IRC 7216 Consent for AI Tools: A Preparer's Guide
Updated 2026-10-15. Educational only, not legal or tax advice. Every claim links to a source below.
Short answer: entering a client's tax return information into a third-party AI tool is a disclosure. Unless an exception in the regulations applies, you need the client's written consent first. For Form 1040 clients, that consent has to follow the format rules in Rev. Proc. 2013-14.
What section 7216 prohibits
IRC §7216 makes it a misdemeanor for a return preparer to knowingly or recklessly disclose return information, or use it for anything other than preparing the return. The criminal penalty is a fine of up to $1,000 (or $100,000 in identity-theft cases), up to one year in prison, or both.
The civil side, IRC §6713, adds $250 per disclosure, capped at $10,000 per calendar year.
Does an AI tool count?
The IRS has not issued AI-specific guidance. Practitioner commentary reads the existing regs plainly: typing return information into ChatGPT, Claude or a similar tool is a disclosure to another person, the AI provider. General-purpose assistants are unlikely to qualify as an "auxiliary service" exception.
Tax-specific vendors that sign data-handling agreements need their own analysis. Ask each vendor in writing how they treat 7216.
What a valid consent needs
- Before the disclosure: consent must be signed before any data leaves your firm (Treas. Reg. §301.7216-3).
- Form 1040 clients: follow the mandatory language and format in Rev. Proc. 2013-14.
- Specific: commentators recommend naming the actual tool or vendor and describing the data and purpose, not "various AI tools".
- Voluntary: the client must be free to say no without losing your services.
A practical workflow
- List every AI tool that might see client data, and record it in your WISP.
- Redact names, SSNs, EINs and account numbers before using any general assistant.
- For tools that must see real data (AI prep tools such as Juno, Filed or Black Ore Tax Autopilot), get a standalone 7216 consent naming the tool.
- Keep signed consents with the client file.
See also our 7216 and Pub 4557 checklist and the WISP guide.
FAQ
Do I need 7216 consent to use ChatGPT with client data?
If you enter identifiable tax return information, it is a disclosure to a third party, and commentators conclude you need written consent unless an exception applies. Redacting identifiers avoids the issue for general questions.
What is the penalty for violating 7216?
Criminal: a fine of up to $1,000, up to a year in prison, or both (IRC §7216). Civil: $250 per disclosure, up to $10,000 a year (IRC §6713).
Which IRS guidance covers 1040 consent format?
Rev. Proc. 2013-14 sets the mandatory language and format for consents from Form 1040-series taxpayers.
Sources
- law.cornell.edu/uscode/text/26/7216
- law.cornell.edu/uscode/text/26/6713
- law.cornell.edu/cfr/text/26/301.7216-3
- irs.gov/irb/2013-11_IRB
- tomtalkstaxes.com/p/ai-7216
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