---
title: AI for CPAs, Section 7216 consent and client data
description: AI for CPAs and IRS Section 7216. Is putting a client's return into AI a disclosure? Consent rules, Rev. Proc. 2013-14, WISP and Safeguards Rule duties.
canonical: https://privatesuperintelligence.si/blog/ai-for-cpas-client-confidentiality/
last-updated: 2026-10-15
---

# AI for CPAs, Section 7216 consent and client data

If you prepare returns, Section 7216 of the Internal Revenue Code makes it a crime to knowingly or recklessly disclose a client's tax return information, or use it for anything other than preparing the return, unless an exception in the statute or regulations applies or the client has signed a valid consent. Neither the statute, the regulations nor any IRS guidance we found says in terms whether sending that information to an AI provider counts as a disclosure. The IRS Office of Professional Responsibility addressed AI in June 2026 and told practitioners to use "only secure, enterprise-approved AI", but it did not answer the consent question, so the cautious reading treats the AI provider as a recipient that needs a regulatory exception or a signed consent.

This page is general information, not legal or tax advice. Talk to your own counsel about your firm's facts.

## What Section 7216 and its regulations say

The statute, 26 U.S.C. § 7216(a), covers anyone "engaged in the business of preparing, or providing services in connection with the preparation of" income tax returns who "knowingly or recklessly" either:

1. "discloses any information furnished to him for, or in connection with, the preparation of any such return", or
2. "uses any such information for any purpose other than to prepare, or assist in preparing, any such return".

It is a misdemeanor, with a fine of up to $1,000 ($100,000 where section 6713(b) applies), up to one year in prison, or both.

The Treasury regulations define the key terms this way:

| Term (Treas. Reg. § 301.7216-1(b)) | Text |
|---|---|
| Tax return information | "any information, including, but not limited to, a taxpayer's name, address, or identifying number, which is furnished in any form or manner for, or in connection with, the preparation of a tax return". It includes information you derive or generate from it, and even statistical compilations that identify no one. |
| Disclosure | "the act of making tax return information known to any person in any manner whatever." |
| Use | "any circumstance in which a tax return preparer refers to, or relies upon, tax return information as the basis to take or permit an action." |
| Tax return preparer | Includes anyone in the business of "providing auxiliary services in connection with the preparation of tax returns, including a person who develops software that is used to prepare or file a tax return". |

## Is sending return information to an AI provider a disclosure?

The rules don't name AI, so you have to work from the text. Three provisions do most of the work.

**The contractor exception.** Section 301.7216-2(d)(2) lets you disclose return information without consent to a contractor "in connection with the programming, maintenance, repair, testing, or procurement of equipment or software used for purposes of tax return preparation", but "only to the extent necessary" for the contracted services, and only if every individual who receives it gets a written notice explaining sections 6713 and 7216. Whether a general-purpose AI model fits "software used for purposes of tax return preparation" is not settled.

**Preparer-to-preparer disclosures.** Section 301.7216-2(d)(1) allows disclosure to another preparer in the United States for preparing the return or for auxiliary services, "so long as the services provided are not substantive determinations or advice affecting the tax liability". A substantive determination "involves an analysis, interpretation, or application of the law." Asking an AI to analyze a client's position looks a lot like that, and for substantive determinations the regulation requires consent first.

**Location.** If the recipient is outside the United States, the regulations require the client's consent "prior to any disclosure", and Rev. Proc. 2013-14 adds mandatory wording for those consents, with stricter rules when the information includes a Social Security number. Where an AI provider processes data is therefore part of the 7216 analysis.

Use is a separate question. If a vendor's terms let it train models on what you send, the information may serve a purpose beyond preparing the return, which section 7216(a)(2) restricts. Read the plan's terms before you assume an exception covers you.

