Leaders of the Senate Finance Committee have introduced a bill to prohibit the Patent and Trademark Office from granting any further patents for tax strategies and tax-planning inventions.

The bill echoes one passed in September by the House (see House Prohibits Tax-Planning Patents). Like the House bill, it contains an exception for tax preparation software.

Committee Chairman Max Baucus, D-Mont., and ranking Republican member Charles Grassley, R-Iowa, introduced the bill. Co-sponsors include Carl Levin, D-Mich., Ron Wyden, D-Ore., Barack Obama, D-Ill., and Jeff Bingaman, D-N.M.

Tax-planning inventions generally include tax strategies, techniques, schemes and systems designed to minimize or avoid tax liabilities. The U.S. Treasury Dept. has concerns about such patents and recently proposed regulations that would add patented transactions as a new category of reportable transactions.

"Tax practitioners should be able to provide advice and services to their clients without paying a fee to the patent holder," said Baucus in a statement.

To date, the Patent and Trademark Office has granted 60 tax patents, and 99 tax patent applications are pending.

The American Institute of CPAs urged passage of the Senate bill. "Taxpayers should not have to worry about infringing patents when preparing their tax returns," said AICPA president and CEO Barry Melancon in a statement. "Neither should the tax professionals who prepare millions of tax returns each year. Tax patents are an obstacle to equal application of the tax laws."

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