Patents on Tax Reduction Strategies a Problem 217
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."
What? (Score:5, Funny)
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Who needs a patent when you have a monopoly?
Re:What? (Score:4, Interesting)
Wether handing out taxation rights to private parties really has a place in modern society and in a free market is dubious, particularly when the system is far removed from any democratic control.
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Re:What? (Score:4, Insightful)
Patience.
It's a matter of time before the remains of SCO patent the use of patent lawsuits as a business model. The hope would be to get into a lawsuit over that patent, creating a potential infinite recursion and thereby an infinite revenue stream out of thin air. :p
Fourteenth Amendment / equal protection clause (Score:5, Interesting)
( and, yes, it does say 'state', but the US Supreme Court has ruled that this usually applies to federal law also. )
Re:Fourteenth Amendment / equal protection clause (Score:4, Insightful)
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Re:Fourteenth Amendment / equal protection clause (Score:5, Insightful)
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then again, i never was a fan of that amendment, as it seems to counter the first.
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"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
Not this shit again. (Score:4, Insightful)
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 [apfn.net] 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." [capitolhillblue.com]
It surprises me that he repeats the same claim just a week ago [capitolhillblue.com]
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.
Re:TOTALLY FALSE!!!! SLASHDOT LIES AGAIN (Score:5, Insightful)
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.
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Was Jesus trolling when he said "actions ... speak louder than words"? You do realize that was the point of the statement, for those who believe Bush never said such a statement about the Constiution being just paper, right? Bush has shown he only treats the Constitution as a piece of paper. What sort of believer are you wh
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Licensing "Plan B" (Score:5, Insightful)
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.
Re:Licensing "Plan B" (Score:4, Interesting)
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Actually, my patent plan is ingenious (Score:2)
shall not abridge the privileges (Score:2)
Watch the constant attack on the 1st and 2nd amendments by the states ( and feds )
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now the first, that's different.
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Not true.
The First Amendment, and all of the Bill of Rights, only applied to the federal government until the Fourteenth Amendment [usconstitution.net] was passed in 1866. This amendment states, in part, "[...] No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States...." This is what applied the First, Second, and the rest of the Bill of Rights to the states.
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Unfortunately, currently in this country getting justice requires you to pay for it. The people that are fighting to restrict my god given rights have somewhat larger pocketbooks.
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By this logic the First Amendment does not apply to the states yet either (after all, it only mentions Congress, not states.) However, this logic is flawed. The Fourteenth Amendment [usconstitution.net] clearly states, "[...] No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States...." This means that privileges, such as the First and Second and all other amendments, apply to the states (note this was ratified in 1866, so
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Ho
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Self Destruct (Score:5, Funny)
Re:Self Destruct (Score:5, Funny)
"One can only hope that tax and patent lawyers turn on each other and simply self destruct."
You work as an ecology consultant for Austraila or something?
What if they get viable offspring, you thought of that?!
Re:Self Destruct (Score:5, Funny)
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Although ya know, this gives me an idea. If you can patent something as braindead as this, why not declare other, more common business practices patentable ??? profit? Hell even something thats not a business practice, like wiping your arse, you could claim it was! Patent "lawyering", why didn't anyone think of that?
A Good Thing! (Score:5, Insightful)
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!
What the...? (Score:5, Insightful)
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!
Re:What the...? (Score:5, Insightful)
Is it time to get out my gun?
(I don't really have one but I got two dogs at my disposal and I can get a stick and some rocks.)
Re:What the...? (Score:4, Funny)
These are serious times. (Score:5, Funny)
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> 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
I'm as outraged as you, but patents don't apply to personal use, AFAICT. You can read patents all day and build devices in your private home. They only come into play when you start producing stuff for other people, usually commercial but gifts may be restricted.
So you can still
Re:What the...? (Score:5, Informative)
Re:Exactly, its about "degree of inventive ingenui (Score:2)
Oh that's it! (Score:5, Insightful)
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.
