The Senate has passed a patent reform bill containing provisions that eliminate patents on tax strategies.

In an 89-9 vote the Senate cleared a bill passed by the House in June that would mark the biggest change to U.S. patent law since 1952. The measure, called the America Invents Act, now heads to the White House for President Obama’s signature.

While patent law isn’t something that normally concerns CPAs, this legislation is significant. Once signed by the President it will prevent any individual or firm from patenting tax strategies, which could otherwise subject taxpayers to royalty fees for using the patented strategy when filing their taxes. The bill also stops tax patents from providing windfalls to lawyers and patent holders by preventing them from holding exclusive rights to use loopholes, which could provide some businesses with unfair advantages over their competitors. 

Legislators defeated an amendment by Republican Sen. Tom Coburn from Oklahoma that would have prevented patent fees from being diverted to other uses than the patent office by a vote of 50-48, along with  several other amendments that would have sent the bill back to the House. The Senate had passed an earlier version of the patent reform bill in March.

In May, OSCPA leaders met with Ohio’s Congressional delegation to advocate for stopping the practice of issuing patents on tax strategies. The legislation has been a priority on OSCPA’s federal legislative agenda and its passage is a huge win for the profession.