The American Institute of CPAs told the Internal Revenue Service and the Treasury Department of its strong opposition to tax patents in a letter commenting on proposed regulations.
The letter to Linda Stiff, acting commissioner of the IRS, and Eric Solomon, assistant secretary of tax policy at the Treasury Department, was prompted by proposed regulations on patents as reportable transactions under Sections 6011 and 6111 of the Tax Code.
"We strongly oppose tax strategy patents because of the negative impact such patents have on taxpayers, tax professionals and on tax administration," wrote Jeffrey Hoops, chair of the AICPA's tax executive committee. "We believe that patents for tax-planning methods undermine the integrity, fairness and administration of the tax system and are contrary to sound public policy."
The AICPA agrees with the Treasury Department that a patent for tax advice or a tax strategy might be interpreted by taxpayers as tacit approval of the transaction and could harm the government's ability to obtain information about tax avoidance transactions.
The AICPA wants to go beyond regulations, however, and is looking for legislation to stop tax strategy patents from growing. The institute recommended that the Treasury Department and the IRS establish procedures to coordinate the review and analysis of tax strategy patent applications with the U.S. Patent and Trademark Office before patents are issued.
They might require the PTO to notify the IRS when tax strategy patent applications are filed or require the applications to be filed with the PTO and the IRS simultaneously. As an alternative, the IRS could closely monitor tax strategy patents as they are made public and designate potentially abusive ones as transactions of interest.