Broker Letter Regarding UBTI: Unrelated Business Income held in an IRA
I received a letter from my broker yesterday. The gist is "they" have a had a policy change and "they" are going to file my taxes for any Unrelated Business Income" for any asset (such as a MLP or LLC) held in my IRA's that exceed the $1,000 threshold. "They have hired a 3rd party tax preparer. "They" will access my K1's electronically and "They" will prepare the tax forms (Form 990-T). For this, "they" will deduct from my IRA any taxes due and will charge me $200 to $500!
In the letter they state only that "they" have had a policy change. They do not state that they have been mandated by the IRS to do this. I have not signed anything authorizing them to access my K1's or do any portion of my taxes.
Has anyone else received a letter such as this or been notified by their brokers or trading platforms of anything similarly related to UBTI? Does anyone know if the IRS has, indeed, mandated the brokerages do this?
I have put a call into the branch manager and am waiting to see if I can opt