[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2657 Introduced in House (IH)]







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 following 
      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 executable computer software obtained by the Internal 
                            Revenue Service.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Software Trade Secrets Protection 
Act of 1997''.

SEC. 2. LIMITATION ON AUTHORITY TO REQUIRE DISCLOSURE OF COMPUTER 
              SOURCE CODES.

    (a) In General.--Section 7602 of the Internal Revenue 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 Disclosure 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 examination of--
                    ``(A) the computer source code for any computer 
                software program for accounting, tax return preparation 
                or compliance, or tax planning, or
                    ``(B) design and development materials related to 
                such a software program (including program notes and 
                memoranda).
            ``(2) Exceptions.--Paragraph (1) shall not apply to--
                    ``(A) any inquiry into any offense connected with 
                the administration or enforcement of the internal 
                revenue laws, or
                    ``(B) any such program and materials--
                            ``(i) owned by the taxpayer or a related 
                        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 
provision which is necessary to prevent the disclosure of trade secrets 
or other confidential information, including a provision 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 Revenue Code of 1986 
(relating to confidentiality and disclosure of returns and return 
information) is amended by redesignating subsection (q) as subsection 
(r) and by inserting 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 connection 
                with the examination of such taxpayer's return,
                    ``(B) the software may be disclosed only to persons 
                conducting such examination whose duties or 
                responsibilities require access to the software,
                    ``(C) the software shall be maintained in a secure 
                area or place,
                    ``(D) the software may not be copied except as 
                necessary to perform such examination,
                    ``(E) at the end of the examination (and any 
                judicial review related thereto), 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
                    ``(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 enactment of this Act.
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