AI integration into tax practice demands proactive client conversations about technology use, data protection, and professional safeguards.
AI isn't coming to tax practice; it's already here. Tax preparation software, research platforms, and practice management systems have used AI for years. "Intuit has been using AI for years now. All the vertical industry software uses AI," notes Jeanne Hardy, founder of Creative Business Inc. For practitioners using cloud-based solutions, AI likely processes client data daily.
Clients Want Answers
Tax practitioners report routine AI discussions with clients at all levels. Richard Jackson, EY's global AI assurance leader, says these conversations happen "with almost every client, whether it's senior management or at the board level."
Common client questions include: How do you use AI in my tax work? What data gets processed? Are you using public models? How is my financial information protected?
Thomas DeMayo from PKF O'Connor Davies sees these concerns emerging naturally in due diligence conversations, with clients asking about public models and data privacy measures.
Proactive Transparency Builds Trust
Smart practitioners don't wait for client concerns; they lead the conversation. Michelle Voyer from Cohn Reznick views these discussions as opportunities to demonstrate technological sophistication: "We're open with clients about the tools we use, particularly when they contribute to accuracy and efficiency."
This proactive approach builds trust while positioning the firm as technologically advanced rather than secretive about AI usage.
Data Privacy Is the Top Concern
Every practitioner identifies data privacy as clients' primary worry, which is understandable given the sensitive financial information tax professionals handle.
The solution is emphasizing the difference between consumer AI and professional tools. DeMayo's firm stresses: "We don't use any public models. People within the firm can only use approved products." They require strict assurances that AI providers won't use client data for model training.
This distinction is crucial: while clients might worry about ChatGPT retaining tax information, professional tax software operates under strict data protection protocols.
Formalizing Policies
Some firms add AI language to engagement letters. Voyer explains: "We structure our engagement letters to reflect how technology may be used. When clients express preferences around automated tools, we document those choices and clarify how that may impact timelines and costs."
Others take phased approaches, starting with email updates before potentially adding formal engagement letter language.
Emphasizing Human Oversight
Critical to these conversations is reinforcing that AI enhances rather than replaces professional judgment. Jackson emphasizes "the human in the loop, ensuring no one comes away with the impression they're letting AI do all the work."
For tax practitioners, this means explaining how AI assists with data processing or research while emphasizing that tax strategy, compliance decisions, and advisory services remain human responsibilities.
Handling Refusals
Rarely, clients refuse all AI usage. Hardy compares this to clients still demanding paper checks. Practitioners must decide whether to accommodate these preferences (potentially increasing costs and timelines) or refer clients elsewhere.
However, complete refusal is uncommon when practitioners educate clients about specific applications and safeguards. "If you start small, tailor it to them and bring them along, you'll probably have more success," Hardy suggests.
Ongoing Communication
AI evolves rapidly, making these one-time conversations insufficient. Hardy recommends regular updates: "Maybe it's quarterly, or maybe you send a newsletter because people are reading the news [about developments]."
Action Items for Tax Practitioners
Start conversations early during engagement discussions. Be specific about AI usage in their tax work. Emphasize security measures and professional-grade protections. Document client preferences clearly. Maintain ongoing communication as technology evolves.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
Subscribe to the TPN Newsletter!
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.