A Reuters article, "U.S. Senators Urge Treasury to Fix Money Fund Tax Concerns", says "A bipartisan group of U.S. senators is pressuring the Treasury Department to relieve money market fund investors from tax rules that will kick in if the Securities and Exchange Commission decides to force some funds to float their share price. In a series of three letters dated July 15 and seen by Reuters, Democratic Senators Bob Menendez of New Jersey and Mark Warner of Virginia and Republicans Pat Toomey of Pennsylvania and Mike Crapo of Idaho said the Treasury needs to issue quickly guidance because it will help inform both the public and the SEC." The article excerpts a comment from Toomey's letter. "Money market mutual fund investors must be given an opportunity to review and comment on the proposed solution to the tax compliance burden, and the SEC and Department of Treasury should have the benefit of those comments,' Toomey wrote in his letter. The pressure from the four senators comes at a crucial time for the SEC, which is close to finishing new reforms for money market funds." The article continues, "The primary tax concern for money funds has to do with rules that would be triggered requiring investors to track gains and losses. Today, all money funds have a stable $1 per share NAV. That makes things simple for tax purposes because a stable price does not generate gains or losses. But if the share price floats, investors will need to track tiny gains and losses. In addition, floating shares of money funds could also separately trigger "wash sale" tax rules, which bar an investor from recognizing losses from the sale of securities if the investor purchased substantially identical shares within 30 days before or after such sale.” The article goes on, quoting two senators. "'Investors could still be deterred from investing in or using money market mutual funds for cash management if they must calculate and track the small capital gains and losses resulting from frequent transactions in a fund,' wrote Menendez and Warner." (See also, Bond Buyer's "Senators Raise Tax Issues On MMF Proposals; SEC to Weigh Rules July 23".) In other news, SEC Commissioner Michael Piwowar, delivered some pointed comments Tuesday about the Financial Stability Oversight Council. "The prudential regulators on the Council have been proceeding as if they themselves are the ones who know securities markets and investment products best. The most obvious example is the Council's much-discussed hubris in releasing proposed recommendations regarding money market mutual fund reform. It would be comedic, if not in such a serious context, that it did so while publicly acknowledging that the SEC "is best positioned" to implement such reforms."
