Tax and accounting firms · AI and the Safeguards Rule · updated
IRS OPR Alert 2026-19 on AI, in plain words
On 24 June 2026 the IRS Office of Professional Responsibility issued its first guidance on AI in tax practice. Among its best practices: “Document AI usage and verification processes.” (IRS OPR Alert 2026-19) (read 9 October 2026). It does not amend Circular 230 or set a log format. It says the existing rules already apply: you remain responsible for work done with AI, its accuracy, your fees, and your clients' information.
What it applies to AI
| Rule | What the alert says it means with AI |
|---|---|
| Circular 230 §10.22, due diligence | Review everything AI produced, and check its facts, citations and calculations, before it reaches a client or the IRS. |
| §10.27(a), fees | Bill for the work actually done: charging for time AI saved, or billing AI work twice, can breach it. Pass the savings on openly. |
| §10.35, competence | Understand the AI tools you use: how they produce content, where they go wrong, and whether their output is fit for an IRS matter. |
| §10.36, firm procedures | Whoever oversees the firm's practice puts AI procedures in place: staff training, secure data handling, checking AI's accuracy, vetting outside AI tools, and documents them. |
| §10.37, written advice | Advice drafted with AI rests on facts and law you verified yourself, not on AI's say-so. |
| IRC 6713 and 7216(a) | Disclosing or using tax return information without authority carries civil and criminal penalties; use only secure, enterprise-approved AI for client data. |
Client data only in secure, enterprise-approved AI
“Practitioners must strictly handle all client data using only secure, enterprise-approved AI.”
Applies since 24 June 2026.
Firm procedures for AI, written down (Circular 230 §10.36)
“And all steps and processes documented to show adherence to section 10.36.”
Applies since 24 June 2026; on whoever has principal authority for the firm's practice.
What to write down
- Which AI tools and plans the firm allows on client data, and why each is secure and approved.
- How AI output is verified before use, and a record of each check: the date, the client file, the tool, what it was used for and who checked it.
- Staff training on AI's risks and the firm's rules.
- How the firm vetted each outside AI vendor.
- Where the record of AI use is kept, and who reviews it.
The alert names no format. The AI addendum writes these as sections of your security plan, and its section 5 is a verification record. What each tool logs on its own is in the table there.
What counts as tax return information
“The term tax return information means 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 of the taxpayer.”
Applies always; IRC 7216 and 6713 penalise unauthorized disclosure or use.
Keep the log on your own computer, free
$ npx --allow-remote=root https://agentwares.vercel.app/dl/safeguards-log-0.2.0.tgz add cowork-otel.jsonl purview-audit-export.csv $ npx --allow-remote=root https://agentwares.vercel.app/dl/safeguards-log-0.2.0.tgz report --from 2026-07-01 --to 2026-09-30
safeguards-log reads the exports your AI tools already give you (Cowork and Claude Code OpenTelemetry, the Claude Enterprise audit log and Compliance API, ChatGPT Enterprise's Compliance Logs, Purview's Copilot audit, agentreceipt), keeps one hash-chained log of who did what and when, without the words, and writes the period's report as Markdown, PDF and CSV with a SHA-256 commitment. Runs on your computer: no account, no upload, no AI. Also a local MCP server: the same command with mcp.
A signed annual AI-activity report
A signed annual AI-activity report adds a dated Ed25519 signature over the SHA-256 commitment this tool prints, so a reviewer can check the report was not changed after it was signed, and when it was signed. Only the commitment is sent to be signed: your log and report never leave your computer. The report itself is complete without it.
One purchase for each year's report, with no account; the report command prints the link for your report's commitment.
okgate as your firm's OpenTelemetry collector is not built
okgate as your firm's OpenTelemetry collector: a hash-chained log of every agent action on client files, per preparer, without running a collector yourself. It would hold your firm's telemetry, which raises the question of tax return information (IRC 7216) that this local tool avoids, so it is not built until that is settled.
Until it is, the free tool above keeps the same log on your own computer, from a collector you run.
Sources
- IRS Office of Professional Responsibility, OPR Alert 2026-19: Introductory Guidelines for Responsible AI Use in Federal Tax Practice (24 June 2026), read 9 October 2026
- 26 CFR 301.7216-1, Disclosure or use of tax return information (Cornell LII), read 9 October 2026
- IRS Publication 5708 (Rev. 8-2024), Creating a Written Information Security Plan for your Tax & Accounting Practice, read 9 October 2026