## What the IRS has said about AI

On June 24, 2026, the IRS Office of Professional Responsibility issued *Issue Number 2026-19, Introductory Guidelines for Responsible AI Use in Federal Tax Practice*. It applies existing Circular 230 duties to AI:

- **Due diligence (§ 10.22).** Verify "the accuracy of facts, citations, and calculations produced by AI."
- **Fees (§ 10.27).** Billing for time not actually spent, or double billing for AI-assisted tasks, may violate the rule depending on the facts.
- **Competence (§ 10.35).** Understand "AI systems' operational mechanics, limitations, and risks."
- **Firm procedures (§ 10.36).** Train staff, set protocols for secure data handling, and vet outsourced or third-party AI tools, documenting each step.
- **Confidentiality (§§ 6713, 7216 and Circular 230 § 10.51(a)(15)).** "Practitioners must strictly handle all client data using only secure, enterprise-approved AI." The best practices list adds: "Never upload sensitive data to unsecured sites."

The alert warns that client privacy "can be compromised when data generated for one client is repurposed by the program to respond to an inquiry concerning another client." It does not say whether entering return information into an AI tool is a disclosure, or whether consent is needed. We found no IRS guidance that does. Publication 4557 (Rev. 6-2024) and Publication 5708 (Rev. 8-2024) don't mention AI either.

## How to write a Section 7216 consent that names the AI provider

If you decide consent is the right route, Treas. Reg. § 301.7216-3 sets the floor. The consent must:

- be "knowing and voluntary", and you generally can't condition your services on it
- name the preparer and the taxpayer
- state the purpose of the disclosure and "identify the specific recipient (or recipients)"
- specify the tax return information to be disclosed
- be signed and dated by the taxpayer

For Form 1040 filers, Rev. Proc. 2013-14 adds format rules. Each consent must be a separate written document (it can be attached to the engagement letter), paper consents need at least 12-point type, and the consent must include mandatory statements in a set order, starting with "Federal law requires this consent form be provided to you." If the consent doesn't state a duration, it lasts one year from signature. It must also tell the client how to reach the Treasury Inspector General for Tax Administration about improper disclosures.

For business returns, a consent "may be in any format, including an engagement letter", and may cover "a descriptive class of entities" in place of named recipients only for the purposes the regulation lists, such as preparing returns or required financial statements.

So a line authorizing "various AI tools" won't meet the requirement to identify the specific recipient on a 1040 consent. Name the provider and the purpose.

## Your WISP and the FTC Safeguards Rule

IRS Publication 4557 states that under the FTC Safeguards Rule, "tax return preparers must create and enact security plans to protect client data," and that failure to do so "may result in an FTC investigation." Publication 5708 is the IRS template for that written information security plan. The rule itself, 16 C.F.R. § 314.4, applies to AI vendors like any other service provider. You must:

- designate a "Qualified Individual" to oversee and enforce the program
- take reasonable steps to select service providers "capable of maintaining appropriate safeguards"
- require them "by contract to implement and maintain such safeguards"
- periodically assess them "based on the risk they present"
- notify the FTC within 30 days of discovering a notification event that involves the information of at least 500 consumers

In practice, an AI tool belongs in your WISP's vendor list, with its contract, its data location and its training terms on file.

## Busy season, K-1s and client families' offices

The hardest cases come from wealthy clients with many entities. A family's K-1s, trust returns and partnership statements often arrive through its family office, which may run its own AI tools. Our guide to [K-1 tracking across entities](/blog/k-1-tracking-across-entities/) covers that workflow. If the family's attorneys are involved, privilege adds a second set of rules, set out in our note on [AI and attorney-client privilege](/blog/ai-and-attorney-client-privilege/).

## Private SuperIntelligence for client family offices

Private SuperIntelligence from Mitosis Labs is an AI concierge for family offices and private clients. Each deployment is built for one client, from the hardware to the choice of model provider to where the data is stored, and the provider keeps no copy of the work, trains nothing on it and cannot see the outputs. Families get the most capable AI, trusted with everything, while you keep your own Section 7216 analysis for any information you share. Read more on our [family offices](/family-offices/) page.

