Federal Issues

    Tax Strategy Patents 

    On September 16, 2011, President Obama signed the America Invents Act, which contains a provision that eliminates the patenting of new tax strategy patents. The AICPA strongly supported this legislation and worked towards its passage over a period of several years. The AICPA maintains that no one should have a monopoly over any part of the tax code and all Americans should be free to use any legally permissible means to comply with the law.  Taxpayers should not be required to pay royalties or be subject to litigation for patent infringement just for paying their taxes.

    In the 112th Congress, the AICPA strongly supported S. 139, a bill to stop the issuance of patents on tax strategies, introduced by Senators Max Baucus, a Montana Democrat, and Charles Grassley, an Iowa Republican.  The AICPA also supported the provision to stop tax strategy patents, included in the Senate patent reform bill, S. 23, commonly referred to as the America Invents Act.  The America Invents Act passed the Senate on March 8, 2011, and a similar version passed the House on June 23.  The Senate adopted the House bill on September 8, and it was signed into law by President Obama on September 16.

    Legal Background

    In 1998, the U.S. Federal Circuit Court of Appeals, in State Street Bank & Trust v. Signature Financial Group, Inc., held that business methods could be patented. Since then, over 130 patents for tax strategies have been granted and over 150 patent applications for tax planning methods are pending.  These tax strategy patents cover a wide range of activities including real estate transactions, charitable giving, retirement planning, and the granting of stock options.  It is an unfair burden on American taxpayers and their advisers to expect them to become experts in all issued and pending tax strategy patents.

    U.S. Supreme Court Bilski case

    The U.S. Supreme Court heard arguments on Dec. 7, 2009 in the Bilski v. Kappos case, which involved a challenge to a business method patent.  Tax strategy patents are a subset of business method patents. The lower court in Bilski had narrowed the standard of patentability for business method patents, but did not eliminate them.  It said nothing explicitly about tax strategy patents.  Following the lower court’s decision in Bilski, the U.S. Patent and Trademark Office continued to grant tax strategy patents, and new tax strategy patent applications continue to be filed.  The U.S. Supreme Court issued its decision on Bilski, June 28, 2010,  which did not affect the issuance of tax strategy patents.  The AICPA continues to believe that a legislative solution is essential to resolving this problem.

    History and Status of Legislative Action

    In the 110th Congress, the House of Representatives included a ban on tax strategy patents in the major patent reform bill that passed the House, 220-175.  Unfortunately, that bill did not become law.   In addition, Representatives Rick Boucher and Bob Goodlatte introduced freestanding legislation, H.R. 2365, to try to fix this problem.  In the Senate, in the 110th Congress, Senators Baucus and Grassley introduced freestanding legislation, S. 2369, which garnered 30 co-sponsors, including then-Senator Barack Obama. 

    In the 111th Congress, Representatives Rick Boucher and Bob Goodlatte re-introduced freestanding legislation, H.R. 2584, which garnered 45 co-sponsors.

    Copy of Legislation

    A copy of the bill is available on THOMAS.  The most recent version of the bill, and all Congressional actions, are available by searching for S. 139 or S. 23 by bill number.

    Issue Paper

    112th Congress AICPA Position on Patents for Tax Planning Methods

    AICPA Letters to Members of Congress

    September 6, 2011 AICPA Letter to all United States Senators

    February 10, 2011 AICPA Letter to House Judiciary Chairman Smith and Ranking Member Conyers

    February 2, 2011 National Coalition Letter to Senate Judiciary Chairman Leahy and Ranking Member Grassley

    September 28, 2010 Eighteen Organization Coalition Letter to Senators Leahy, Sessions, Baucus, Grassley, and Representatives Conyers, Smith, Levin, Camp, Boucher and Goodlatte

    October 20, 2009 Coalition Letter to Representatives Conyers, Smith, Rangel, Camp, Boucher and Goodlatte

    AICPA Media Articles


    March 8, 2011 Journal of Accountancy Article, Senate Passes Bill Addressing Tax Strategy Patents

    October 22, 2009 Journal of Accountancy Article, Coalition Urges Congress to Ban Tax Strategy Patents

    April 2008 Journal of Accountancy Interview, On Equal Terms: Rep. Rick Boucher tells why patents on tax planning methods run counter to public policy

    Other Documents and Links

    March 3, 2011 Floor Statement, Tax Patents Provision in Patent Reform Bill by Senator Charles Grassley

    May 20, 2009 Dear Colleague letter by Representative Rick Boucher

    September 9, 2007 Dear Colleague letter by Representatives Charlie Rangel and James McCrery

    Co-Sponsors

    A full list of co-sponsor is available on THOMAS.

