Congress should restrict patents on tax strategies or protect taxpayers and preparers from infringement actions arising from them, the AICPA told members of congressional committees. In letters to the House and Senate tax-writing and judiciary committees and a white paper, the AICPA said one government agency—the U.S. Patent and Trademark Office—should not be allowed to grant what may be regarded, perhaps falsely, as a dispensation for complying with the laws enforced by another, the IRS.
Just because a tax position is patented doesn’t necessarily mean it comports with the Tax Code, the AICPA said, noting similar concerns expressed last summer by IRS Commissioner Mark Everson during congressional hearings. Moreover, tax patents usurp congressional authority and create a private monopoly by granting to the holder an exclusive use of provisions of public laws, the AICPA said. They also impose a burden on other taxpayers and preparers, who could be hit with infringement warnings and demands for royalties, especially if patents proliferate. Patents complicate tax preparation and increase costs of compliance and administration, the AICPA said.
Since a federal appellate court ruling in 1998 upheld a patent for a business method, the Patent Office had awarded 52 patents for tax strategies as of mid-March, with another 84 pending. For more on the issue, see http://tax.aicpa.org/Resources/Tax+Patents/.