Software Firms Accuse IRS of Stealing Their Products

U.S. software companies accused the Internal Revenue Service Friday of ripping off the tax software they sell to corporate clients.

The Software Publishers Assn., which represents software giants Microsoft Corp., Adobe Systems Inc., Netscape Communications Corp. and others, said the IRS takes computer programs that one corporation uses to file its taxes and uses them to improve the way it checks other corporate returns.

They said that the IRS wants to use the data behind the programs, known as a source code. IRS officials say they need the information to ensure that companies are preparing their taxes correctly.

“The IRS wants our software and is using the audits of our corporate customers to try and get it,” Stephen Winn, the president of Computer Language Research Inc., told the House Ways and Means Committee. “They want to be able to improve the efficiency and effectiveness of their auditing process by confiscating software,” said Winn, testifying on behalf of the Software Publishers Assn.

Officials at the IRS say they haven’t stolen anything. They said they need access to software to understand the complicated paths companies, particularly multinational corporations, take to pay their federal taxes.

“It’s absolutely not true,” said Jodi Patterson, a spokeswoman for the IRS. “We need the source code [software] in order to be able to verify the returns.”