IRS official signals additional guidance on AI, practitioner fees

The IRS Office of Professional Responsibility (OPR) will issue additional guidance on artificial intelligence (AI) and practitioner fees in the coming months after several organizations, including the AICPA, raised concerns about language in earlier guidance, the agency’s director said Monday at the National Tax Conference.

Thomas Curtin, who noted that he was speaking in his personal capacity and not on behalf of the IRS, said the OPR was “not suggesting that practitioners must reduce fees simply because AI allows you to complete certain tasks more effectively.”

Curtin revisited a June alert, which cited Treasury Circular 230’s prohibition on charging unconscionable fees, when the IRS said that practitioners using generative AI should pass along efficiencies gained from the technology through billing practices that reflect reduced research and drafting time.

Responding to the OPR regarding the June guidance, the AICPA said in September that the language doesn’t appear to allow for a value-pricing model and that it overlooks the costs and risks associated with implementing the technology.

Speaking about the AICPA response, Curtin said, “I do feel that it was worthwhile to kind of get the conversation going. And again, they’re just guidelines. I’m not up here trying to say that we’re creating new authority or anything like that.”

Curtin said the guidance was intended to address transparency and concerns about unconscionable fees, comparing AI to other technologies that have improved efficiency in tax practice, such as tax software and document-scanning tools.

Still, Curtin said that the OPR expects to issue additional guidance on AI and practitioner fees in the next couple of months.

Panelist Ryan Corcoran, a partner with RSM US LLP, said the economics of AI adoption are more complicated than simply measuring time savings, because firms continue to incur implementation, governance, security, and training costs.

“What time savings?” he asked. “It’s just more volume. It’s a lot more work that’s put into a lot of these things.”

But Corcoran said he appreciated the guidance because it was “not very heavy-handed” and was allowing the technology to “sort of play out in front of us before we try to constrain the rules.”

Other points discussed during the session included:

• The two warned that taxpayers and practitioners should be cautious about entering tax return information into public AI tools because of potential confidentiality and Sec. 7216 concerns.
• Curtin said AI is not considered a “person” under Circular 230, meaning practitioners cannot rely on AI-generated work in the same way they may rely on the work of another professional.
• Corcoran highlighted concerns about “shadow AI,” in which employees use unapproved AI tools outside firm-approved systems and security controls.
• Corcoran said that many practitioners now receive AI-generated tax analyses from clients and must review those materials using the same professional judgment they apply to other client-provided information.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.