VIA FAX
March 3, 1995
TO: TAX COMMITTEE No. 10-95
RE: MARCH 13 MEETING ON MULTIPLE CLASS TAX ISSUES
______________________________________________________________________________
As we discussed at the February Tax Committee meeting, the Internal Revenue Service
("IRS") has been considering how the preferential dividend rules of Internal Revenue Code
section 562 should be applied to regulated investment companies ("RICs") with multiple classes
of shares. At the meeting, we discussed an "interim" representation that IRS was accepting that
permits certain class-specific expenses to vary by less than 50 basis points. We also discussed
IRS’ announced intention to continue issuing private letter rulings for multiple class structures
while it studied preferential dividend issues.
The Institute has become aware that IRS has been raising additional preferential
dividend issues and may be requiring additional representations in connection with multi-class
ruling requests. We have been informed, for example, that IRS (1) has refused to issue a ruling
permitting class-specific expenses to be varied in a non-pro-rata manner, (2) may even be
considering whether a pro-rata waiver may be made, and (3) has raised preferential dividend
issues in connection with a fund-of-funds ruling request.
To ascertain what issues IRS has been raising and the legal theories for their positions,
the Institute has scheduled a meeting for Monday, March 13 at 10:00 a.m. in the David Silver
Conference Room, located on the 12th floor of our offices at 1401 H Street, N.W. Because many
of the conversations with IRS have involved outside advisers (attorneys and/or accountants)
retained by our members, Institute members are invited to bring outside advisers with them to
this meeting. Lunch will be served following the meeting.
All persons planning to attend the meeting should either complete the attached
response sheet and fax it to Theresa Brice at (202) 326-5841 or call Theresa at (202) 326-5833 no
later than Thursday, March 9.
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment
ATTENDANCE RESPONSE FORM
ICI Multiple Class Tax Issues Meeting
Monday, March 13, 1995
Please fax this portion to Theresa Brice, Investment Company Institute, 202-326-5841.
YES NO
____ ____ MULTIPLE CLASS TAX ISSUES MEETING - 10:00 a.m.
____ ____ LUNCH
_________________________________________ _________________________________________
NAME(S) OF ATTENDEE(S) COMPANY NAME(S)
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