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FEATURE STORY
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Patented Tax Strategies
On this hot topic, publications offer
analysis; the web complements with fabulous primary source
materials
By Donald H. Kelley
The December 2006 Trusts & Estates article -- Patenting Tax
Strategies by Mary Lee Turk in the Chicago office of McDermott, Will
and Emery -- fueled my interest in this hot topic. The piece discusses
recent cases on the patenting of tax strategies, examines the issues
pertaining to the patented stock option grantor annuity trust (SOGRAT)
strategy raised by Wealth Transfer Group LLC v. Rowe, No.
3:06-cv-00024-AWT (D. Conn. Jan. 6, 2006) and advocates changes in the
treatment of patented tax strategies.
Turk's analysis also made me want to review some primary sources:
professional association comments; the legislative history on patented
tax (including transfer tax) strategies; patents issued for tax
strategies; and recent developments involving patented tax strategies
and related business processes. Many of these materials can be found on
the Internet.
For example, a simple search for "patented tax strategies" brings up a
paper cited in Turk's piece, by Paul Devinsky, John Fuisz and Thomas
Sykes, partners at McDermott Will & Emery LLP in Washington D.C. and
Chicago. Whose Tax Law Is It?, a
supplement to the Legal Times (Oct. 16, 2006) provides additional
background on patented tax strategies before
Rowe.
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(continuation of article)
The Patent
Office
Turk also mentions the U.S. Patent Office (USPTO) website, US Patent Grant and US PreGrant Publication documents
classified in US Patent Classification 705/36T.
This site lists patented tax strategies by description and patent
assignee. The list displays a remarkable variety of planning
techniques, insurance systems, pension systems and investment management
systems. Another such listing is at USPTO Full-Text and Image Database,
which includes a list of patented financial planning strategies.
The Testimony of James Toupin, General Counsel of the
USPTO, cited in Turk, is available as part of
the Ways and Means Committee Hearing on Issues Relating to the
Patenting of Tax Advice. The hearing was held
before the Subcommittee on Select Revenue on July 13, 2006.
The Committee Hearing
Other primary legislative material is available on the Ways and Means Committee site. For
the hearings conducted during the 109th Congress, look at the Hearing on Issues Relating to the Patenting of Tax
Advice. There, you can view the list of
witnesses and their testimony, submissions for the record and the entire
hearing transcript. Testimony before the committee includes:
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Commentary
Additional, relevant papers and reports from government agencies and
professional organizations are available on the Internet:
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Current
Developments
The Internet also provides a convenient way to stay current on patented
tax strategies and follow new developments.
The Rowe case involved a suit claiming infringement of the
patented GRAT strategy trademarked as SOGRAT. An Internet search for
"Wealth Transfer Group LLC v. Rowe" brings up a link to the Consent Final Judgment Regarding Settlement Agreement (March 9, 2007), reflecting the final disposition of
the case in a confidential settlement agreement.
To determine the legislative aftermath of the Ways and Means Committee
hearings, use the Thomas site to see new bills. The home page, thomas.loc.gov/, includes a search for newly proposed legislation.
A search of the words "patent tax" brings up the Stop Tax Haven Abuse Act. On Feb.
17, 2007, Sens. Carl M. Levin (D-Mich.), Norman Coleman (R-Minn.) and
Barack Obama (D-Ill.) introduced this act with provisions to restrict
patents on "inventions designed to minimize, avoid, deter, or otherwise
effect liability for federal, state, local or foreign tax." These
provisions would become effective on the date of enactment and apply to
any patents not granted before that date.
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Bottom Line
The government websites, such as
Thomas.gov and http://www.irs.gov, provide a wealth of primary source material on a
broad range of topics. Such resources can complement the analysis and
practical guidance that publications like Trusts & Estates offer.
Trusts & Estates magazine is pleased to present the monthly
Technology Review by Donald H. Kelley -- a respected connoisseur of
software and Internet resources wealth management advisors use to
further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to
the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb.
He is the co-author of Intuitive Estate Planner Software (Thomson - West
2006). He has served on the governing boards of the American Bar
Association Real Property, Probate and Trust Section and the American
College of Tax Counsel. He is a past regent and past chair of the
Committee on Technology in the Practice of the American College of Trust
and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions
on the tech resources available in the practice today. His columns are
edited for readability only. Send feedback and suggestions for articles
directly to him at dhkelley@qwest.net.
To
subscribe, click here.
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