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Patents on Tax Reduction Strategies a Problem
EsonLinji writes "The International Herald Tribune has an article about how some lawyers are realising that patents on tax reduction strategies (a business method) might be a problem. The article states that there are already 50 such patents with more on the way, and at least one lawsuit. Particularly worrying is the idea of needing a license to follow the law. Fortunately, some of the laws get that this is a problem. Tax patents, the lawyers wrote, amount to 'government-issued barbed wire' to keep some taxpayers from getting equal treatment under the tax code."
No patents on tax increases?
Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
( and, yes, it does say 'state', but the US Supreme Court has ruled that this usually applies to federal law also. )
One can only hope that tax and patent lawyers turn on each other and simply self destruct. Maybe then we can make up for the past few decades of apparent non accelerating advancement.
"Thanks for all the money you paid to us. We've used it to buy off ISO among other things" -Microsoft
Finally, someone was dumb enough to rock the patent boat silly.
/read common man/ to take notice that something is just a bit wrong. Unfortunately, I don't forsee any great changes to come until wealthy men start losing out to those less fortunate. A good ol' fashioned robin hood approach to the matter could very well upset things just enough to make some real changes.
Granted, these will probably be killed due to certain issues... like aformentioned blurb mention.
However, it might just be enough to get more people
I will make it quite simple. Rich people don't care if poor get poorer. Rich people don't care if they lose wealth to other rich people. Rich people do care if they lose wealth to poor people. You just can go around upsetting the natural balance of things.
Yes, over the top a bit and a bit absurb, but I think I can get a few people behind my new campaign slogan.
Vote Cylix 2008!
"You should always go to other people's funerals; otherwise, they won't come to yours." -- Yogi Berra
Okay, so let me get this straight...
The gaming industry doesn't want me to make backups of my game to keep the disk from being scratched by overuse. It's infringement after all.
The recording industry won't let me put my tunes on a mix CD because that's a type of infringement too.
Now the government is going to ensure that I'm going to have to go to certain places to file my taxes this year because otherwise that's a different kind of infringement, patent infringement - and it doesn't matter if I read the law myself and saw that this is possible, because some tax firm in the middle of Texas came up with it as soon as the law was passed?
Enough is enough, already!
I'm filing my patent on looking both ways before crossing the street. Oh yeah, and a patent on not getting a traffic citation by not speeding.
How can you patent a business method on following the law? Let's forget for a moment how ridiculous a patent on business methods are in the first place.
If, however, a tax dodge only comes into use several years after the tax law, then I would agree that the dodge was not obvious.
Having said that I still don't think that there should be patents on things like this, but that is another matter.
I'm flabbergasted. Honestly, I fucking am. This is just not fucking acceptable. Just... no. What the fucking... I mean, how the fuck.... FUCK.
I have a request for you, world. Please end. Immediately. I really mean it. No more. It's not worth it to keep existing, y'know? We are an embarrasment to the concept of existence.
I mean seriously, holy shit.
That line may not mean what you think it means.
Oh, wow, so NOW someone patents something that pinches lawyers, and it's "ZOMG! WE GOTTA DO SOMETHING ABOUT THAT!!!" from the lawyers, and all this business method patenting bullshit that has been going on for decades gets nary a finger wave all this time?
I'm shocked. Truly.
Even beyond the fact that patenting something has to do with obeying the laws of the land, the whole notion of patenting business methods (and many forms of software patents as well) was and has always been absurd and self-destructive.
-SS "Teach the ignorant, care for the dumb, and punish the stupid."
But what if one gets tax advice from overseas where they don't accept silly patent laws?
Table-ized A.I.
So, if I patent a method af applying for and receiving a patent, will the patent system self destruct?
"nor deny to any person within its jurisdiction the equal protection of the laws."
Good point. But until this is 'noticed' by the courts, there are some further worrying questions. One is that there is nothing specific about patenting 'business methods' related to tax law, as opposed to other branches of law, as far as I can see. So, why not patent a type of defense in criminal law? Not that this topic is funny, but imagine for humor's sake "Plan B" from The Practice or "the Chewbacca Defense" from South Park being patented.
"Ain't democracy great?"
