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The enactment of the America Invents Act today gave taxpayers what observers consider as a significant victory. The new law is a key patent reform legislation that included a provision eliminating tax strategy patents that have been fought by the American Institute of Certified Public Accountants for over five years.
If allowed to continue, this type of patent could potentially complicate the tax compliance for a lot of Americans and expose many of them to royalty fees and patent infringement lawsuits.
Barry Melancon, AICPA president and CEO, said, “Tax strategy patents are the equivalent of private tollbooths that block tax compliance options and could cost Americans more money. We are grateful that Congress and the President recognized this and acted to correct the inequity.”
As a result, tax strategy patents present an obstacle to the use of legitimate ways to minimize or postpone tax liability. This situation can lead to discrepancies where one taxpayer could face a higher tax obligation than another, even if the two have basically the same tax situation. Doing away with the issuance of new tax strategy patents will somehow level the playing field, giving every American the opportunity to explore all legal steps to keep their taxes at the minimum.
“Navigating the tax code should be a simple, clear and fair process,” said Melancon. “The remedy contained in the new law reinforces this goal and makes it easier for financial professionals to give appropriate tax advice,” he added.
The new law considers any “strategy for reducing, avoiding, or deferring tax liability” as a “prior art” under patent law, and for that reason, not patentable. “Tax liability” under the law generally indicates any tax liability as defined under federal, state, local or foreign laws.