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Questions

Can tax preparers use AI with client tax return information?

Carefully. IRC §7216 makes it a misdemeanor for tax return preparers to knowingly or recklessly disclose information furnished for preparing a return, or use it for other purposes, unless an exception or consent applies. Sharing return data with an AI service can be a disclosure, so remove client identifiers and return details, or follow the consent regulations first.

Last reviewed · 2 sources

The statute

26 U.S.C. § 7216 covers “any person who is engaged in the business of preparing” returns who “knowingly or recklessly” discloses information furnished for, or in connection with, preparing a return, or uses it for any other purpose. Penalties include fines of up to $1,000, or $100,000 in certain cases, and imprisonment of up to one year.

The IRS’s Section 7216 information center notes that final regulations on disclosure and consent took effect on 28 December 2012.

Why AI tools raise the question

A general-purpose AI service is a third party. Pasting a client’s return details into it sends that information to the provider. Whether that is a permitted disclosure depends on the regulations and any consent obtained, which is a question for your own compliance review.

Lower-risk ways to use AI

  • Ask about rules and calculations using made-up or generalized figures
  • Draft letter templates without client details
  • Replace SSNs, EINs, names, addresses and account numbers before sharing any real document
  • Restore details locally before sending anything to the client

Where PiBye fits

How PiBye handles this

PiBye detects SSNs, EINs, card and account numbers, names and dates on your Mac and replaces approved items before you use AI, then restores them locally.

Download PiBye for macOSRequirements and install steps

1.0.1 · macOS 14.8.5 or later · Apple Silicon · 1.1 GB

Frequently asked questions

Is removing the SSN enough?

Not necessarily. Other return details can be tax return information. Share only what the task needs.

Does §7216 apply to Canadian preparers?

§7216 is US federal law. Canadian preparers have their own confidentiality obligations.

Sources

  1. 26 U.S. Code § 7216 — Disclosure or use of information by preparers of returns, Legal Information Institute, Cornell Law School. Checked 17 September 2026.
  2. Section 7216 information center, Internal Revenue Service. Checked 17 September 2026.