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MORE PATENT ABSURDITY

February 22, 2007

The TaxProf has two posts on efforts of the American Bar Association Tax Section to cope with the proliferation of patents for tax strategies.

This post reports on a letter sent by the Tax Section's patent task force to the IRS urging them to require that all "patented" tax strategies be disclosed on tax returns as "reportable transactions."

That strikes me as a lame and doomed improvisation. All it would do would be to add an inconvenience to the use of patented tax strategies. One of the biggest dangers of these patents is the liklihood that patents are being issued on things people will do anyway; they will keep on doing what they have always done and find themselves inadvertently violating disclosure requirements resulting from some patent they've never heard of.

I'm convinced there's a much more direct and effective approach to the problem. Putting this language in the US Code should do the trick:

(a) No patent shall be granted for any method of compliance or planning with respect to Title 26 of the U.S. Code.

(b) Any patent granted prior to the date of enactment of this Section with respect to a patent referred to in subsection (a) shall be null and void.

The TaxProf also posts on a teleconference scheduled today for lawyers on issues raised by tax patents.

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