The ability to make choices is the pillar of a free market economy. But when it comes to the Internal Revenue Services' new tax reporting requirements, choices will mean plenty of additional operational and technological headaches for mutual fund companies over the next year.

Mutual funds will be "dealing with soup to nuts changes in books of records, tax reporting systems as well as customer interfaces and communications," said Nico Willis, chief executive of Networth Services, a Phoenix, Az.-based software firm specializing in tax-lot accounting.

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