Apparently changing your corporate status to a real estate investment trust (REIT) does not always come easy, nor is there such thing as a free lunch. Iron Mountain Inc. (NYSE: IRM) is seeing it shares get pounded after the Internal Revenue Service may delay the document storage company’s conversion to a REIT. The company also disclosed that before it formed the working group, the IRS had indicated that it was adverse to giving it a ruling letter. To make matters worse, this is not just an Iron Mountain issue, as the IRS working group could pose delays (or refusals) to many companies that are trying to convert or are considering converting to a REIT.

To show just how bad this is, Iron Mountain is down 17% at $28.50, and shares hit a 52-week low of $27.75 on the day. Volume is already 10 times normal as well at 9 million shares. So, what about other companies considering or working toward a REIT conversion. This is a huge issue for dividend and income investors, as well as investors who focus on special situations and restructurings. Some of these efforts have been on the backs of activist investors as well.

CBS Corp. (NYSE: CBS) is restructuring and moving toward an outdoor advertising REIT for one of its units. Its stock is down only 0.2% at $48.74. This drop is child’s play compared to others.

Lamar Advertising Co. (NASDAQ: LAMR) is trying to convert to a REIT, and its stock is down 3% at $44.15, but its 52-week range is $25.53 to $49.61. This is a $4.1 billion market cap as of now.

Equinix Inc. (NASDAQ: EQIX) also said that the IRS informed it of a working group on REIT conversions. This is down 5% at $193.50, against a 52-week range of $158.98 to $231.56. The market cap for this data center services provider is about $9.5 billion.

Another REIT conversion plan comes from casino owner Penn National Gaming Inc. (NASDAQ: PENN), although this is trading up 1% on the day at $55.59 after word that the IRS working group may have no impact at all on Penn. Its market cap is $4.4 billion.

Copart Inc. (NASDAQ: CPRT) is getting hit hard as its vehicle auction operations were listed as having exposure to this issue by at least one analyst. Copart shares are down a sharp 7% at $32.00, against a 52-week range of $22.59 to $38.26, and it has a market cap of $4 billion.

The IRS is likely looking to tighten up on the number of companies seeking to covert for tax purposes. Obviously it has to be a part of the government looking for higher tax revenues. As you can see, there is quite literally billions of dollars worth of value here at stake.

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