The Internal Revenue Service has proposed tax relief for money market fund investors in response to concerns about proposed reforms from the Securities and Exchange Commission in the money market industry that could trigger so-called “wash sale’ tax rules.

The Securities and Exchange Commission has proposed transitioning money market funds used by institutional investors from a price of $1 per share to a floating net asset value, or NAV. The proposed reform comes in response to the panic that ensued in the money market industry in 2008 when the Reserve Primary Fund could not maintain the stable $1 per share price because of losses sustained on Lehman Brothers debt and “broke the buck,” as well as recommendations from the Financial Stability Oversight Council, according to Reuters.

But investors have raised concerns that switching to a floating NAV could trigger the wash sale tax rules, which prevent investors from recognizing losses on the sale of securities if they bought similar shares within 30 days before or after the sale.

Notice 2013-48, issued Wednesday by the IRS, would establish a “de minimis” exception to the wash sale rules for certain redemptions of shares of money market funds that, under regulations proposed last month by the SEC, would no longer maintain a constant share price.  Under the proposed revenue procedure, if a taxpayer realizes a loss upon a redemption of certain money market fund shares, and the amount of the loss is not more than 0.5 percent of the taxpayer’s basis in the shares, the IRS will treat the loss as not realized in a wash sale.

This proposed guidance is intended to mitigate the tax compliance burdens that could result from proposed changes in the rules governing the prices at which certain money market fund shares are issued and redeemed. The proposed revenue procedure is drafted as if the SEC had already adopted the final rules addressing floating net asset value in substantially the same form as the proposed rules.

If those rules are not adopted in substantially the same form as they have been proposed, the IRS cautioned, the revenue procedure proposed by the notice may not be adopted or may be adopted in materially modified form.

The Treasury Department and the IRS are requesting comments on the proposed revenue procedure.