Right there is the prime reason why people are getting more and more cynical about this entire democracy thing: here, democracy has degenerated into a simple oligarchy, where the group in power is the group with money. Quite frankly, I wouldn't be surprised if in 50 years, the US would have the same political system that China has now: a central party that is in name democratic, but in practice completely static, and where ascension to posts comes strictly through internal power struggles.
I'm really not one for doomsday scenarios, but I have to say that this kind of crap is how people get disenfranchised and the idea that they have nothing to lose anymore. And what do people do who feel they have nothing to lose? They revolt. Feh.
Those who can, do. Those who can't, sue.
...is that the patents are based on something that may not remain the same for the life of the patent.
If I patent a tax avoidance scheme that involves, say, investing in a rainforest planting scheme to get a tax break (grossly simplified example) and that tax break is removed in the next budget then the patent is no longer valid.
One of the principles of patent law is that a patent is a disclosure: in exchange for protection on your invention you provide instructions on how to implement the invention. If it's not implementable the patent is invalid - this is where those perpetual motion machines that slip through from time to time get knobbled.
As a patent examiner cannot be certain that the "model" of the patent will work for the term of the patent they shouldn't grant it.
Or, of course, the next US administration could implement an intellectual property regime that doesn't look like an unseemly land grab, and then spend all its time in the WTO trying to persuade the rest of us to follow suit.
We waste incredible amounts of time and money working around our Byzantine internal revenue code. There's a better way to handle this.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I think the USPTO should start rubber stamping patents on legal strategy, what better way to bring the entire house of cards crashing down?
Tax shelters, and other creative interpretations of the tax code, are the bane of the IRS's existence. In the late '90s and early '00s, a few accountants went overboard with their tax planning strategies and started selling them as if they were "products", not unlike the what the law firms appear to be doing today. As a result of their marketing of products called BLIPS, FLIP, OPIS, and SOS, KPMG ended up paying the IRS $456 million dollars in penalties. Since 2003, the IRS appears to have focused on cleaning up the accounting industry and the rules around "reportable transactions" (transactions with attributes common to tax shelters) and seems to have the accountants in check. It looks like it's time to turn their attention to the lawyers.
Just like the "confidential transactions" of the accounting industry, where the taxpayer isn't allowed to disclose the details of a transaction to others (presumably for intellectual property protections for the accountant), a lawyer holding a patent on a tax strategy will only serve to draw attention to the strategy and get the whole thing shut down.
Boring but informative:
From the IRS Publication 550 on reportable transations:
See also: Inside the KPMG mess
"The first thing we do," said the character in Shakespeare's Henry VI, is "kill all the lawyers."
I'm a software engineer. I work in Windows, and frequently have to work with ** shudder ** Microsoft SQL Server. Now, I'd much rather work in Unix; or maybe something better. But if you start making lots of stipulations about what you're willing to work with, you'll find it harder to find work period. My choices of systems are constrained by my customers' choices.
Why is this relevant?
I suspect most lawyers, if they could, would change a number of laws. That's probably why many lawyers decide to become politicians; but for the vast majority that don't, they're stuck working with what they have or not working at all.
It always sticks in my craw when politicians use lawyers for scapegoats. The lawyers are just making a living with what the politicians hand them.
Now it is true that business patents started after a court decision allowing them; however that court decision interpreted a statute, which happened to have an unintended consequence. It has been within the power of politicans ever since to fix this oversight, but they haven't because the average person is much less important to them than people seeking to turn business practices into a form of property.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Fortune Magazine has 2 good writeups about this. They say "For tax-shelter touts, the patents are a potentially deceptive marketing tool: Just because a process is "patented" doesn't mean it's legal. "A patent carries with it no assurance whatsoever that the process will pass IRS muster," IRS commissioner Mark Everson told a congressional hearing in July. Giving patent protection to even legit tax strategies alarms many experts. "If you can patent an interpretation of the tax law, why not patent anyone's legal advice?" asks Carol Harrington, a lawyer with the firm McDermott Will & Emery in Chicago."
and
"'A patent carries with it no assurance whatsoever that the patented process, transaction or structure will pass IRS muster,' IRS Commissioner Mark Everson told a Congressional hearing in July. 'We are concerned, however, that taxpayers may be confused about this.'"
You can find the links to the articles here and here.
Balance the f'ing budget
Try to be deft enough at foreign policy that you do not get most of the rest of the world pissed off at you.
When striking at your enemy, prefer a swift lance in the right place versus an avalanche in the general area.