## Frequently asked questions

### Does Section 7216 apply to AI tools?

Section 7216 applies to any disclosure or use of tax return information by a preparer, whatever the technology. No IRS guidance says in terms whether entering return information into an AI tool is a disclosure, so firms rely on the regulatory exceptions or on signed consent.

### Has the IRS issued guidance on AI and Section 7216?

OPR Alert 2026-19 (June 24, 2026) says practitioners must handle client data "using only secure, enterprise-approved AI" and should never upload sensitive data to unsecured sites. It does not address consent under Section 7216.

### Do I need client consent to use ChatGPT on a tax return?

It depends on whether a regulatory exception covers the disclosure and use, which turns on the tool, its terms, where it processes data and what you ask it to do. Analysis of the law is a substantive determination, and disclosing to another preparer for that purpose requires consent.

### Can an engagement letter serve as a Section 7216 consent?

For business returns, yes, if it meets the content rules in § 301.7216-3(a)(3)(i). For Form 1040 filers, Rev. Proc. 2013-14 requires a separate written document, which can be attached to the engagement letter.

### Does my WISP need to cover AI vendors?

The FTC Safeguards Rule requires you to oversee service providers that handle customer information, by contract and periodic assessment. An AI vendor that receives client data falls within that duty.


## Related reading

- [AI chats and attorney-client privilege for estate clients](/blog/ai-and-attorney-client-privilege/)
- [AI for estate planning attorneys](/blog/ai-for-estate-planning-attorneys/)
- [Is ChatGPT safe for confidential information?](/blog/is-chatgpt-safe-for-confidential-information/)
- [What is zero data retention AI?](/blog/zero-data-retention-ai/)
- [How to keep company data private when using AI](/blog/keep-company-data-private-with-ai/)
- [Private AI for family offices](/blog/private-ai-for-family-offices/)
- [What is private superintelligence?](/blog/what-is-private-superintelligence/)

## Sources

- [26 U.S. Code § 7216, Disclosure or use of information by preparers of returns (Legal Information Institute, Cornell Law School)](https://www.law.cornell.edu/uscode/text/26/7216)
- [26 CFR § 301.7216-1, Penalty for disclosure or use of tax return information (Legal Information Institute)](https://www.law.cornell.edu/cfr/text/26/301.7216-1)
- [26 CFR § 301.7216-2, Permissible disclosures or uses without consent of the taxpayer (Legal Information Institute)](https://www.law.cornell.edu/cfr/text/26/301.7216-2)
- [26 CFR § 301.7216-3, Disclosure or use permitted only with the taxpayer's consent (Legal Information Institute)](https://www.law.cornell.edu/cfr/text/26/301.7216-3)
- [Rev. Proc. 2013-14, Internal Revenue Bulletin 2013-3 (IRS, January 2013)](https://www.irs.gov/irb/2013-03_IRB)
- [Issue Number 2026-19, Introductory Guidelines for Responsible AI Use in Federal Tax Practice (IRS Office of Professional Responsibility, June 24, 2026)](https://www.irs.gov/pub/opr-taxpros/issue-number-2026-19-introductory-guidelines-for-responsible-ai-use-in-federal-tax-practice.pdf)
- [Publication 4557, Safeguarding Taxpayer Data (IRS, Rev. 6-2024)](https://www.irs.gov/pub/irs-pdf/p4557.pdf)
- [Publication 5708, Creating a Written Information Security Plan for your Tax and Accounting Practice (IRS, Rev. 8-2024)](https://www.irs.gov/pub/irs-pdf/p5708.pdf)
- [16 CFR § 314.4, Elements, FTC Standards for Safeguarding Customer Information (Legal Information Institute)](https://www.law.cornell.edu/cfr/text/16/314.4)