"Tax advisors, who generally are not patent experts, have the burden to be aware of such patents, and either provide tax advice that complies with the patent holders' requirements, risk a lawsuit for themselves and their client, or potentially not provide the most advantageous advice to clients," the group stated in a letter to lawmakers. "Not surprisingly, these patents create a highly burdensome level of cost ultimately borne by taxpayers."
To date, 117 tax strategy patents have been issued by the U.S. Patent and Trademark Office, and about 151 are pending.
This means a tax preparer must search the patent database before recommending a strategy to a client or risk being fined for improperly employing the strategy.
"A legislative solution must be pursued immediately if we are to provide taxpayers with equal access to all available avenues of federal tax compliance," the letter states.
Existing patents already affect tax decisions on retirement plans, real-estate transaction and estate planning.
Patents that are pending would "affect taxpayers' ability to create a financial plan for funding college education; utilize incentive programs for health care saving account cards; insure against tax liabilities, and use life insurance to generate income," the letter states.
Legislation banning these patents have been introduced in both chambers but has failed to gain traction in the Senate.
The letter was signed by U.S. PIRG, the AICPA, the American Association of Attorney-Certified Public Accountants, the American College of Tax Counsel and Citizens for Tax Justice.