IRS permits electronic imaging in Rev. Proc. 97-22.

Rev. Proc. 97-22 establishes the Service's commitment to accepting the use of electronic storage systems for the purpose of maintaining records as required by Sec. 6001. The procedure outlines detailed requirements that a taxpayer's system must meet to be considered adequate for IRS purposes.

The taxpayer must ensure "an accurate and complete transfer of original computerized books and records to an electronic storage media. The electronic storage system must also index, store, preserve, retrieve, and reproduce the electronically stored books and records." The storage system must include:

1. Reasonable controls to ensure the integrity, accuracy and reliability of the electronic storage system, and to prevent and detect the unauthorized creation of, addition to, alteration of, deletion of or deterioration of electronically stored books and records;

2. An inspection and quality assurance program, evidenced by regular evaluations of the electronic storage system (including periodic checks of electronically stored books and records); and

3. A retrieval system that includes an indexing system and the ability to reproduce legible and readable hard copies of electronically stored books and records.

Further, the Service requires that on request and/or at the time of an examination, a taxpayer must:

* Maintain an electronic storage system and, if necessary, provide the IRS with descriptions of the system, including all procedures relating to its use and its indexing system;

* Be able to retrieve and reproduce electronically stored books and records and provide the Service with the resources necessary to locate, retrieve, read and reproduce any electronically stored books and records;

* Maintain an electronic storage system that does not limit or restrict the IRS's access and use of the electronic storage system on the taxpayer's premises, including personnel, hardware, software, files, indexes and software documentation; and

* Maintain an electronic storage system that provides support for the taxpayer's books and records (including books and records in an automated data processing system). For example, the information maintained in an electronic storage system and the taxpayer's books and records must be cross-referenced in a manner that provides an audit trail between the general ledger and the source document(s).