{"id":7924,"date":"2026-08-14T06:23:00","date_gmt":"2026-08-14T10:23:00","guid":{"rendered":"https:\/\/verito.com\/blog\/?p=7924"},"modified":"2026-08-10T09:37:02","modified_gmt":"2026-08-10T13:37:02","slug":"ai-tax-preparer-disclosure-requirements","status":"publish","type":"post","link":"https:\/\/verito.com\/blog\/ai-tax-preparer-disclosure-requirements\/","title":{"rendered":"Do Tax Preparers Have to Disclose AI Use to Clients?"},"content":{"rendered":"\n<p><strong>No. The IRS&#8217;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&#8217;t name it yet.<\/strong><\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Key takeaways<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>OPR Alert 2026-19 applies six Circular 230 duties to AI use but doesn&#8217;t require telling clients AI was involved.<\/li>\n\n\n\n<li>AI-powered tax research now reaches 60% of preparers weekly, up from 33% a year ago (Blue J \/ CPA.com, June 2026).<\/li>\n\n\n\n<li>Section 7216 requires signed consent to share return data with third parties; AI tools haven&#8217;t been formally classified either way.<\/li>\n\n\n\n<li>AICPA guidance: a Section 7216 AI disclosure must be its own document, not a clause in the engagement letter.<\/li>\n\n\n\n<li>The preparer who signs the return owns it, whether or not AI helped write it.<\/li>\n<\/ul>\n<\/blockquote>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2 id=\"table-of-contents\">Table of Contents<\/h2><nav><ul><li><a href=\"#what-does-the-ir-ss-new-ai-guidance-actually-require\">What Does the IRS&#8217;s New AI Guidance Actually Require?<\/a><\/li><li><a href=\"#does-section-7216-require-telling-clients-when-ai-prepares-their-return\">Does Section 7216 Require Telling Clients When AI Prepares Their Return?<\/a><\/li><li><a href=\"#how-fast-is-ai-use-growing-among-tax-preparers\">How Fast Is AI Use Growing Among Tax Preparers?<\/a><\/li><li><a href=\"#what-should-firms-do-about-the-disclosure-gap\">What Should Firms Do About the Disclosure Gap?<\/a><\/li><li><a href=\"#sources\">Sources<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-does-the-ir-ss-new-ai-guidance-actually-require\"><span id=\"what-does-the-irss-new-ai-guidance-actually-require\">What Does the IRS&#8217;s New AI Guidance Actually Require?<\/span><\/h2>\n\n\n\n<p><strong>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.<\/strong><\/p>\n\n\n\n<p>Nothing here is a new rule. It&#8217;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:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Due diligence in reviewing AI-generated output before it goes on a return<\/li>\n\n\n\n<li>Technological competence with the tools the firm uses<\/li>\n\n\n\n<li>Fee transparency around AI-assisted work<\/li>\n\n\n\n<li>Written advice standards, applied to anything AI drafts<\/li>\n\n\n\n<li>Client data confidentiality when data moves through an AI tool<\/li>\n\n\n\n<li>Firm-level supervision of how staff use AI<\/li>\n<\/ul>\n\n\n\n<p>What the alert didn&#8217;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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"does-section-7216-require-telling-clients-when-ai-prepares-their-return\">Does Section 7216 Require Telling Clients When AI Prepares Their Return?<\/h2>\n\n\n\n<p><strong>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.<\/strong><\/p>\n\n\n\n<p>Henry Grzes, lead manager for tax practice and ethics at the AICPA, told CNBC that firms shouldn&#8217;t wait for the IRS to settle the question before acting: \u201cOur recommendation would be [to] be safe, as opposed to finding out, \u2018Uh-oh, I should have gotten this.\u2019\u201d <em>(Henry Grzes, Lead Manager for Tax Practice and Ethics, AICPA \u00b7 CNBC, Aug 2026.)<\/em> He added that for individual returns, a Section 7216 disclosure has to be a separate document, not a clause folded into the engagement letter.<\/p>\n\n\n\n<p>Joshua Youngblood, an IRS-enrolled agent and founder of The Youngblood Group in Dallas, made the comparison plainly to CNBC:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<figure class=\"wp-block-pullquote\"><blockquote><p><em>\u201cIf 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\u2019t you think it\u2019s appropriate to do that if you\u2019re going to send their information to an AI tool that\u2019s going to prepare the return?\u201d<\/em><\/p><cite>Joshua Youngblood, IRS-Enrolled Agent, Founder, The Youngblood Group \u00b7 CNBC, Aug 2026<\/cite><\/blockquote><\/figure>\n<\/blockquote>\n\n\n\n<p>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&#8217;s a stretch to argue it isn&#8217;t warranted for an AI tool the client has never heard of.