Where do we draw the line between private, protected information and public information? Where tax strategies are concerned, there is no line – at least not according to Congress.
There’s a piece of legislation working its way through Washington right now (or it will be after the Thanksgiving break) that would prohibit CPAs and other tax professionals from patenting their tax strategies.
Overall, I agree with this. On one hand, it’s difficult to put considerable time and effort into researching loopholes and creating a personalized tax strategy for someone who then turns around, repackages and rebrands that strategy and sells it as their own product.
But when I look at the big picture, I consistenly arrive at this conclusion: tax loopholes are created by the government and are meant to be used by business owners, real estate investors and individuals. So making a claim that because you found them first you can control access to those loopholes and charge a fee to provide that access doesn’t make sense, nor does it fit public policy. I can’t imagine a situation where as a tax professional I would have to tell someone “there is a tax savings here but you can’t take it unless you pay someone XXX ahead of time.”
I was surprised to learn that there are already about 60 tax patents in existence and another 180 or so applications working their way through the Patent Office. I don’t know what the impact of legislation banning tax strategy patents would be on the patents that have already been granted or the ones in the pipeline. But after all my complaining about bad legislation (mortgage debt forgiveness) or missing legislation (AMT reform) I’m glad to see our government putting legislation in place that will benefit all taxpayers.