The managing partner of a mid-market accounting firm should have the tax practice record, in every engagement file, each task done with AI and who checked the output, before the 2027 filing season, because the IRS Office of Professional Responsibility's June 2026 guidelines recommend documenting AI usage and verification processes.
The office enforces Treasury Circular 230 and can discipline practitioners. On June 24, 2026 it sent its Introductory Guidelines for Responsible AI Use in Federal Tax Practice, which apply existing Circular 230 duties, among them due diligence, fees, competence and a firm's procedures, to AI. The guidelines say virtually all professional tax firms use some form of AI, whether they are aware of it or not, and name document review platforms and research products among the places it sits.
Section 10.36 puts the procedures duty on whoever has principal authority and responsibility for overseeing the firm's tax practice. That person must take reasonable steps to ensure the firm has adequate procedures, and can be disciplined where willfulness, recklessness or gross incompetence in that duty goes with a pattern or practice of noncompliance. The guidelines say firms must deploy AI procedures covering training, internal rules, secure data handling, accuracy monitoring and the vetting of outside AI tools, with all steps and processes documented to show adherence to section 10.36.
Under due diligence, practitioners must review all AI-created documents before delivery to a client or submission to the IRS, verifying the facts, citations and calculations AI produced. Under fees, billing for time not actually spent may violate the rule, depending on the facts; practitioners should disclose, in general or specific terms as needed, the AI activities performed. The AICPA's Journal of Accountancy reported on September 8, 2026 that the AICPA is seeking clarification from the IRS on the guidelines' language about passing AI cost savings on to clients, and that its chief executive called the office's language not authoritative and said it could be overstepping.
In the first month, the partner who heads tax lists every AI tool staff use, research platforms included, and the IT lead confirms which are approved for client data, since the guidelines say client data goes only into secure, enterprise-approved AI. In the second, each engagement file gets one entry per AI-assisted task: the tool, what it produced, the reviewer who checked its facts, citations and calculations, and the date. In the third, the managing partner reads the entries in a sample of files and has engagement letters updated. The AICPA's lead manager for tax practice and ethics told CNBC, in a story published August 4, 2026, that with no formal guidance yet, preparers should err on the side of caution and get a signed disclosure from clients if they use AI to prepare returns; for non-individual returns the Section 7216 disclosure can sit in the engagement letter, while individual returns need a separate document.
The record can stop at federal tax work, the practice the guidelines address. Crediting AI cost savings to clients can wait for the clarifying language and FAQs the AICPA says it is working on with the IRS.
A risk control lead at Aon, which administers the AICPA Member Insurance Program, told Accounting Today in April 2026 that there has yet to be any substantive claim activity linked to AI use at accounting firms, and that insurers already ask firms whether they use AI, police it and have protocols in place, though not yet from a set list of questions, as they do on data security.
