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Security & compliance Open question — the Lab is working on this

Should I wait for IRS guidance on whether AI tools count as an 'auxiliary service' under 7216 before choosing tax software?

48:07From the June 16 call · Workpaper Automation, 7216 Questions, and Claude for Bookkeeping

One participant noted that a Google search on 'Blue J 7216' returned information suggesting Blue J runs on dedicated tenant infrastructure and doesn't use client data to train general models, making it one of the more defensible vendors for data privacy, though the intersection of Blue J and section 7216 still involves specific compliance considerations. The group's consensus was that the IRS will not clarify whether these tools count as an 'auxiliary service' before next tax season or before firms need to decide on software, and the industry itself has not settled on a single interpretation - some say you need an individual-specific disclosure form, others (like the commentator 'Ish') suggest a lighter consent embedded in the engagement letter, and others say no disclosure is needed at all. One participant said practically, if still in practice, they would use a trusted vendor program, bury disclosure language in the engagement letter, update their Written Information Security Plan (WISP), and confirm their IT provider/software (e.g., Intacct) has strong privacy features - reasoning that if ever challenged, they could point to having taken reasonable, documented steps rather than building something themselves with no support.

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