Memo #
18826
INSTITUTE REQUESTS CLARIFICATIONS WITH RESPECT TO IRS INFORMATION REQUESTS REGARDING MUNICIPAL BONDS
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Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.
[18826]
June 7, 2005
TO: FIXED-INCOME ADVISORY COMMITTEE No. 12-05
MONEY MARKET FUNDS ADVISORY COMMITTEE No. 10-05
TAX MEMBERS No. 15-05
RE: INSTITUTE REQUESTS CLARIFICATIONS WITH RESPECT TO IRS INFORMATION
REQUESTS REGARDING MUNICIPAL BONDS
The Institute has submitted the attached letter requesting clarifications with respect to
IRS information requests regarding municipal bonds held by funds. The IRS is interested in
improving these information requests so that funds know, for example, the specific purpose of
the inquiry and whether the IRS believes that the bond may be taxable. Under one possible
approach, the requests would be color-coded, where:
“Green” might indicate a general request for information, i.e., there is no current
belief that the specific bond or similar bonds of that type are likely to be taxable;
“Yellow” might indicate that the request relates to a bond that is similar to a type
of bond that has been determined to be, or may be, taxable, although the
particular bond in the fund’s portfolio may not be taxable; and
“Red” might indicate that the IRS has concerns regarding the taxability of the
specific bond with respect to which information has been requested.
The Institute’s letter supports a color-coding system or some similar method of
providing additional information to recipients of IRS information requests regarding municipal
bonds. The letter also expresses our interest in maintaining an ongoing dialogue with the IRS
regarding the regulation of municipal bonds.
Lisa Robinson
Associate Counsel
Attachment (in .pdf format)
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website (http://members.ici.org) and search for memo 18826, or call the ICI Library at (202) 326-8304 and request the
attachment for memo 18826.