No. The IRS’s first formal AI guidance, released June 24, 2026, maps six existing Circular 230 duties onto AI-assisted work but stops short of requiring preparers to tell clients when AI touched their return. The AICPA is recommending firms get a signed disclosure anyway, since IRC Section 7216 already requires client consent before a preparer shares return information with outside parties, and AI arguably fits that description even though the rule doesn’t name it yet.
Key takeaways
OPR Alert 2026-19 applies six Circular 230 duties to AI use but doesn’t require telling clients AI was involved.
AI-powered tax research now reaches 60% of preparers weekly, up from 33% a year ago (Blue J / CPA.com, June 2026).
Section 7216 requires signed consent to share return data with third parties; AI tools haven’t been formally classified either way.
AICPA guidance: a Section 7216 AI disclosure must be its own document, not a clause in the engagement letter.
The preparer who signs the return owns it, whether or not AI helped write it.
Table of Contents
What Does the IRS’s New AI Guidance Actually Require?
OPR Alert 2026-19, issued June 24 by the IRS Office of Professional Responsibility, mapped six existing Circular 230 duties onto AI use: due diligence in reviewing AI output, technological competence, fee transparency, written advice standards, client data confidentiality, and firm-level supervision. It confirmed the preparer who signs a return owns the result, regardless of whether AI assisted.
Nothing here is a new rule. It’s the IRS taking duties that already existed under Circular 230 and stating plainly that they apply to AI the same way they apply to a junior associate or outside software. The six duties, as reported:
Due diligence in reviewing AI-generated output before it goes on a return
Technological competence with the tools the firm uses
Fee transparency around AI-assisted work
Written advice standards, applied to anything AI drafts
Client data confidentiality when data moves through an AI tool
Firm-level supervision of how staff use AI
What the alert didn’t address is the client-facing side: whether a taxpayer has any right to know AI was part of the process before their return gets filed.
Does Section 7216 Require Telling Clients When AI Prepares Their Return?
Not explicitly, but the AICPA thinks it should apply. IRC Section 7216 requires a preparer to get signed client consent before sharing return information with a third party, such as a financial advisor. Exceptions have covered tax software, and no one has settled whether an AI tool that processes return data counts as software or as a third party.
Henry Grzes, lead manager for tax practice and ethics at the AICPA, told CNBC that firms shouldn’t wait for the IRS to settle the question before acting: “Our recommendation would be [to] be safe, as opposed to finding out, ‘Uh-oh, I should have gotten this.’” (Henry Grzes, Lead Manager for Tax Practice and Ethics, AICPA · CNBC, Aug 2026.) He added that for individual returns, a Section 7216 disclosure has to be a separate document, not a clause folded into the engagement letter.
Joshua Youngblood, an IRS-enrolled agent and founder of The Youngblood Group in Dallas, made the comparison plainly to CNBC:
“If you have to have a disclosure to send a tax return to, say, a financial advisor that your client has been with for 20 years, wouldn’t you think it’s appropriate to do that if you’re going to send their information to an AI tool that’s going to prepare the return?”
Joshua Youngblood, IRS-Enrolled Agent, Founder, The Youngblood Group · CNBC, Aug 2026
His point stands on its own logic even without a rule that says so in writing: if disclosure is required for a 20-year relationship with a known human advisor, it’s a stretch to argue it isn’t warranted for an AI tool the client has never heard of.
How Fast Is AI Use Growing Among Tax Preparers?
A June 2026 survey of more than 1,000 tax professionals by Blue J and CPA.com found weekly AI-powered tax research use nearly doubled year over year, from 33% of respondents in 2025 to 60% in 2026. Forty-four percent now use AI for advisory projects, and 40% apply it to tax planning work that directly affects what clients owe.
That last number is the one worth sitting with. Tax research is one thing, an AI tool surfacing a citation you then verify yourself. Tax planning that changes what a client owes is a different level of exposure, and it’s already at 40% adoption while the disclosure rules are still unwritten.
What Should Firms Do About the Disclosure Gap?
Until federal rules catch up, the practical move is to build the disclosure and the governance now instead of waiting for a mandate. That means a standalone signed AI-use disclosure, a written inventory of which AI tools touch client data, and folding AI governance into the firm’s existing written information security plan.
A few concrete steps:
Draft a standalone AI disclosure. Per the AICPA’s guidance, it can’t live inside the engagement letter. Have clients sign it separately before AI touches their return.
Inventory the AI tools actually in use. Firm-wide policy is hard to write if nobody has listed which tools staff are already using for research, drafting, or planning.
Fold AI governance into the WISP. Two of the six Circular 230 duties in the OPR alert, client data confidentiality and firm-level supervision, are the same ground a written information security plan already covers under IRS Publication 4557. If your firm’s WISP doesn’t yet name how AI tools handle client data, that’s the gap to close first, not a second document to write from scratch.
Lock down the AI tool’s own account settings, the same way you would any other application handling client data: enforce MFA and SSO through your identity provider, disable model training on your firm’s data, set retention limits, and turn on whatever audit logging the tool offers.
VeritShield WISP builds a custom written information security plan around a firm’s actual size, software, and workflow, not a template, delivered in 5 business days for $999/year with unlimited revisions if the firm’s setup changes. VeritGuard and VeritComplete configure a firm’s Microsoft 365 or Google Workspace tenant (MFA, identity, access controls, DLP, logging) and help make the account-wide setting changes on the AI tools themselves, so the fourth step above doesn’t sit on one partner’s to-do list indefinitely.
“I value the robust firewall that Verito provides, helping me maintain compliance with WISP and ensuring the protection of client data.”
Camren Majors is co-founder and Chief Revenue Officer of Verito Technologies, a cloud hosting and managed IT company built exclusively for tax and accounting firms. He is the co-author of Beyond Best Practices: Modernizing the Successful Accounting Firm (2026). His work has been featured in NATP TAXPRO Magazine and he has presented for NATP, NAEA, and NSA.
