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Guidance: what to decide before client tax data goes into AI

In CPA Practice Advisor (October 12, 2026), a CPA lays out what a tax firm should decide in writing before staff use AI with client returns. It builds on IRS OPR Alert 2026-19 (June 24, 2026), which says practitioners must handle all client data using only secure, enterprise-approved AI.

Why it matters

This is guidance, not an incident. The IRS alert links careless AI use to the penalties for unauthorized use or disclosure of tax return information (IRC sections 6713 and 7216). It says firms need staff training, secure data handling and vetted outside AI tools, with every step documented. The article adds that the IRS hasn't said whether sending return information to an AI tool counts as a disclosure to a third party, so the author suggests a separate signed AI consent, worded with your counsel.

What to do

• Write down which AI tools and plans your office approves, and keep client return information inside those tools only.
• Talk to your counsel about a separate signed AI consent, and keep a way to prepare the return without AI for clients who say no.
• Have a person check every AI draft before it goes to a client or the IRS, keep a simple log of which tools touched which client's file, and review the policy once a year.

Sources

• cpapracticeadvisor.com: https://www.cpapracticeadvisor.com/2026/10/12/what-to-settle-before-client-tax-data-touches-ai/191491/
• irs.gov: https://www.irs.gov/pub/opr-taxpros/issue-number-2026-19-introductory-guidelines-for-responsible-ai-use-in-federal-tax-practice.pdf