Senate to Vote on Patent Reform; FPA Says Axe Tax Strategy Patents

Upcoming vote to ‘eliminate tax strategy patents’ a plus for planners and taxpayers, FPA says

More On Tax Planning

from The Advisor's Professional Library
  • Charitable Giving Charitable giving can reduce your clients’ tax liabilities. However, the general and verification rules for the deduction of charitable gifts must be understood in order to take full tax advantage of such gifts.
  • IRAs: Eligibility The eligibility rules for contributing to traditional and Roth IRAs are complicated. Learn how to effectively use them in retirement plans.

The Financial Planning Association (FPA) is cheering a vote by the U.S. Senate Committee on the Judiciary, commending it for sending the Patent Reform Act of 2011 to the full Senate for a vote.

At issue is the current practice of “patenting tax strategies,” which the FPA says, “has hindered the financial planning process for both practitioners and consumers.”

"The Committee’s action on this bill is a tremendous step on behalf of taxpayers and their financial planners," Marvin W. Tuttle (left), executive director and CEO of the FPA, said in an announcement. "The practice of patenting a specific strategy is like a football team laying claim to the Hail Mary and forbidding other teams to use it in their playbook. FPA encourages the Senate to put American taxpayers first and pass the bill, which will lift the burden that has been unnecessarily inflicted on the tax and planning process."

The FPA pointed out in its release that, “Patenting tax strategies and corresponding ‘advice’ has been an increasing problem because it limits the ability of taxpayers to fully utilize interpretations of tax law intended by Congress. Many feel that it has created a monopoly for the patent holders to determine who can and cannot utilize parts of the tax code.”

The FPA also noted the extra burden that patents of this type place on planners, saying it “believes” that patenting tax strategies “has also affected the creation of financial plans because it requires the planner to be aware of ever-increasing strategy patents, in addition to ever-changing tax laws. Advisors must seek permission from the patent holder to provide the most advantageous advice to clients, or risk a lawsuit for themselves and their clients.”

Reprints Discuss this story
This is where the comments go.