1 See Institute Memoranda to Accounting/Treasurers Committee No. 30-96 and Tax Committee No. 27-
96, dated July 25, 1996, to Accounting/Treasurers Committee No. 47-96 and Tax Committee No. 36-96, dated
November 26, 1996, and to Accounting/Treasurers Committee No. 8-97 and Tax Committee No. 10-97, dated
March 14, 1997.
[9649]
February 6, 1998
TO: TAX COMMITTEE No. 5-98
RE: INSTITUTE LETTER REGARDING THE 1998 IRS/TREASURY BUSINESS
PLAN
______________________________________________________________________________
The Institute submitted the attached letter to the IRS requesting that the 1998 IRS/Treasury
Business Plan include a project to publish guidance setting forth "safe harbor" circumstances under
which the IRS will not raise preferential dividend concerns regarding waivers and reimbursements of a
multiple-class fund's expenses. As you may know, the Institute has submitted to the IRS a proposal for
such a safe harbor,1 and the project was on the 1997 IRS/Treasury Business Plan. The project was not
completed last year due to the numerous issues requiring immediate guidance that arose after the
enactment of the Taxpayer Relief Act of 1997.
The letter states that published guidance on expense waivers and reimbursements in a multiple-
class fund context is essential due to the popularity of, and amounts invested in, multiple-class funds. In
addition, the letter notes that the Institute's proposal for guidance would significantly reduce the
inconsistencies between the tax and securities law treatment of waivers and reimbursements and would
relieve the industry of the unwarranted restrictions imposed under the current rulings practice of the
IRS.
Anne M. Barr
Associate Counsel
Attachment