Part III. Administrative, Procedural, and Miscellaneous

(2) An imaging system must include:

(a) reasonable controls to ensure the integrity, accuracy, and reliability of the imaging system, including a record of where, when, by whom, and on what equipment the image was produced, including the hardware and software that was used;

(b) reasonable controls to prevent the unauthorized creation of, addition to, alteration of, deletion of, or deterioration of any imaged document (for instance, one control could be the use of a non-erasable and nonrewritable media);

(c) an inspection and quality assurance program evidenced by regular evaluations of the imaging system including periodic checks of imaged documents;

(d) a retrieval system that includes an indexing system (within the meaning of section 4.02 of this revenue procedure); and

(e) the ability to reproduce a legible and readable hardcopy (within the meaning of section 4.01(5) of this revenue procedure) of an imaged document.

(3) For each imaging system used, the taxpayer must establish, maintain, and retain written procedures that describe in detail the complete imaging system. Any changes to the imaging system must be documented in writing. These written procedures and all modifications must be readily available to the Service upon request.

(4) The imaging system must provide support for the taxpayer’s books and records (including books and records in an automated data processing system). For example, the imaging system and the taxpayer’s books and records must be cross-referenced, so that all imaged documents that support an entry in the taxpayer’s books and records can be automatically identified and retrieved for viewing or printing.

(5) All images reproduced by the imaging system must exhibit a high degree of legibility and readability when displayed on a video display terminal or reproduced on paper. The term ‘‘legibility’’ means the observer must be able to identify all letters and numerals positively and quickly to the exclusion of all other letters or numerals. The term ‘‘readability’’ means

Imaging Systems to Retain Books and Records

Notice 96–10

This notice provides a proposed revenue procedure that, when finalized, will provide guidance to taxpayers on the use of an imaging system to satisfy the requirement of § 6001 of the Internal Revenue Code to maintain books and records.

The Service is proposing this revenue procedure as one means of complying with the requirements of § 6001 using electronic technology for records storage. The Service welcomes public comments on the proposed revenue procedure. Comments should be submitted by March 28, 1996, to the Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044, Attn: CC:CORP:T:R (ITA Branch 4), Room 5228.

Rev. Proc. 96–