The House Ways and Means Committee has introduced a bill that would streamline and modernize the tax code for mutual funds and their shareholders. For the past 50 years, the code has been adjusted piecemeal, and an entire review of the rules hasn’t occurred for more than 20 years.

There are two separate rules, for example, for Form 1099, and mutual funds are still precluded from earning income from commodities. Furthermore, there are various rules for preferential dividends and shareholder communications about dividend designation requirements. Mutual fund companies have also experienced complications with the excise tax on undistributed income that Congress has required them to pay since 1986.

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