Re:Oh that's it! (Score:5, Interesting)
"How can you patent a business method on following the law?"
Easy. It's done all the time with the law of nature, so why not with the other laws? It's even more justified to patent following this law, since it's something that we have written by ourselves. Something that should not be justified, is to patent facts, like they do in science like physics and medicine.
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There are no laws of nature, so your analogy fails.
Obviousness test (Score:5, Interesting)
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.
Re:Obviousness test (Score:4, Insightful)
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I don't know - if the tax dodge was obvious to the skilled accountant you would think it would be obvious to the skilled tax law draftsperson
Too bad there are so few of those in Congress. If a CEO signed without reading as often as Congressmen vote without reading, he would end up in jail. Congress also has a habit of 'patching' existing legislation which is itself a patch to a patch. When they do that, they apparently never bother to look at what will result when the patches are applied in order.
Put
Re:Obviousness test (Score:4, Interesting)
Can't help but to wonder though, if it's something many start using to avoid taxes immediately after a new tax law is released, it's probably the intended effect. Like a tax break for driving eco-friendly cars or something. If it's something that is only discovered severals years after the tax law, it's probably a loop hole that got missed when the law was being written.
Which then brings the question, if you knew a loop hole in the law, would you tell the people who can close it about the hole by filing for a patent in use of it? Seems kinda self-defeating, sure you might get a patent for the hole but the hole will get closed that much quicker than if you had just kept your mouth shut and kept it secret.
Re:Obviousness test (Score:5, Insightful)
Accounting firms get paid tens of millions of dollars to come up with tax hedges. It isn't all that obvious what they are doing in many cases.
For instance, one older tax hedge -- not listed specifically in any laws -- involved forming a specific type of investment trust which purchased secured deed liens bonds of oil piplines, then reselling the interests in the trust. Using this method, the income from said trusts could be treated as operating (rather than investment) income by the holders in due course. This allowed them to prevent required liquidation (and subsequent taxation) of retained earnings in a C corp which had since converted to an S corp.
If 1 click puchasing counts as non-obvious, the above is not even questionable.
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The definition used to be whether the new invention would be obvious to a "Person Having Ordinary Skill in the Art" (PHOSITA) So basically, you'd take your average tax boy and see if this would have been obvious to him based on the prior art.
Unfortunately, the case law is in such a state that the "Person Having Ordinary Skill in the Art" is no longer the standard by which obviousness is jud
Re:Obviousness test (Score:4, Insightful)
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Tax code? Obvious? Let me be the first to say: BAHAHHAHAHAHAHHAHAHAHAAAAAAAAAA *rolls on floor laughing*
What the pizzachrist. (Score:2, Funny)
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.
Re:What the pizzachrist. (Score:5, Funny)
Also, I own a copyright on the term "Please end." Please end(c) your use of this phrase immediately.
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Awww.. come on now! (Score:5, Insightful)
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.
Re:Awww.. come on now! (Score:5, Insightful)
I think #1 problem is that we have TOO MANY laws. Seriously. Cut the big book of laws to a cliff note sized booklet, and we will not have 99% of all the problems we currently have with the law. And to boot, regular citizens will actually be able to understand and follow the law themselves.
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The reason we have so many laws is that people require clarity. Let's take for example, a paper that I am currently writing in law school. In essence, so and so was charged with a DUI, but there is sufficient evidence to show that he may have been entrapped. How do we know if he has been entrapped? There's a 2-part test. Was he induced into committing the crime, and was he predisposed to commiting it?
Do you see the
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That said, yes, you're right, it's obviously not feasible to condense all laws into 25 A6 pages. However, what I object to is the proliferation of stupid laws, and the continued existence of laws that have no reason to exist anymore. The "don't spit on Sunday's" law that probably was enacted in 1812 fits both categories. Or a tax code that has grown to 7500 pages -
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Or, they could set up a huge organization to rival the IRS to send forms out to every citizen, corp, organization, etc for them to fill out annually to determine how many laws you've obeyed, and how much you owe for NOT going to jail.
