Grant Thornton LLP has expressed the belief that patenting tax advice or tax strategies should be prohibited by legislation, and has urged the Internal Revenue Service (IRS) and the US Treasury Department to delay finalizing proposed regulations while Congress considers an appropriate legislative solution.
Grant Thornton 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.
In a statement, the company argued that:
"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."
It continued: "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."
Grant Thornton went on to state, however, that 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.
However, the firm contended that if increased taxpayer disclosure is the best solution
available through regulation, then the necessity for a more direct legislative
solution is clear.
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