August 18, 2006
NYSBA Releases Report on Patentability of Tax Advice and Tax Strategies
The New York State Bar Association Tax Section has sent a report to the House Ways & Means Committee and Senate Finance Committee on the Patentability of Tax Advice and Tax Strategies. Here is the Summary:
We think the patenting of tax advice and tax strategies raises a number of difficult policy and practical issues. While the payment of taxes is mandatory, taxpayers are free to arrange their affairs within the bounds of the law in a manner that minimizes their legal liability for taxes. We do not believe that it is sound policy to force taxpayers to choose between paying more tax than they are legally obligated to pay and paying royalties to a third party who has patented a tax strategy.
In addition to this basic policy concern, we believe that applying patent law to tax strategies poses serious administrative problems and burdens, on account of the manner in which tax strategies are developed, the confidential nature of tax returns and the relationships between tax practitioners and their clients. These problems include difficulties in establishing and challenging the originality and obviousness of tax strategies, as well as issues in identifying what types of behavior constitute infringement. We believe that allowing tax strategies to be patented may interfere with the duties that tax practitioners owe to their clients, as well as the free exchange of ideas among tax practitioners and between tax practitioners and government officials, resulting in adverse effects on taxpayers and tax practitioners and ultimately on the development of sound tax policy.
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