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-fast-is-ai-use-growing-among-tax-preparers\">How Fast Is AI Use Growing Among Tax Preparers?<\/h2>\n\n\n\n<p><strong>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.<\/strong><\/p>\n\n\n\n<p>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&#8217;s already at 40% adoption while the disclosure rules are still unwritten.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-should-firms-do-about-the-disclosure-gap\">What Should Firms Do About the Disclosure Gap?<\/h2>\n\n\n\n<p><strong>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&#8217;s existing written information security plan.<\/strong><\/p>\n\n\n\n<p>A few concrete steps:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Draft a standalone AI disclosure. <\/strong>Per the AICPA&#8217;s guidance, it can&#8217;t live inside the engagement letter. Have clients sign it separately before AI touches their return.<\/li>\n\n\n\n<li><strong>Inventory the AI tools actually in use. <\/strong>Firm-wide policy is hard to write if nobody has listed which tools staff are already using for research, drafting, or planning.<\/li>\n\n\n\n<li><strong>Fold AI governance into the <a class=\"wpil_keyword_link\" href=\"http:\/\/verito.com\/written-information-security-plan\" target=\"_blank\" rel=\"dofollow noopener\" title=\"WISP\" data-wpil-keyword-link=\"linked\" data-wpil-monitor-id=\"1363\">WISP<\/a>. <\/strong>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&#8217;s WISP doesn&#8217;t yet name how AI tools handle client data, that&#8217;s the gap to close first, not a second document to write from scratch.<\/li>\n\n\n\n<li><strong>Lock down the AI tool&#8217;s own account settings, <\/strong>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&#8217;s data, set retention limits, and turn on whatever audit logging the tool offers.<\/li>\n<\/ol>\n\n\n\n<p>VeritShield WISP builds a custom written information security plan around a firm&#8217;s actual size, software, and workflow, not a template, delivered in 5 business days for $999\/year with unlimited revisions if the firm&#8217;s setup changes. VeritGuard and <a class=\"wpil_keyword_link\" href=\"http:\/\/verito.com\/veritcomplete\" target=\"_blank\" rel=\"dofollow noopener\" title=\"VeritComplete\" data-wpil-keyword-link=\"linked\" data-wpil-monitor-id=\"1362\">VeritComplete<\/a> configure a firm&#8217;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&#8217;t sit on one partner&#8217;s to-do list indefinitely.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<figure class=\"wp-block-pullquote\"><blockquote><p><em>\u201cI value the robust firewall that Verito provides, helping me maintain compliance with WISP and ensuring the protection of client data.\u201d<\/em><\/p><cite>Carrol G., Owner, Gatlin Tax, Ltd \u00b7 G2, Nov 2025<\/cite><\/blockquote><\/figure>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sources\">Sources<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/08\/04\/ai-tax-preparers.html\" target=\"_blank\" rel=\"nofollow noopener\">IRS AI guidance doesn&#8217;t require tax preparers to tell clients about AI use<\/a>, CNBC<\/li>\n\n\n\n<li><a href=\"https:\/\/www.thestreet.com\/taxes\/irs-ai-disclosure-tax-preparers\" target=\"_blank\" rel=\"nofollow noopener\">IRS AI disclosure guidance for tax preparers<\/a>, TheStreet<\/li>\n\n\n\n<li>IRC Section 7216 (taxpayer information disclosure)<\/li>\n\n\n\n<li>Circular 230, IRS Office of Professional Responsibility Alert 2026-19 (June 24, 2026)<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"No. The IRS&#8217;s first formal AI guidance, released June 24, 2026, maps six existing Circular 230 duties onto&hellip;\n","protected":false},"author":12,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-7924","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-knowledge-base"},"acf":[],"_links":{"self":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/7924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/comments?post=7924"}],"version-history":[{"count":4,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/7924\/revisions"}],"predecessor-version":[{"id":8017,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/7924\/revisions\/8017"}],"wp:attachment":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/media?parent=7924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/categories?post=7924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/tags?post=7924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}