Who it's for
Using AI as a tax preparer without disclosing return information
US tax return preparers face a criminal statute on top of professional duties. IRC §7216 penalizes preparers who knowingly or recklessly disclose information furnished for preparing a return, or use it for any other purpose. Before using an AI tool, remove client identifiers and return details you do not need, and use the IRS’s consent rules where disclosure is required.
Last reviewed · 2 sources
What §7216 says
The statute applies to “any person who is engaged in the business of preparing” returns “and who knowingly or recklessly” discloses information furnished for the preparation of a return, or uses it for any other purpose. The penalty is a fine of up to $1,000, or $100,000 in certain cases, imprisonment of up to one year, or both.
Treasury regulations set out when disclosure is allowed, including written consent requirements. The IRS’s Section 7216 information center links to them. Read the regulations, or get advice, before disclosing return information to any third-party service.
Information to keep out of AI tools
- Names, addresses and dates of birth of taxpayers and dependants
- SSNs, ITINs and EINs
- Bank account and routing numbers
- Employer names and identifying income details
Where AI still helps
Explaining a rule, drafting a client letter template, or checking a calculation rarely needs the client’s identity. Build the prompt from the facts that matter, with identifiers replaced, and restore details locally when the output goes to the client.
Where PiBye fits
How PiBye handles this
PiBye detects names, SSNs, EINs, card and account numbers and dates on your Mac and replaces approved items with stand-ins, so the AI works on the structure of the problem rather than the taxpayer’s identity.
It does not decide whether a use complies with §7216; that remains your responsibility.
1.0.1 · macOS 14.8.5 or later · Apple Silicon · 1.1 GB
Frequently asked questions
Is pasting a return into ChatGPT a disclosure under §7216?
It can be. The statute covers disclosure of information furnished for preparing a return. Get advice on your specific use and the consent regulations.
Does removing names make it compliant?
Not necessarily. Other return details can still be tax return information. Share only what the task needs.
What information does §7216 cover?
The statute refers to “any information furnished to him for, or in connection with, the preparation of any such return.” That is broader than identifiers alone.
Sources
- 26 U.S. Code § 7216 — Disclosure or use of information by preparers of returns, Legal Information Institute, Cornell Law School. Checked 17 September 2026.
- Section 7216 information center, Internal Revenue Service. Checked 17 September 2026.