Staff of the U.S. Securities and Exchange Commission have met with the Internal Revenue Service to discuss tax implications if money-market mutual funds were to adopt a floating share price, two people familiar with the talks said.

Discussions have centered on the tax treatment of small gains and losses for investors in funds, said the people, who asked not to be named because the talks weren't public. IRS officials have told the securities regulator that they don't have much flexibility to interpret current tax law, one of the people said.

The discussions suggest SEC staffers are developing a more detailed proposal to force money funds to adopt a floating share price, a move the industry has said would destroy their appeal. One such proposal prepared last year under the direction of former SEC Chairman Mary Schapiro was rejected by three of her four fellow commissioners in August, even before they were presented with a formal draft.