potentially controlling interests in U.S. businesses, thereby reducing the risk of tax avoidance.
Case against: Some might argue that the 10% threshold is arbitrary or that the 5-year lookback period adds unnecessary complexity for foreign investors, potentially still deterring some legitimate portfolio investment.
Estimated impact: This threshold and lookback period significantly narrow the scope of the ECI exception, focusing its benefits on passive foreign portfolio investors and limiting potential revenue loss from larger, more active foreign interests.
The amendments made by this Act shall apply to taxable years beginning after December 31, 2026.
Section 2(e)
Why it matters:Effective dates are typically placed at the end of legislative sections as a standard practice. This date provides lead time for taxpayers and the IRS to adjust to the new rules.
Case for: A delayed effective date provides ample time for the Treasury Department and IRS to issue necessary guidance, for PTPs and investors to adjust their strategies, and for tax-exempt organizations and RICs to update their compliance procedures.
Case against: Some might argue that delaying the effective date postpones the intended benefits of increased capital flow and simplified tax treatment, especially if the need for capital in critical energy sectors is urgent.
Estimated impact: This provision ensures that the tax changes do not take effect immediately, providing a transition period of several months before the new rules apply to the 2027 tax year.