Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

TAX PATENTS: A LIVE CASE

October 27, 2006

AccountingWeb.com reports that at least one tax patent case is now in litigation:

John W. Rowe, the former chief executive of Aetna, is currently being sued by the Tax Strategies Group in federal court in Connecticut for using a patented tax strategy without permission. The suit charges that he infringed on a patent when he established a certain kind of trust to minimize taxes on stock options. Mr. Rowe’s attorney, Cheryl E. Hader, a partner in Ropes & Gray, says in the Times report, that the strategy he used was clearly authorized by the tax law and should not have been given a patent.

This business of patenting tax strategies is a crock. They are just a way for patent jackals to extract tribute from the already-costly process of complying with the tax law. The problems are obvious, as the article points out:

Congress has not ruled on whether patents on tax ideas are legal, but it seems obvious they would want to ensure equal protection under the law, the New York Times says.

“It is not right that Congress can give a taxpayer a benefit and someone can prohibit you from using that benefit to reduce your taxes,” Donna Belcher, a tax lawyer with the firm McGuire Woods in Richmond, Virginia, told Fortune.

Given the number of tax strategies that might be patentable, the Times envisions “lawyers and accountants rushing to the patent office as soon as a new tax law is passed, seeking to claim credit from dreaming up ideas that were made possible by the new law.”

It's enough fun trying to stay out of trouble with the IRS without worrying that some patent parasite is also going to try to take a cut. Congress needs to step in and end this nonsense, and soon.

Prior Tax Update coverage:

ABA ON TAX PATENTS: MEND, DON'T END?

'THE TAX LAW SHOULD BE AN OPEN ROAD, NOT A TOLL ROAD'

PATENTLY ABSURD

PAY YOUR TAXES ON TIME! (PATENT PENDING)

(Thanks to Hank Stern from InsureBlog for the tip)

      Bookmark: del.icio.us • Digg • reddit