Senate Bill Could Block Patents on Tax Strategies

01/24/2011

On January 20, Senate Finance Committee Chair Max Baucus and Ranking Member Chuck Grassley introduced the “Equal Access to Tax Planning Act of 2011.” The legislation is designed to prevent individuals from getting patents on tax strategies. According to the bill's backers, if patents were allowed for tax strategies, some taxpayers could face fees simply for complying with the Internal Revenue Code and patent holders could earn windfalls and gain an unfair competitive advantage.

Baucus commented that “patenting common tax strategies undermines the fairness of our tax system. Taxpayers shouldn't have to pay royalties to others just to file their tax returns and comply with the tax code.” Grassley added that “it's unfair for taxpayers to have to pay for these methods. Also, tax patents undermine a tax system based on voluntary compliance.”

The bill provides that for purposes of evaluating an invention, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, would be deemed insufficient to differentiate a claimed invention from the prior art. The rule would be effective on the date of enactment and apply to any patent application pending and any patent issued on or after that date.