Legislation Addressing Tax Strategy Patents 


    112th Congress


    President Obama signing the Bill into Law


    Public Law 112-29
    - enacted legislation - Leahy-Smith America Invents Act

    As the AICPA has been supporting for five years, on September 8, 2011, the U.S. Senate passed the America Invents Act (HR 1249) by a vote of 89–9. The Senate’s version of the bill was identical to one passed by the House of Representatives on June 23, 2011, and was presented on September 12, 2011 to President Barack Obama for his signature, which occurred on September 16, 2011.

    The act reforms the U.S. patent system, and among its provisions is one intended to stop the granting of patents for tax strategies. The act deems any “strategy for reducing, avoiding, or deferring tax liability” to be “prior art” under patent law, and therefore not patentable. The tax strategy provision applies to “any patent application that is pending on, or filed on or after” the date of enactment. See the list of 167 patent applications pending on 9/16/11.  See also the list of 161 issued tax strategy patents as of 9/16/11 that remain in existence.

    In the act, “tax liability” is broadly defined to mean any liability for tax under federal, state, local or foreign law, and the provision covers taxes imposed by any “statute, rule, regulation, or ordinance that levies, imposes, or assesses such tax liability.”

    The provision, however, does not apply to tax preparation and other software; it explicitly excludes any “method, apparatus, technology, computer program product, or system, that is used solely for preparing a tax or information return or other tax filing” or that is “used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor.”


    S. 139 - The Equal Access to Tax Planning Act of 2011 (Baucus and Grassley introduced 1/25/11)

    On January 25, 2011, Senators Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) (and 6 cosponsors) introduced S. 139, legislation that is intended to stop the granting of patents for tax strategies. The Equal Access to Tax Planning Act of 2011 would provide that “any strategy for reducing, avoiding, or deferring tax liability” is deemed to be “prior art” under patent law, and therefore not patentable.  The proposed legislation would apply to any attempt to patent a strategy to reduce tax liability under federal, state, local or foreign law.    


    S. 23 - America Invents Act (Leahy, Sessions, Grassley, and Hatch introduced 1/25/11)

    Section 14 of S. 23, America Invents Act of 2011, also introduced on January 25, 2011, contains the same tax strategy patent provision of S. 139, deeming tax strategy patents as prior art so they would not be patentable.  S. 23 (including Section 14 on tax strategy patents) was unanimously reported out of the Senate Judiciary Committee on February 3, 2011.


    H.R. 1249 - America Invents Act (Smith introduced 3/30/11)


    Note:
      See also Tax Strategy Patent Legislation in Prior Congressional Sessions for more information on tax strategy patent legislation introduced in prior years.

     

     

     




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