ABA Tax Section Urges IRS to Make Taxpayers Disclose Use of Patented Tax Strategies

The ABA Tax Section yesterday requested in an 8-page letter that the IRS require taxpayers to list the use of a patented tax strategy as a reportable transaction on their tax returns:

These Comments were prepared by members of the Section’s Task Force on Patenting of Tax Strategies (the “Task Force”). Principal responsibility was exercised by Dennis B. Drapkin. Substantive contributions were made by Ellen Aprill, Derek Bambauer, Michael Lang, Stuart Lewis and Charles Pulaski. The Comments were reviewed by William Wilkins of the Section’s Committee on Government Submissions and Susan Serota, Council Director for the Task Force. ...

These Comments make recommendations regarding the following:

• Creation of a new category of reportable transaction for transactions that use patented tax strategies.
• Expansion of the material advisor rules to include persons who license tax patents to others or who provide tax statements regarding tax patents.
• Consideration of whether the IRS should receive patent applications pertaining to tax strategies at the time the applications are filed with the United States Patent and Trademark Office (the “PTO”).