Many personal service firms are organized as state law limited partnerships, in part to take advantage of the apparent statutory exemption from self-employment taxes for “limited partners” under Code section 1402(a)(13). The application of this exemption to newer forms of limited liability entities is unclear. In its decision in Renkemeyer v. Commissioner, the Tax Court rejected an attempt to extend the self-employment tax exemption to partners in a limited liability partnership. Developments in other areas of tax law have raised related questions regarding the definition of the term limited partner in the context of limited liability companies. Although Congress has previously limited Treasury’s authority to implement regulations on this issue, Treasury now arguably can and should clarify the definition of “limited partner” for purposes of section 1402(a)(13). Such a definition could be designed to apply consistently to all entities, focusing not on limited liability but on the rights of members to participate actively in the management of the business and the extent to which they actually do participate. This would eliminate variations based on entity type and applicable state law while exempting truly passive investors from self-employment tax as was originally intended by section 1402(a)(13).