As Congress considers legislation to reform the U. S. patent system, it should take the opportunity to end the ridiculous practice of allowing people and corporations to patent tax strategies that complicate the tax filing process for everyday taxpayers.
Every year, we all pay the price either directly or indirectly because opportunists are granted monopolies on certain parts of the tax code. Once given these “tax strategy patents,” patent holders can ask for royalties from people and companies that want to use their “strategy.” They can even deny taxpayers the right to use that strategy – even if that means that the taxpayer ends up having to pay more in taxes.
Perhaps the most outrageous example of this is a patent that has been issued related to tax savings on converting an IRA to a Roth IRA. Surely, Congress, the Internal Revenue Service, and the Patent and Trademark Office never envisioned that everyday taxpayers could be sued just for trying to plan for their retirement!
It’s bad enough that underhanded patent lawyers invent some of these dubious schemes to make money, shift the tax burden and complicate compliance for the rest of us. It’s even worse that it has the backing of the U.S. government. We urge Congress to ban tax strategy patents rather than allowing corporations and financial wizards to build up business models around them.
Banning tax strategy patents has broad, bipartisan support. Last year’s Senate bill to address this issue was co-sponsored by 30 Senators from both sides of the aisle. Many diverse organizations – from consumer groups and financial planning organizations to certified public accountants – are also calling for the ban.
Vermont’s own Senator Patrick Leahy is set to lead the effort on comprehensive patent reform later this year. We urge Senator Leahy to make this ban a top priority in the final bill. We need his leadership now more than ever in order to protect regular taxpayers from the risk of lawsuits and royalties as they try to pay their taxes.
