I
105TH CONGRESS
1ST SESSION
H. R. 2657
To amend the Internal Revenue Code of 1986 to prohibit the summons
and examination of source codes for third-party computer programs and
the disclosure of executable computer software obtained by the Internal
Revenue Service.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 9, 1997
Mr. SAM JOHNSON of Texas (for himself, Mr. HERGER, Mr. CHRISTENSEN,
Mr. HOUGHTON, Mr. RAMSTAD, Ms. DUNN of Washington, Mr. ENGLISH
of Pennsylvania, Mr. WELLER, and Mr. HAYWORTH) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to prohibit
the summons and examination of source codes for third-
party computer programs and the disclosure of execut-
able computer software obtained by the Internal Revenue
Service.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Software Trade Se-
crets Protection Act of 1997’’.
SEC. 2. LIMITATION ON AUTHORITY TO REQUIRE DISCLO-
SURE OF COMPUTER SOURCE CODES.
(a) IN GENERAL.—Section 7602 of the Internal Rev-
enue Code of 1986 (relating to examination of books and
witnesses) is amended by adding at the end the following
new subsection:
‘‘(d) LIMITATION ON AUTHORITY TO REQUIRE DIS-
CLOSURE OF COMPUTER SOURCE CODES.—
‘‘(1) IN GENERAL.—Nothing in this section or
in any other provision of this title shall be construed
to require the submission of, or to permit the exam-
ination of—
‘‘(A) the computer source code for any
computer software program for accounting, tax
return preparation or compliance, or tax plan-
ning, or
‘‘(B) design and development materials re-
lated to such a software program (including
program notes and memoranda).
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply to—
‘‘(A) any inquiry into any offense con-
nected with the administration or enforcement
of the internal revenue laws, or
‘‘(B) any such program and materials—
‘‘(i) owned by the taxpayer or a relat-
ed person, and
‘‘(ii) used exclusively by the taxpayer
and not for commercial distribution.’’
(b) PROTECTION OF TRADE SECRETS AND OTHER
CONFIDENTIAL INFORMATION.—Subsection (b) of section
7604 of such Code is amended by adding at the end the
following new sentence: ‘‘Such order may make any provi-
sion which is necessary to prevent the disclosure of trade
secrets or other confidential information, including a pro-
vision that any document or information be placed under
seal to be opened only as directed by the court.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 3. PROTECTION FROM DISCLOSURE OF EXECUTABLE
COMPUTER SOFTWARE.
(a) IN GENERAL.—Section 6103 of the Internal Rev-
enue Code of 1986 (relating to confidentiality and disclo-
sure of returns and return information) is amended by re-
designating subsection (q) as subsection (r) and by insert-
ing after subsection (p) the following new subsection:
‘‘(q) PROTECTION
OF
EXECUTABLE
COMPUTER
SOFTWARE.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section, in the case of executable
computer software which is treated as a return or
return information under this section with respect to
any taxpayer—
‘‘(A) the software may be used only in con-
nection with the examination of such taxpayer’s
return,
‘‘(B) the software may be disclosed only to
persons conducting such examination whose du-
ties or responsibilities require access to the soft-
ware,
‘‘(C) the software shall be maintained in a
secure area or place,
‘‘(D) the software may not be copied ex-
cept as necessary to perform such examination,
‘‘(E) at the end of the examination (and
any judicial review related thereto), the soft-
ware 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 de-
leted, and
‘‘(F) the software may not be decompiled,
disassembled, or reverse engineered.
‘‘(2) EXECUTABLE
COMPUTER
SOFTWARE.—
For purposes of paragraph (1), the term ‘executable
computer software’ means computer software which
is readable only by a computer, including the object
code.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
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