IRS Leaves AI Tax-Prep Disclosure Rules Unclear as 60% Use AI Weekly
Updated
Updated · CNBC · Aug 4
IRS Leaves AI Tax-Prep Disclosure Rules Unclear as 60% Use AI Weekly
2 articles · Updated · CNBC · Aug 4
Summary
June IRS guidance told tax practitioners to verify AI-generated work and pass efficiency gains to clients, but it did not say whether generative AI use in preparing returns must be disclosed.
Section 7216 generally requires signed client permission before taxpayer data is shared beyond return preparation, yet older exceptions for software leave uncertainty over whether AI tools qualify the same way.
60% of more than 1,000 tax professionals now use AI for tax research at least weekly, up from 33% in 2025, while firms also use it for advisory work, planning, compliance research and drafting.
AICPA and other experts are urging updated IRS guidance, and some advise preparers to get signed disclosures now because knowing violations can bring fines of up to $1,000 or one year in jail.
Consumers are being urged to ask whether AI is used on their returns and what safeguards prevent their personal data from being shared or used to train outside systems.