The Treasury Department, facing a potential "hemorrhage" of tax revenue from the rapid expansion of businesses operating as partnerships, yesterday called for taxing the new entities as if they were corporations.

"Without action, {the partnerships} would proliferate and gradually become the norm for doing business and the corporate tax could erode," Assistant Treasury Secretary J. Roger Mentz told a congressional hearing. "We are sincerely concerned that there could be a revenue hemorrhage if they are allowed to proliferate," he added.

As water seeks new holes in a dike when old ones are plugged, companies have turned to partnerships in response to last year's tightening of the tax code. They are reorganizing in large numbers as master limited partnerships (MLPs), a form that allows some of the advantages of corporate operation while maximizing the tax benefits of the new law.

Unlike traditional limited partnerships, MLPs operate much as corporations do, trading shares on stock exchanges and, recently, getting into such traditionally corporate fields as motion pictures, cable television, hotel chains, health care and home building.

In 1981, three such partnerships were formed. In 1986, 38 were created, 21 of them after September as the tax-revision law was moving toward President Reagan's signature. The Treasury said there now are 127 publicly traded partnerships.

The Joint Committee on Taxation reported that sales of new MLPs were 245 percent higher in the first five months of 1987 than for the same period a year earlier.

As is the case with all partnerships, income to the MLP is taxed only when it is distributed to the shareholders (who also take the partnership's tax deductions and credits themselves). Corporations pay taxes on their net profits, after the approriate deductions are subtracted, and shareholders are taxed on the dividends they receive.

Because the 1986 law reduced the top tax rate for individuals more than it cut the rate for corporations, it gave limited partnerships a relative advantage over the corporate form. And the law's crackdown on "passive" tax losses has sent investors looking for passive income against which they can take those losses, another incentive for MLPs. Passive deals are those in which investors do not play a managing role.

Treasury Department figures released yesterday estimated that taxing all MLPs as corporations would bring in $1.5 billion in revenue over the next five years. Exempting already-existing partnerships would cut revenue collection to $665 million.

Mentz said the Reagan administration favored exempting several categories of partnerships from taxation as corporations, including oil and gas and certain real estate partnerships. Exempting all natural-resource partnerships would cut new revenue to $260 million over five years.

Mentz reiterated that the Reagan administration remains firmly opposed to tax increases. Taxing MLPs as corporations would be "revenue-protecting" rather than "revenue-enhancing," he said.

The House Ways and Means Committee, whose select revenue subcommittee held yesterday's hearing, is searching for $19.3 billion in higher taxes for fiscal 1988 to fulfill the target set by the congressional budget resolution. Altogether, the resolution calls for $64 billion in additional revenue over the next three years.

Committee members -- several of them from oil and gas or other energy-producing districts -- displayed little enthusiasm for clamping down hard on MLPs. Rep. Michael Andrews (D-Tex.) said many energy producers "would have ground to a standstill without this important vehicle." The overflow crowd of lobbyists also displayed little enthusiasm for raising taxes on MLPs, muttering whenever Mentz reiterated Treasury's contention that large amounts of revenue would be lost if the expansion of MPLs continued unchecked.

Defenders of limited partnerships also testified yesterday, arguing that they were an efficient way to raise capital, less precarious than the debt financing often used by corporations.

"The tax policy you are reviewing has permitted partnerships to finance housing for Americans of all incomes, biomedical research and development which may cure diseases like cancer and AIDS, energy exploration that may help keep the American flag out of the Persian Gulf, and a host of other valuable activities," said Christopher L. Davis, president of the Investment Partnership Association.