Tax Law and Business Organization Strategy

Senate Bill on Tax Patents Introduced

On Nov. 15, Senate Finance Committee Chair Max Baucus (D-MT) and committee ranking minority member Chuck Grassley (R-IA) introduced legislation to prohibit the Patent and Trademark Office (PTO) from granting patents for common tax strategies and tax planning inventions. 

“America's patent system promotes innovation and competitiveness in all industries. However, the growing number of attorneys and accountants applying for patents of tax strategies and techniques is cause for concern,” Baucus said. “Taxpayers should not have to pay a toll charge or worry that they're violating patent law when they try to file their tax returns. Tax practitioners should be able to provide advice and services to their clients without paying a fee to the patent holder.”

Grassley added that tax patents “undermine the integrity and fairness of the federal tax system. They put taxpayers in the undesirable position of having to choose between paying more than legally required in taxes or paying a royalty to a third-party for use of a tax planning invention that reduces those taxes. Congress needs to level the playing field and improve options for taxpayers.”

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