AICPA seeks IRS clarity on AI guidelines, CPA fees

The AICPA is seeking clarification from the IRS on guidelines suggesting that tax practitioners should pass AI-related cost savings on to clients, saying 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.

The guidelines from the Office of Professional Responsibility (OPR), posted in June, said practitioners using generative AI should pass along efficiencies gained from the technology through billing practices that reflect reduced research and drafting time. The guidelines cite Circular 230’s prohibition on charging unconscionable fees.

The AI update, which the OPR described as “introductory guidelines for responsible AI use in federal tax practice,” also said practitioners should fairly credit clients for cost reductions associated with AI use.

“The IRS statement implies that any efficiencies gained through AI should be directly passed on to the client,” Eva Simpson, CPA, CGMA, AICPA vice president–Member Value, Tax & Advisory Services, said in an email. “That is an overly simplistic view that ignores the full economics of AI adoption, including software licensing costs, implementation expenses, governance requirements, and the significant investment needed to train professionals to use these tools responsibly and effectively. It also overlooks that professional services are increasingly priced based on value delivered, not just time spent, and that the benefits AI creates for clients should be considered as part of that equation.”

AICPA leaders discussed the issue during a recent Town Hall and Washington Tax Brief. Melanie Lauridsen, the AICPA’s vice president–Tax Policy & Advocacy, said the AICPA is working with the IRS on clarifying language and FAQs “because value pricing is something that is just part of business, and you have to be able to include the liability that you’re taking as you go through all of this.”

AICPA chair Jan Lewis, CPA, CGMA, a firm partner and former chair of the AICPA’s Tax Executive Committee, said firms also incur costs to train employees and establish procedures for using AI responsibly.

“We know that that AI-generated work is valuable to our client, and that value, however it is performed by AI or by the profession, has a cost and it has a benefit, and we need to bill for that service based on the value provided,” Lewis said.

Mark Koziel, CPA, CGMA, president and CEO of the AICPA, who said he had heard from CPAs on the issue, said the OPR language is not authoritative and could be “overstepping a little bit.”

Some CPAs still use the traditional hours-times-rate billing model, but many have moved to a value-pricing model, he said.

Some firms also bundle services, including tax return preparation, at no additional charge, Koziel said. They also provide advisory services, including tax, retirement, and estate planning, which is the direction the AICPA has encouraged members to take.

In addition, CPAs who use AI still have the risk and liability that accompany the preparation and filing of tax returns, he said.

AICPA resources

The AICPA has provided guidelines and FAQs on the use of AI in federal tax practice.

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