Tax News

CCH (cch.taxgroup.com) reports:

The House is scheduled to vote on September 7 on a bill to ban the controversial practice of patenting tax strategies, an aide to Rep. Howard L. Berman, D-Calif., told CCH on September 6. The measure is part of a comprehensive patent reform bill, the Patent Reform Bill of 2007 (HR 1908), sponsored by Rep. Berman.
In July, the House Judiciary Committee approved language curtailing the patenting of tax strategies (TAXDAY, 2007/07/19, C.3). Under HR 1908, an applicant would not be able to obtain a patent for a "tax-planning method." The bill defines a tax-planning method as "a plan, strategy, technique, or scheme that is designed to reduce, minimize or defer, or has, when implemented, the effect of reducing, minimizing or deferring a taxpayer's liability." However, the bill would not prohibit the patenting of return-preparation software.
The U.S. Patent and Trademark Office has approved patents for roughly 50 tax strategies, according to the AICPA. An additional 50 applications are reported to be pending. Many critics, including the AICPA, charge that patenting may mislead taxpayers into believing that a tax strategy has been approved by the IRS. In fact, the IRS does not review the applications for tax strategy patents.
Also on September 6, House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., and ranking member Jim McCrery, R-La., urged their colleagues to oppose any effort to remove the anti-tax strategy patent language from HR 1908. "The tax laws belong to all of us and we all have an obligation to comply with them. We shouldn't have to pay a royalty to do so," they wrote.
Legislation to prohibit the patenting of tax strategies is also pending in the Senate. The Stop Tax Haven Abuse Act (Sen 681) would prohibit the patenting of any strategy designed to minimize, avoid, defer, or otherwise affect the liability for federal, state, local or foreign tax. The bill has been referred to the Senate Finance Committee.
By George L. Yaksick, Jr., CCH News Staff
House Ways and Means Committee Letter