But wait..I could pay less by not obeying the law, therefor obeying the law about not using a patented method of obeying the law
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Laws are written in legalese for the same reason applications are written in programming languages, not English. Let's take a crime like murder - the layman's definition is very simple - to kill someone.
In legal terms, you have to put up standards of intent like manslaughter, assault with fatal outcome (which is a sep
Outsource the Lawyers! (Score:2, Insightful)
Recursive patents. (Score:5, Funny)
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I suspect there would be prior art.
But perhaps one could patent the business method of "using software patents to impede open source competitors threatening your monopoly", for example. If some company would like to prove that they have prior art, then please, be my guest.
The kicker is the final line in the article: (Score:5, Insightful)
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.
Re:The kicker is the final line in the article: (Score:4, Interesting)
There are plenty of other signs of approaching fascism in the US, but I am afraid few inside will recognise them. After all, it is unpatriottic to think such toughts, and in times of war, you should not question the army/the president/gouvernment...
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For my next amazing trick, I will demonstrate that 2 = 2.
Looks like the obvious stuff is taken... (Score:2)
2. Hire a grasping, unethical lawyer.
3. Profit!
What's particularly insane about this... (Score:3, Insightful)
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.
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It's still valid ... it's just worthless.
A patent on a better horse-buggy whip thingie wan't invalidated when the horseless carriage came along ... just that no one cared about your patent any more... ... just renders it worthless. (where worthless means that your idea requires no protection because no one will use your idea....)
Events overtaking your idea doesn't invalidate your patent
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A patent is on the specific way of doing something ... not on the end result. In other words, a patent may protect a way to convert steam into locomotion, but that didn't stop the internal combustion engine from also causing locomotion.
So what that means is that the tax patent will be some series of off-shore accounts, tax shelters, shell companies and the interactions between them. This sequence of actions is what will be protected, and even if the tax code changes, this series o
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Being a 'usefull invention' is a requirement for patenting. If an 'invention' is useless then the patent should become invalid because one of the basic requirements for being patented is no longer forfilled.
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I'm pretty much for it, although I'd like to
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And that is not hard to do in California, for example, where 50k a year puts you at the poverty level. Even at 100k or more, there are no fantas
if that passed, I'd open car dealerships in TJ... (Score:3, Interesting)
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 mo
Lawyers refuse to eat own dogfood! (Score:3, Insightful)
I think the USPTO should start rubber stamping patents on legal strategy, what better way to bring the entire house of cards crashing down?
Dragonzakura Quote (Score:2)
*note: Toudai = Tokyo University (basically the #1 university in Japan)
The IRS and Tax Shelters (Score:4, Informative)
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 [irs.gov] on reportable transations:
See also: Inside the KPMG mess [businessweek.com]
Not such a big problem... (Score:2)
Ah, but how can you follow the law if you can't afford to pay the law's copyright holders [slashdot.org] for the right to read it?
Unfortunately for all of them.... (Score:2, Redundant)
Patent =! Legal (Score:3, Informative)
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 [cnn.com] and here [cnn.com].
Someone missed the boat... (Score:2)
1. Patent ingenious tax strategy
2. Sell licenses for ingenious tax strategy
3. Patent genius idea of patenting tax strategies
4. Sell licenses to others so that they can patent their own ingenious tax strategies
5. PROFIT ON YOUR OWN AND OTHERS' INGENIOUS TAX STRATEGIES!!!
Notes From the Field (Score:5, Informative)
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.
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Re:Shakespeare was right (Score:5, Interesting)
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.
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It should be
"The first thing we do is kill all the lawyers who are politicians"
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Exactly (Score:2)
If the Democrats somehow manage to take control of the presidency and both houses of Congress, they'll take advantage of the shady techniques pioneered by the Republicans, possibly even extending them. Historically, our country always does best when the party in the White House is a different party than the one controlling Congress.
I was going to continue my rant, but it got too depressing. Anyways, make sure you vote in November - regardless of who you support.