My third topic is one of extreme concern to my firm and other business software publishers. To our dismay and over our objections, the IRS, during audits of licensees of business software, is attempting to seize the software industry's single most important asset, its intellectual property, through prolonged and potentially ruinous litigation, without compensation, without offering even the most basic protections to the publisher. In my view, the IRS is on a wrong-headed crusade based on a fundamental misunderstanding of what software is and what it does. First, let me give you a quick primer on software. A corporate tax program, such as those published by my firm, may have 300,000 pages of source code, as well as notes the programmer makes as he proceeds, and comments from users who call in during the tax season with ideas and problems with the software.
Source code is the crown jewel of any software company.
It contains all the trade secrets, know-how, and tricks of the trade that set one firm's product apart from another firm's. We do not share our source code with anyone and we guard it by aggressively prosecuting any infringement of copyright, trademark, and trade secret laws. This then brings us to the present problem. The IRS wants our software and is using the audits of our corporate customers to try and get it. A designated summons is a powerful tool, in that it stops the running of the statute of limitations until lifted.