When a client runs their return through ChatGPT or Gemini, tell them plainly what they shared and how to use AI with less exposure next time, and answer each "correction" with a source they can open. If you use AI on client returns yourself, the confidentiality rules apply to you, not to the client: in the US, section 7216 and the IRS's guidance on AI; in the UK and EU, the GDPR.
What a client shares when they upload a return
A finished return holds more personal data than almost any other document a client owns. A US Form 1040 carries the Social Security numbers of the taxpayer, the spouse and every dependant, and the bank routing and account numbers for a direct-deposit refund. A UK Self Assessment return (SA100) carries the Unique Taxpayer Reference, the National Insurance number and the date of birth. In the EU, returns carry the national tax ID.
A client who uploads "my return" usually uploads the whole pack:
- Identifiers: SSN or ITIN, National Insurance number and UTR, a national tax ID.
- Other people: the spouse, children and other dependants, often with dates of birth.
- Income: wages and employers, investment and rental income, the refund or the amount due.
- Bank details: account numbers for refunds and payments.
- Attachments: W-2s, 1099s, P60s, and sometimes a photo of a passport or driving licence.
Most of this is the client's own data. The spouse and children did not decide to share theirs.
What to tell a client who already did it
Skip the lecture. The client was trying to understand their own return. Give them three steps:
- Delete the chat. In ChatGPT, a deleted chat disappears from the account at once and is scheduled for permanent deletion within 30 days, unless OpenAI must keep it longer for security or legal reasons (as of October 2026). Deleting does not undo the upload. It shortens how long the data is kept.
- Turn off training for future chats. On personal ChatGPT plans, "Improve the model for everyone" is on by default and can be turned off in Settings, Data controls. Our article on whether it is safe to upload documents to ChatGPT covers what happens to a file on personal and business plans.
- In the US, get an Identity Protection PIN. An IP PIN prevents someone else from filing a federal return with the client's SSN or ITIN. Anyone who can verify their identity can get one, and parents can request one for dependants. Tax professionals cannot get it for a client; the client has to apply.
When the client brings back AI "corrections"
The r/Accounting thread on this opens with a client who ran a draft return through ChatGPT and Gemini and came back with change requests the preparer calls "flat out wrong". In one reply, a client asked why the new car loan interest deduction was missing. The car was bought in 2024, and the deduction applies only to loans taken out after December 31, 2024.
A chatbot can state a tax rule confidently and still be wrong, out of date, or right for someone else's facts. The IRS Office of Professional Responsibility lists fabricated outputs, or "hallucinations", among the limits of generative AI in its June 2026 guidance for tax practitioners. The model also does not know what is not on the page: the purchase date, a move abroad, an election made in an earlier year.
A response that works:
- Ask for the exact question the client typed and the full answer, not a summary.
- Answer each point with a source the client can open: an IRS or HMRC page, the form instructions, the law itself. "Here is the IRS page" settles more than "ChatGPT is wrong".
- If the AI found something real, say so and fix it.
- Keep the exchange in the client file. If the client insists on a position you advised against, the record shows what you said.
- If these reviews take real time, cover them in next year's engagement letter.
A note you can send to clients
Keep it short and do not ban AI: clients will use it anyway. Tell them how to use it with less exposure, and invite them to send you what it says. Adapt the wording to your practice.
Subject: Using AI tools with your tax documents
Many clients now ask ChatGPT, Gemini or other AI tools about their
return. That is fine, and we are happy to look at what comes out of it.
A few suggestions:
1. Ask about the rule, not your return. "Can I deduct interest on a
car loan taken out in 2025?" gets you an answer without your details.
2. If you paste figures, first remove your Social Security / National
Insurance / tax ID number, the names and dates of birth of your
spouse and children, bank account numbers, your address and your
employer's name.
3. Do not upload photos of your passport, driving licence or ID card.
4. Check the tool's data settings first, for example whether your chats
are used to train its models.
5. AI tools can be wrong or out of date on tax rules, and they do not
know the facts you have given us. Send us the question and the
answer, and we will check them against official guidance before
anything on your return changes.
If you have already uploaded your return, delete that chat and let us
know. We can explain how to protect your tax account.If you use AI on returns: US rules
A client may share their own return with anyone. A preparer may not. Section 7216 of the Internal Revenue Code makes it a misdemeanor for anyone in the business of preparing returns to knowingly or recklessly disclose information furnished for a return, or to use it for any other purpose. The penalty is a fine of up to $1,000 ($100,000 where section 6713(b) applies), up to a year in prison, or both. Section 6713 adds a civil penalty.
