ACCESS Act Modernizes Partnership Tax Rules: New Investment Flexibility for Mutual Funds and Pensions Starting in 2027

The ACCESS Act is a technical tune-up for the Internal Revenue Code that changes how Publicly Traded Partnerships (PTPs)—businesses like energy pipelines or real estate firms that trade on the stock market—are taxed and regulated. Starting in 2027, the bill strips away several layers of red tape that currently make it difficult for large institutional investors and foreign individuals to put money into these companies. By adjusting ownership thresholds and repealing specific restrictive loss rules, the bill aims to make these partnerships a more standard part of a diversified investment portfolio.

Opening the Door for Retirement Funds

Currently, if a tax-exempt group like a pension fund or a university endowment invests in a PTP, they can get hit with a specific tax on 'unrelated business income.' The ACCESS Act changes the math here. Under Section 2, if a tax-exempt entity owns less than 5% of a PTP, that income is no longer subject to that extra tax. For someone with a 401(k) or a pension, this is a 'behind the scenes' win; it allows the professionals managing your retirement money to invest in energy infrastructure and other PTP-heavy sectors without the tax headache that previously ate into returns.

Mutual Funds Get More Room to Grow

If you own mutual funds, you’re likely familiar with the idea of diversification. Right now, Regulated Investment Companies (RICs) face a strict 'asset test' that limits how much of their portfolio can be tied up in certain partnerships. This bill strikes down the specific 25% limitation in Section 851(b)(3)(B) that applied to these investments. Instead of having a special cap just for PTPs, mutual funds would fall under the general rule that no more than 25% of their assets can be in a single issuer. This simplifies life for fund managers and potentially gives your favorite mutual fund more flexibility to lean into the energy sector if they think it’s a good bet.

Simplifying the Tax Paperwork

For a long time, PTPs were treated as a 'silo' when it came to losses—you could only use a loss from one PTP to offset a gain from that same PTP. The ACCESS Act repeals Section 469(k), meaning these investments will now follow the general 'passive activity' rules. This is a significant shift for investors who previously had to track these losses separately. Additionally, the bill makes the U.S. market more attractive to international investors by exempting them from certain withholdings and taxes when they sell their stakes, provided they own less than 10% of the company. While these are technical changes, the goal is clear: increase the flow of cash into U.S. energy and infrastructure by making the tax code less of a barrier.