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Big Brother Expands Reach

Klotz on Bonds

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<h3>James A. Klotz</h3>

James A. Klotz

There’s not much Congress does without a lot of fanfare. It did, however, manage to slip in a surprise for some municipal bond investors.

Back in May, Congress quietly passed a law that expands the tax-free income reporting requirements for individuals as well as financial institutions.

For the first time, financial institutions, such as banks and broker/dealers, will be required to furnish the IRS with municipal bondholders’ information with respect to payments of tax-exempt interest in 2006, as well as the portion of interest paid on private activity bonds subject to the Alternative Minimum Tax (AMT).

The standard 1099 INT form will be amended to include these categories.
James A. Klotz

President

James A. Klotz is the President of FMSbonds, Inc.
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Oct 27, 2006

Please note that all investing entails risk. Fixed income securities are subject to risks that will affect their value prior to maturity. Some of these risks can be related to changes in market conditions, issuer creditworthiness, and interest rates. This commentary is not a recommendation to buy or sell a specific security. All references to tax-free income refer to U.S. federal income tax. Income earned by certain investors may be subject to the Alternative Minimum Tax (AMT), and or taxation by state and local authorities. Please consult with your tax professional prior to investing. For more information on these topics please click on the “Bond Basics” link below or search by keyword at the top of this page.