Read Sun Tzu.
Remember that the "goddamn piece of paper" written about 230 years ago helped make us the most respected country in the world at one time, and was specifically intended to protect us from the worst of leaders, not those that we trust.
Constrict the ability of lobbies to buy our government policies, criticize your elected officials with reasoned arguments, accept the inevitable fact that your views are not absolutely "right", don't use all caps in your Slashdot subject line, limit your government to doing the things that only government can do well, think for yourself (at length).
Question why you believe what you believe, as if it was a scientific question -- which of course it never will be.
Put your neocortex in control of your verbal/written output, as opposed to your limbic system.
Failing all of the above, stew in your own juices and try to avoid ad hominem attacks. If you find a perfect way of doing this, let me know or patent it.
BTW, if I had to label myself it would be as a centrist-conservative, but any label now carries so much stupid baggage that I try to avoid any one of them. "More power to the Party of Thinking People" -- Oh Shit, there isn't one.
I don't trust atoms -- they make up stuff.
Disclaimer - I am a tax lawyer
We've been discussing this internally for a few months now. Looking at the patent applications involving tax, we saw three categories of items:
(1) claims on how to implement data tracking systems in order to pay taxes (think programs for calculating sales taxes depending on where the product is shipped).
(2) claims on automating how to think through the tax consequences of a business deal (wow, if you do it with a database rather than pencil and paper, that should be patentable, right?) Side note: The hard part is not the algorithm, the hard part is getting the data and keeping it up to date.
(3) claims on a certain sequence of transactions that are claimed to be non-obvious and achieve lower taxes than a different sequences of transactions.
These have all the same problems that the software industry is dealing with: Some of this stuff has been done for decades, but is not "obvious" to a patent examiner.
A lot of these seem to be filed for patent troll purposes - if the patent office grants the application, then the patent holder will show up at the big accounting firms and demand a payoff.
There are a couple of interesting additional twists when this stuff starts getting applied to things like tax law. The first relates to type 1 claims (e.g. data tracking implementations). Here is where we argue that the patent system should not be allowed to put roadblocks on people's attempts to follow the law (and we are not even talking about gaming the system, just trying to be legal).
The second tax law specific twist relates to telling the government about your new tax planning idea. A competent government would look at the idea, decide if it should be allowed, and if it doesn't like the idea, change the tax law even before the patent is granted. [Yes, you can argue whether the US has competent government, but hey, we can talk hypothetically.]
I generally agree that the patent system is broken, we've just found additional ways to demonstrate that fact.
If you think deeply enough, you will have no single direction for your outrage.
Nice try. Here's the Straight Dope article on it.
Fascism starts when the efficiency of the government becomes more important than the rights of the people.
No, you're 100% incorrect.
I honestly don't know why that meme is still floating around the interwebs. The guy at capitolhillblue was the only person to push this story and he did it with anonymous sources.
If you read here it has the followup article CHB wrote 3 days later, titled "Where there's smoke, there's ire" which CHB pulled from his own site
"This article has been removed from our database because the source could not be verified."
It surprises me that he repeats the same claim just a week ago
Not to mention that he first claims he heard it from 3 sources, then later changed it to two sources. The man reported shiat either he or someone else made up.
I honestly don't care about getting modded up, but please mod down the AC.
[Fuck Beta]
o0t!
Check out http://www.uspto.gov/patft/class705_sub36t.html
Alot of these seem to be computerized systems to generate tax advantages for businesses or computer programs to determine a tax benifit. I wonder if anyone can find any 'outrageous' examples in here?
Sticks and rocks will no longer protect you. You're going to need to get some kind of gun that fires dogs.
In TJ, Mexicali, Windsor, Vancouver, Niagra Falls.
This fair tax is only fair if you think rich people would give up and not try to find ways around it.
There wouldn't be a single car sold in Detroit, Port Huron, Seattle, Buffalo, San Diego (probably LA), or any city near Canada or Mexico.
And that'd just be the start. Rich people would find ways to lease stuff so they never actually buy stuff (it IS a sales tax).
We have an income tax, which made rich people find ways to never realize income, thus we had to modify our tax code to fix that.
There's no reason to think the rich wouldn't find a way to avoid a sales tax just like they avoid income tax.
http://lkml.org/lkml/2005/8/20/95