WASHINGTON — The Bond Dealers of America is forming a task force to focus exclusively on tax reform and its potential impact on the municipal securities market.

The tax task force will consist of six to seven BDA board members as well as other market participants and is expected to officially be launched this month, Mike Nicholas, BDA's CEO said Monday in a brief interview.

The task force's primary purpose will be to provide immediate response on how legislative proposals will impact the muni market place, Nicholas said. The group will have a presence in Washington, D.C. and will seek to ensure that lawmakers understand the full impact of tax-related muni proposals.

Separately, the BDA will hold a series of meetings from July through September with dealers in key BDA middle market cities to update them on current tax issues being discussed in Washington. The initial meetings will be held in Chicago, Minneapolis, Memphis, Little Rock, and Dallas.

"The whole point is to get out ahead of tax reform," Nicholas said. "Tax reform is going to be all encompassing and it could change the muni market."

Dealers will meet with BDA senior vice president of government relations, Susan Collet, and several other tax consultants and regulatory counsel.

Some of the issues the BDA will discuss include whether Congress will limit or completely eliminate tax-exemption for new munis or certain types of bonds. They will also discuss the future of Build America Bonds and other direct-pay and tax credit bonds.

BABs were created in 2009 by the American Recovery and Reinvestment Act and expired at the end of 2010. Issuers receive subsidy payments from the federal government equal to 35% of their interest costs.

The BDA will provide dealers with a complete overview of the tax reform discussions that have occurred in Washington, D.C. and tell them what to expect for the remainder of the year. It will also discuss with them what happened during the 1986 tax overhaul and the lessons that can be learned for 2013.

The group will review how Congress is tackling tax reform issues and what economic and political circumstances will shape the debate over the next year.

"We will talk about how the industry needs to coalesce and rally together to ensure that tax reform does not have a negative on the muni market," Nicholas said.

The dealer group also plans to update its members on the status of the Dodd-Frank Act, including the Volcker Rule and the application of a fiduciary standard to broker-dealers.

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