article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Software Trade Secrets Protection Act''. SEC. 2. SOFTWARE TRADE SECRETS PROTECTION. (a) In General.--Subchapter A of chapter 78 of the Internal Revenue Code of 1986 (relating to examination and inspection) is amended by redesignating section 7612 as section 7613 and by inserting after 7611 the following: ``SEC. 7612. SPECIAL PROCEDURES FOR SUMMONSES FOR COMPUTER SOFTWARE. ``(a) Limitation on Authority to Require Production of Computer Software Source Code.-- ``(1) In general.--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 examine any computer software source code or related customer communications, and training materials. ``(2) Exception where information not otherwise available to verify correctness of item on return.--Paragraph (1) shall not apply to any portion, item, or component of computer software source code if-- ``(A) the Secretary, without examining the computer software source code, is unable to otherwise ascertain with reasonable accuracy the correctness of any item on a return after employing auditing procedures and practices otherwise used pursuant to this title, ``(B) the Secretary identifies with reasonable specificity the portion, item, or component of such code needed to verify the correctness of such item on the return, and ``(C) the Secretary demonstrates that with respect to the issue under examination the need for the portion, item, or component of the computer software source code requested outweighs the burdens of production imposed on the summoned person and the risks of disclosure of trade secrets. ``(3) Other exceptions.--Paragraph (1) shall not apply to-- ``(A) any inquiry into any offense connected with the administration or enforcement of the internal revenue laws, and ``(B) any computer software developed by the taxpayer or a related person (within the meaning of section 267 or 707(b)) for internal use by the taxpayer or such person and not for commercial purposes. ``(4) Enforcement proceeding.--In any proceeding brought under section 7604 to enforce a summons issued under this section, the court shall hold a hearing to determine whether the Secretary has met the requirements of paragraph (2). ``(5) Compliance with summons for computer software source code.--Any person to whom a summons for a portion, item, or component of computer software source code is issued shall be deemed to have complied with such summons by producing a hard- copy printout of such code. ``(b) 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 undue burdens or the disclosure of trade secrets or other confidential information with respect to such software, including providing 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 examined 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, and, in the case of computer software source code and related documents, shall not be removed from the owner's place of business, ``(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 of the summons issued under this section), 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 any notes or other memoranda made with regard to such software shall be destroyed, ``(F) the software may not be decompiled, disassembled, or reverse engineered, and ``(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 will examine or otherwise have access to such software, in which such person agrees-- ``(i) not to disclose such software to any person other than authorized employees or agents of the Secretary during and after employment by the Secretary, and ``(ii) not to compete with the owner of the software for a period of 2 years after disclosure to such person of such software. ``The owner of any interest in the software shall be considered a party to any agreement described in subparagraph (G). ``(c) Compliance With Summons for Certain Computer Software Executable Code.--Any taxpayer to whom is issued a summons for commercially available computer software executable code used to prepare such taxpayer's return or to account for the taxpayer's transactions with others shall be deemed to have complied with such summons by producing a read-only version of such code. ``(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, is not machine readable, and is not capable of directly being used to give instructions to a computer, and ``(B) related programmers' notes, design documents, memoranda, and similar documentation, excluding customer communications and training materials. ``(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.''. (b) Unauthorized Disclosure of Software.--Section 7213 of the Internal Revenue Code of 1986 (relating to unauthorized disclosure of information) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following: ``(d) Disclosure of Software.--Any person who divulges or makes known in any manner whatever not provided under section 7612 to any other person software (as defined in section 7612(d)(1)) shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.''. (c) Conforming Amendment.--The table of sections for subchapter A of chapter 78 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 7612 and by inserting the following: ``Sec. 7612. Special procedures for summonses for computer software. ``Sec. 7613. Cross references.''. (d) Effective Date.--The amendments made by this section shall take effect on the date of enactment of this Act.
summary: Software Trade Secrets Protection Act - Amends the Internal Revenue Code to prohibit the issuance or enforcement of any summons to produce or examine any computer software source code or related customer communications and training materials, subject to stated exceptions.