“Taxes are going to rear their ugly head in mutual funds,” Duncan Richardson of Eaton Vance Corp. told Bloomberg back in November. Surprise, surprise – they have.

Wednesday’s InvestmentNews reports mutual fund investors paid $15.8 billion in taxes last year for distributions, citing a report by Lipper Inc. of New York. Funds paid out $261.1 billion in long- and short-term capital gains and income distributions in 2008. The total distributions represented a 55 percent decline, from $581.6 billion in distributions for 2007.

“While many mutual funds lost money in the market downturn last year, the buying and selling of holdings within those funds by portfolio managers resulted in distributions. Some of the trading was due to forced selling to meet the pressure of shareholder redemptions,” writes Sue Asci for InvestmentNews. “But, if the investor held onto the fund, they received a tax bill for the capital gains.”

It was a double whammy, Tom Roseen told InvestmentNews. Investors sold funds at a loss or if they sat on those investments, they still faced capital gains tax liabilities on their tanking funds.

Fixed-income investors took the brunt of the tax hit, Roseen said. Investors in taxable fixed-income funds paid about $6.337 billion in taxes, accounting for 40.2 percent of the total tax bill paid by mutual fund investors.