Grant Thornton LLP believes that patenting tax advice or tax strategies should be prohibited by legislation and urges the Internal Revenue Service and the U.S. Department of Treasury to delay finalizing the proposed regulations while Congress considers an appropriate legislative solution.

Tax advice and tax strategies are rooted in public law. Granting a patent on such strategies and advice allows the patent holder to control or charge another taxpayer for applying law enacted for the potential benefit of every taxpayer. This is unfair and should not be allowed, states Grant Thornton in a company news release.

Grant Thornton goes on to say that attempts to regulate the use of tax patents by requiring additional disclosure from taxpayers who may or may not understand they are employing patented advice does not directly address this unfairness. It will introduce inefficiencies, uncertainties and considerable taxpayer burdens into the tax compliance process. The ability to achieve a tax patent also may have the undesirable consequence of fostering an environment where the prospect of owning a tax patent leads to the development of overly aggressive, abusive tax-avoidance strategies. The IRS and Treasury should be applauded for attempting to address the problems created by allowing tax advice to be patented through the reportable transaction disclosure regime. But if increased taxpayer disclosure is the best solution available through regulation, then the necessity for a more direct legislative solution is clear.

Grant Thornton LLP has submitted a comment letter to the IRS and Treasury detailing its concerns and recommendations on proposed regulations that add a patented transactions category to the list of reportable transactions.