26 U.S.C. § 7612 : US Code - Section 7612: Special procedures for summonses for computer software

Search 26 U.S.C. § 7612 : US Code - Section 7612: Special procedures for summonses for computer software

(a) General rule
For purposes of this title -
(1) except as provided in subsection (b), no summons may be
issued under this title, and the Secretary may not begin any
action under section 7604 to enforce any summons to produce or
analyze any tax-related computer software source code; and
(2) any software and related materials which are provided to
the Secretary under this title shall be subject to the safeguards
under subsection (c).
(b) Circumstances under which computer software source code may be
provided
(1) In general
Subsection (a)(1) shall not apply to any portion, item, or
component of tax-related computer software source code if -
(A) the Secretary is unable to otherwise reasonably ascertain
the correctness of any item on a return from -
(i) the taxpayer's books, papers, records, or other data;
or
(ii) the computer software executable code (and any
modifications thereof) to which such source code relates and
any associated data which, when executed, produces the output
to ascertain the correctness of the item;
(B) the Secretary identifies with reasonable specificity the
portion, item, or component of such source code needed to
verify the correctness of such item on the return; and
(C) the Secretary determines that the need for the portion,
item, or component of such source code with respect to such
item outweighs the risks of unauthorized disclosure of trade
secrets.
(2) Exceptions
Subsection (a)(1) shall not apply to -
(A) any inquiry into any offense connected with the
administration or enforcement of the internal revenue laws;
(B) any tax-related computer software source code acquired or
developed by the taxpayer or a related person primarily for
internal use by the taxpayer or such person rather than for
commercial distribution;
(C) any communications between the owner of the tax-related
computer software source code and the taxpayer or related
persons; or
(D) any tax-related computer software source code which is
required to be provided or made available pursuant to any other
provision of this title.
(3) Cooperation required
For purposes of paragraph (1), the Secretary shall be treated
as meeting the requirements of subparagraphs (A) and (B) of such
paragraph if -
(A) the Secretary determines that it is not feasible to
determine the correctness of an item without access to the
computer software executable code and associated data described
in paragraph (1)(A)(ii);
(B) the Secretary makes a formal request to the taxpayer for
such code and data and to the owner of the computer software
source code for such executable code; and
(C) such code and data is not provided within 180 days of
such request.
(4) Right to contest summons
In any proceeding brought under section 7604 to enforce a
summons issued under the authority of this subsection, the court
shall, at the request of any party, hold a hearing to determine
whether the applicable requirements of this subsection have been
met.
(c) Safeguards to ensure protection of trade secrets and other
confidential information
(1) Entry of protective order
In any court proceeding to enforce a summons for any portion of
software, the court may receive evidence and issue any order
necessary to prevent the disclosure of trade secrets or other
confidential information with respect to such software, including
requiring that any information be placed under seal to be opened
only as directed by the court.
(2) Protection of software
Notwithstanding any other provision of this section, and in
addition to any protections ordered pursuant to paragraph (1), in
the case of software that comes into the possession or control of
the Secretary in the course of any examination with respect to
any taxpayer -
(A) the software may be used only in connection with the
examination of such taxpayer's return, any appeal by the
taxpayer to the Internal Revenue Service Office of Appeals, any
judicial proceeding (and any appeals therefrom), and any
inquiry into any offense connected with the administration or
enforcement of the internal revenue laws;
(B) the Secretary shall provide, in advance, to the taxpayer
and the owner of the software a written list of the names of
all individuals who will analyze or otherwise have access to
the software;
(C) the software shall be maintained in a secure area or
place, and, in the case of computer software source code, shall
not be removed from the owner's place of business unless the
owner permits, or a court orders, such removal;
(D) the software may not be copied except as necessary to
perform such analysis, and the Secretary shall number all
copies made and certify in writing that no other copies have
been (or will be) made;
(E) at the end of the period during which the software may be
used under subparagraph (A) -
(i) the software and all copies thereof shall be returned
to the person from whom they were obtained and any copies
thereof made under subparagraph (D) on the hard drive of a
machine or other mass storage device shall be permanently
deleted; and
(ii) the Secretary shall obtain from any person who
analyzes or otherwise had access to such software a written
certification under penalty of perjury that all copies and
related materials have been returned and that no copies were
made of them;
(F) the software may not be decompiled or disassembled;
(G) the Secretary shall provide to the taxpayer and the owner
of any interest in such software, as the case may be, a written
agreement, between the Secretary and any person who is not an
officer or employee of the United States and who will analyze
or otherwise have access to such software, which provides that
such person agrees not to -
(i) disclose such software to any person other than persons
to whom such information could be disclosed for tax
administration purposes under section 6103; or
(ii) participate for 2 years in the development of software
which is intended for a similar purpose as the software
examined; and
(H) the software shall be treated as return information for
purposes of section 6103.
For purposes of subparagraph (C), the owner shall make available
any necessary equipment or materials for analysis of computer
software source code required to be conducted on the owner's
premises. The owner of any interest in the software shall be
considered a party to any agreement described in subparagraph
(G).
(d) Definitions
For purposes of this section -
(1) Software
The term "software" includes computer software source code and
computer software executable code.
(2) Computer software source code
The term "computer software source code" means -
(A) the code written by a programmer using a programming
language which is comprehensible to appropriately trained
persons and is not capable of directly being used to give
instructions to a computer;
(B) related programmers' notes, design documents, memoranda,
and similar documentation; and
(C) related customer communications.
(3) Computer software executable code
The term "computer software executable code" means -
(A) any object code, machine code, or other code readable by
a computer when loaded into its memory and used directly by
such computer to execute instructions; and
(B) any related user manuals.
(4) Owner
The term "owner" shall, with respect to any software, include
the developer of the software.
(5) Related person
A person shall be treated as related to another person if such
persons are related persons under section 267 or 707(b).
(6) Tax-related computer software source code
The term "tax-related computer software source code" means the
computer source code for any computer software program intended
for accounting, tax return preparation or compliance, or tax
planning.