
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC7612]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
       CHAPTER 78--DISCOVERY OF LIABILITY AND ENFORCEMENT OF TITLE
 
                Subchapter A--Examination and Inspection
 
Sec. 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.

(Added Pub. L. 105-206, title III, Sec. 3413(a), July 22, 1998, 112 
Stat. 751.)


                            Prior Provisions

    A prior section 7612 was renumbered section 7613 of this title.


                             Effective Date

    Pub. L. 105-206, title III, Sec. 3413(e), July 22, 1998, 112 Stat. 
754, provided that:
    ``(1) In general.--The amendments made by this section [enacting 
this section, amending sections 7213 and 7603 of this title, and 
renumbering former section 7612 of this title as 7613] shall apply to 
summonses issued, and software acquired, after the date of the enactment 
of this Act [July 22, 1998].
    ``(2) Software protection.--In the case of any software acquired on 
or before such date of enactment, the requirements of section 7612(a)(2) 
of the Internal Revenue Code of 1986 (as added by such amendments) shall 
apply after the 90th day after such date. The preceding sentence shall 
not apply to the requirement under section 7612(c)(2)(G)(ii) of such 
Code (as so added).''

                  Section Referred to in Other Sections

    This section is referred to in sections 7213, 7603, 7609 of this 
title.
