Years ago Professor Jeffrey G. Sherman wrote in a law review article that traversing the complicated and intricate Subchapter J of the Internal Revenue Code, which is the Subchapter that deals with income taxation of trusts and estates, paralleled Odysseus having to sail through a slim straight with monsters on both sides.[1]
Prior to September 16, 2011, if a tax practitioner navigated the scary waters that is the Internal Revenue Code and discovered a new strategy for reducing taxes, he or she could possibly have patented that strategy. Accordingly, the practitioner was able to require other taxpayers to pay for a license to use the strategy, or prohibit its use all together.
However, the Equal Access to Tax Planning Act, which was signed into law on September 16th eliminated the possibility of someone being able to patent a tax strategy. Notably, the law did not remove such patents that were already in place; rather it only prohibits any new tax strategy patents from being issued.
Of course, the new law has no effect on the real reward for pouring over the Internal Revenue Code to discover a new tax strategy, which is, reducing a client’s taxes.
- Gary Altman, Esq. and Michael Wolsh, J.D.
[1] All You Really Need to Know About Subchapter J You Learned from This Article, 63 Mo. L. Rev. 1 (1998) by Jeffrey G. Sherman.