The conversation about artificial intelligence in tax practice has been dominated by possibility: faster research, automated prep, smarter workflows. That conversation is about to get a second track, one focused on accountability.
The IRS Advisory Council issued a recommendation this week calling for AI safeguards and preparer disclosure requirements. In plain terms, the agency wants to know when AI tools are involved in preparing a return. At the same time, state legislators are introducing bills that target the use of AI in professional services, including accounting. And AICPA chair Jan Lewis said publicly that AI is poised to take over basic tax preparation, which means practitioners need to double down on the value they have always added.
These three developments, taken together, are not a distant warning. They are a signal that the regulatory layer around AI use in tax practice is forming right now, while most small firms are still figuring out which tools to try.
What the Disclosure Push Actually Means
The IRSAC recommendation stops short of mandating a specific form or filing requirement. But the direction is clear: the IRS wants transparency about AI involvement in return preparation. Think of it as analogous to the paid preparer signature requirement, extended to the tools a preparer relies on.
If that framework becomes a rule, firms using AI tools without any documentation of their review process will be caught unprepared. The question will not be whether you used AI. It will be whether you can demonstrate that a qualified human reviewed and took responsibility for the output.
What States Are Doing
While federal guidance is still forming, states are moving independently. Several legislatures have introduced bills that would create disclosure requirements or liability standards around AI use in professional services. These are early stage, but they establish the direction of travel. A firm that operates across multiple states, or that serves clients in states with active AI legislation, needs to be watching this closely.
Three Things to Document Before a Rule Is Final
Small tax firms do not need to wait for a finalized disclosure requirement to get ahead of this. Three things to have in place now:
A tool inventory. Know which AI tools your firm uses, for what tasks, and how frequently. If you cannot answer that question today, you are not ready for a disclosure framework.
A human review protocol. Document how AI output is reviewed before it is used in a client deliverable. Who reviews it? What are they checking? The answer does not have to be elaborate, but it has to exist.
Client communication language. When AI tools are involved in research or preparation, clients should know. Draft a standard disclosure statement now, while you have time to do it thoughtfully rather than reactively.
The Bigger Picture
Jan Lewis is right that AI will change what basic tax prep looks like. The practitioners who come out ahead will not be the ones who adopted AI fastest. They will be the ones who adopted it with enough structure to demonstrate that a licensed professional remained in control of the work.
The IRS is not trying to stop AI adoption. It is trying to create accountability for it. That is a distinction worth understanding now, because the firms that treat those two things as the same will be the most disrupted when the rules arrive.
The window to build a governance framework on your own terms is open. Use it.
Dr. 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.
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