    Outside Media Coverage

    March 9, 2011 InvestmentNews, Tax Strategy Patents May Be Headed for the Ash Heap

    March 8, 2011 AccountingToday, Senate Approves Tax Patent Reform 

    October 1, 2010 The Hill, On the Money, THE HILL's Finance & Economy Blog, Groups call for ban on tax patents by year end

    October 1, 2010 WebCPA, Unresolved Tax Questions Dog Lame Duck Session

    September 29, 2010 accountingWEB, Organizations ask Congress to ban tax strategy patents

    March 20, 2010 AL.com Press-Register Commentary, Your Word: No one should be able to monopolize strategy

    October 30, 2009 Pittsburgh Business Times Article, Accountants, consumer groups push for passage of legislation to eliminate tax strategy patents

    October 23, 2009 WebCPA Article, Patently Indefensible

    October 21, 2009 New York Times Economix Blog Article, Should You Be Able to Patent a Tax Strategy?

    Additional Resources
    AICPA Tax Patent Information web page

    Staff Contacts

    Diana Huntress Deem
    Senior Manager, Congressional Affairs
    202.434.9276
    ddeem@aicpa.org

    Eileen Sherr
    Senior Technical Manager, Taxation
    202.434-9256
    esherr@aipca.org

    For more information on this issue, see Tax Section's Tax Patents page.

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    XBRL

    Overview Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
    Published on December 15, 2014

    AICPA Letter to House Oversight and Government Reform Committee re DATA Act Implementation Hearing

    Legislative Letters The AICPA wrote to the House Oversight and Government Reform Committee regarding the Committee's hearing entitled "Transforming Federal Spending: Implementing the Digital Accountability and Transparency Act."
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    Congressional and Political Affairs Advocacy

    Overview The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
    Published on November 03, 2014

    Federal Legislative and Regulatory Issues

    Federal Law This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
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    Article In letters to members of the Equal Employment Opportunity Commission (EEOC), the American Institute of CPAs (AICPA) has asked commissioners to reject staff appeals to investigate and litigate against accounting firms regarding partner retirement provisions
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    Article The AICPA is opposed to certain provisions included in tax reform proposals that would limit the availability of the cash basis method of accounting.
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    Cash Accounting Bipartisan Letter to the House of Representatives

    Legislative Letters
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    Cash Accounting Senate Letter

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    Camp Letter On Cash Basis April 25, 2014

    Legislative Letters The American Institute of CPAs (AICPA) voices strong opposition to draft legislation that would limit the use of the cash method of accounting for pass-through entities and personal service corporations.
    Published on May 08, 2014

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    Article International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) in London is a response to worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards.
    Published on April 17, 2014

    AICPA Letter to SEC on Proposed Regulation Crowdfunding

    Comment Letter AICPA comments on the SEC's proposed new Regulation Crowdfunding under the Securities Act of 1933 and the Securities Exchange Act of 1934 to implement the requirements of Title III of the JOBS Act as published in SEC File No. S7-09-13.
    Published on February 06, 2014

    Jan 2014 - AICPA Statement for the Record regarding Conferences and Travel

    Article AICPA provided a Statement for the Record to the Senate Homeland Security and Government Affairs Committee in  response  to the hearing held on January 14, 2014 entitled, "Examining Conference and Travel Spending Across the Federal Government."
    Published on January 28, 2014

    Cash Basis Letter to Senate Finance Committee from Associations-Jan7-2014

    Legislative Letters Cash Basis Letter to Senate Finance Committee dated Jaunary 7, 2014 from American Council of Engineering Companies, American Dental Association, American Farm Bureau Federation, American Institute of Architects, American Institute of CPAs and S Corporation Association.
    Published on January 22, 2014

    Municipal Advisors

    Issue Brief The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
    Published on January 07, 2014

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

    Article The AICPA believes that the U.S. DOL should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.
    Published on December 30, 2013

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