SECTION 8. NOTIFICATION

.01 Except as provided in section 9.02 of this revenue procedure, the taxpayer must promptly notify its District Director if any machine-sensible records are lost, stolen, destroyed, damaged, or otherwise no longer capable of being processed (as defined in section 4.02 of this revenue procedure), or are found to be incomplete or materially inaccurate (affected records).

.02 The taxpayer’s notice must identify the affected records and include a plan that describes how, and in what timeframe, the taxpayer proposes to replace or restore the affected records in a way that assures that they will be capable of being processed. The plan must demonstrate that all of the requirements of this revenue procedure will continue to be met with respect to the affected records.

.03 The District Director will notify the taxpayer of any objection(s) to the taxpayer’s plan.

.04 A District Director may consider, whenever warranted by the facts and circumstances, the possibility of requiring less than a total restoration of missing data.

.05 Examples.

(1) Taxpayer A replaces its general ledger software system with a new general ledger software system with which the original system’s records are incompatible. However, A ’s original records are retrievable and capable of being processed on A ’s hardware system. A is not required to notify its District Director of the

change in its software system because A ’s records remain capable of being processed.

(2) Taxpayer B replaces its original ADP hardware system with a new system that cannot process the machine-sensible records created and maintained by B ’s original system. B must notify its District Director of this hardware system change and propose a plan for assuring that the machine-sensible records created and maintained by the original ADP hardware system are capable of being processed. To that end, B considers the following options: (1) having all records in the taxpayer’s original system immediately reformatted so that the new system can retrieve and process those records; (2) having all records in its original system reformatted by a designated future date; or (3) having an arrangement with a third party to process all records in its original system on a compatible system. Any of these options may be acceptable provided the option selected enables the taxpayer to meet the requirements of this revenue procedure with respect to those records. The taxpayer must be able to demonstrate that any third party reformatting or processing is done with the quality controls in place that will ensure the continued integrity, accuracy, and reliability of the taxpayer’s records.