March 9, 1990
TO: BOARD OF GOVERNORS NO. 16-90
SEC RULES COMMITTEE NO. 15-90
STATE LIAISON COMMITTEE NO. 2-90
UNIT INVESTMENT TRUST COMMITTEE NO. 8-90
RE: PROPOSED TENNESSEE LEGISLATION
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As you know, many state laws provide that if a mutual fund
or unit investment trust invests in municipal obligations
issued by the state and its municipalities, interest received
by the fund or trust and paid to its shareholders is exempt
from state income tax. Thus, current Tennessee law provides
that if a mutual fund or unit trust invests at least 75% of its
assets in Tennessee municipal obligations, dividends paid to
shareholders are exempt from Tennessee income tax.
Legislation has been introduced in the Tennessee
legislature that would repeal these exemptions, retroactive to
1977.
The Institute has retained Tennessee counsel and is
scheduled to testify in opposition to the proposed legislation
on Monday, March 12, 1990. Attached are two newspaper articles
describing this matter.
We will keep you advised of further developments.
Catherine L. Heron
Deputy General Counsel
Attachments