Whether accounting firms and tax practitioners should be allowed to seek patent protection for the tax advice they offer is a question being raised on Capitol Hill in response to a recent upsurge in patent applications by the developers of new tax reduction strategies.
By describing their tax strategies as "business methods," a number of tax shelter promoters have convinced the U.S. Patent and Trademark Office to protect their estate and gift tax reduction programs from copycats.
Announcing a new round of congressional hearings on the issue, officials at the House Ways and Means Subcommittee on Select Revenue Measures credited concerns raised by a number of tax practitioners with focusing attention on such patents.
"At first glance, it seems odd that anyone should be permitted to patent means of complying with federal law," said subcommittee chairman Rep. Dave Camp, R-Mich. Nevertheless, Camp insisted that the panel has "no preconceived goals" concerning the patenting of tax advice.
"We want to explore this development and that's why we're inviting the Internal Revenue Service, the Patent and Trademark Office, academicians and practitioners to give us their views of the practice," he said.
On one side of the issue, intellectual property advocates defend the patenting of tax strategies on the grounds that they may help promote the development of new technologies and ideas. But on the other side of the debate, "Tax practitioners have expressed concerns about giving one person the ability to charge others for using relatively common structures," Camp said.
IRS officials are likely to express even deeper concerns about the practice during their testimony before the subcommittee. According to Camp, the hearings should provide Congress with a sense of whether patents may contribute to tax avoidance schemes, which make the agency's job of blocking tax shelters more difficult in the long term.
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