The regulations define the terms broadly. "Tax return information" includes the taxpayer's name, address and identifying number and any information furnished for the return, and "disclosure" is making it known "to any person in any manner whatever" (§301.7216-1). Disclosures the regulations do not expressly allow (§301.7216-2) need the taxpayer's written consent first, in the form §301.7216-3 prescribes.
Neither the statute nor the regulations mention AI. The IRS Office of Professional Responsibility does, in its June 2026 guidance. It lists sections 6713 and 7216 among the rules that apply, warns that AI platforms "may present risks regarding the unauthorized disclosure of sensitive taxpayer information", and says practitioners must handle client data "using only secure, enterprise-approved AI". It also says "Practitioners cannot rely solely on AI" and that AI output must be checked before it reaches a client or the IRS.
Whether sending return information to a particular AI provider is a disclosure that needs consent depends on the tool and the facts. Guidance published by the AICPA suggests assessing exactly that against §301.7216-2 and §301.7216-3. Get advice from a tax lawyer or your professional body before you build AI into your return workflow.
Separately, under the FTC Safeguards Rule, tax and accounting professionals count as financial institutions and must keep a written information security plan, or WISP. The IRS publishes a template in Publication 5708 and security guidance in Publication 4557, Safeguarding Taxpayer Data. The OPR guidance asks firms to set procedures for AI: staff training, secure data handling and vetting outside AI tools. The WISP is the place to write down which tools staff may use and what may go into them.
UK and EU: the GDPR
Tax data about an individual client is personal data under the EU GDPR and the UK GDPR. A name and an identification number are both listed as identifiers. When an AI provider processes that data on your firm's behalf, it is usually a processor, and Article 28 requires a contract with specific terms. Check whether the AI plan you use comes with a data processing agreement before client data goes in. Replacing names with placeholders lowers the risk, but pseudonymised data is still personal data.
The safe-copy method for preparers
Most questions a preparer puts to an AI tool do not need the client's identity: explain this K-1 line, draft a plain-language letter about estimated payments, summarize an HMRC or IRS notice, check a depreciation schedule.
- Ask about the rule in general terms when you can. Nothing about the client leaves the office.
- When the document itself is needed, work on a copy. Replace names, SSNs, NI numbers and tax IDs, addresses, bank account numbers and dates of birth with placeholders such as Person_1, ID_1, Account_1. Keep the amounts, years and line numbers: that is what the question is about. The list of what to remove before a document goes to AI covers the indirect details, such as an employer in a small town.
- Use the same placeholder for the same person everywhere. The spouse is Person_2 on the return, the W-2 and the letter.
- Check the answer against the source, then put the real names back on your own computer.
A safe copy reduces what leaves your office. It does not settle the section 7216 question by itself: the regulation's definition of tax return information is not limited to names and numbers. Take that point to your adviser along with the consent question.
ClientSafe does steps 2 and 3 on your PC. Put the client's documents in one case, review what it found, untick matches that are not personal data and mark anything it missed, then copy the safe copy or save it as a Markdown file. Paste the AI's answer back into the same case to restore the names. For bank exports and financial statements behind a business return, see AI for accountants.
Frequently asked questions
Should I tell clients not to use AI with their taxes?
A ban rarely works, and the data is theirs to share. A note on how to use AI with less exposure, plus an offer to check the answers, keeps the questions coming to you.
Is a return safe to upload if the client removes their name?
No. The SSN or NI number, the dependants' names, the bank numbers, the address and the employer on a W-2 or P60 identify the client too. Remove all of them, or ask about the rule without the document.
Do I need client consent to use AI on returns?
In the US, possibly: section 7216 requires written consent for disclosures its regulations do not otherwise allow, and how that applies depends on the tool and what you send. In the UK and EU, you need a lawful basis under the GDPR and a processor contract with the AI provider. Ask an adviser about your own practice.
ClientSafe replaces client names, ID numbers, addresses and bank account numbers in a safe copy of tax documents on your PC, and puts the real names back into the AI's answer. Detection is not perfect, so review what it found before you copy.
General information, not legal or tax advice.