Page:United States Statutes at Large Volume 112 Part 1.djvu/777

 PUBLIC LAW 105-206-^ULY 22, 1998 112 STAT. 751 (b) CONFORMING AMENDMENT.— The table of sections for such chapter 77 is amended by adding at the end the following new item: "Sec. 7525. Confidentiality privileges relating to taxpayer communications.". (c) EFFECTIVE DATE.— The amendments made by this section Applicability, shall apply to communications made on or after the date of the 26 USC 7525 enactment of this Act. ^°^- SEC. 3412. LIMITATION ON FINANCIAL STATUS AUDIT TECHNIQUES. Section 7602 (relating to examination of books and witnesses) is amended by adding at the end the following new subsection: " (d) LIMITATION ON EXAMINATION ON UNREPORTED INCOME. — The Secretary shall not use financial status or economic reality examination techniques to determine the existence of unreported income of any taxpayer unless the Secretary has a reasonable indication that there is a likelihood of such unreported income.". SEC. 3413. SOFTWARE TRADE SECRETS PROTECTION. (a) IN GENERAL. — Subchapter A of chapter 78 (relating to examination and inspection) is amended by redesignating section 7612 as section 7613 and by inserting after 7611 the following new section: " 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—

