THE PAPERWORK MOUNTAIN, like a newly formed volcano, is rising another few thousand feet. Within the next 10 days, the Treasury expects to issue regulations requiring the nation'sstates, cities and other issuers of tax- exempt bonds to file reports concerning all tax-exempt borrowing. For two years previously, they had been required to report all industrial development bonds.

The reports apparently will cover not just tax-exempts as they are generally thought of, general obligation and revenue bonds sold to the public, but bank loans, leases and overnight loans as well. Failure to file would make any tax-exempt financing taxable.All this is in compliance with the Tax Reform Act of 1986 which - did we hear it all wrong? - was touted as a tax simplification measure.

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