Alliance Resource Partners, LP is a publicly traded partnership pursuant to Internal Revenue Code Section 7704(b) and is taxed as a partnership for U.S. tax purposes. The Partnership states that the 10% exception does not apply, as determined under Treasury Regulation Section 1.1446(f)-4(b)(3)(ii). As a result, a foreign unitholder who sells ARLP’s units should expect their broker/custodian to withhold 10% of the amount realized upon such sale.
Brokers and nominees should treat one hundred percent (100.0%) of ARLP’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. See Treasury Regulation Section 1.1446(f)-4(b). Qualified notices related to distributions can be found here.
Also, foreign unitholders should expect their broker/custodian to withhold on distributions at the unitholder's highest applicable United States tax rate.