What is a Section 7216 consent?

A written consent, signed and dated by the taxpayer, that allows a tax return preparer to disclose or use the taxpayer's return information for a purpose not otherwise permitted by the regulations. It must be obtained before the disclosure or use.

When is 7216 consent required?

Whenever a preparer discloses or uses tax return information in a way not authorized by the statute or 26 CFR 301.7216-2, and for disclosures to preparers located outside the U.S. Disclosures within the firm in the U.S. to help prepare the return, and to software contractors as necessary with written penalty notice, don't need consent.

What is the penalty for violating Section 7216?

Criminally, a misdemeanor with a fine of up to $1,000 ($100,000 in identity-theft cases), up to one year in prison, or both. The civil penalty under section 6713 is $250 per disclosure or use, capped at $10,000 a year, or $1,000 and $50,000 in identity-theft cases.

How long does a 7216 consent last?

As long as the consent states. If it doesn't specify a duration, it's effective for one year from the date the taxpayer signed it.

Can tax preparers use AI tools with client data?

We found no IRS guidance that addresses AI tools specifically. The closest rule allows disclosure to contractors for software used in return preparation, as necessary and with written penalty notice. Uses outside preparation, and disclosures outside the U.S., need consent. Confirm with counsel.

Can a consent be part of the engagement letter?

Rev. Proc. 2013-14 requires each consent to be a separate written document but says it may be provided as an attachment to an engagement letter.

Section 7216 consent: the rules and penalties for tax preparers

Section 7216 of the Internal Revenue Code makes it a crime for a tax return preparer to knowingly or recklessly disclose or use a client's tax return information for anything other than preparing the return, unless the regulations allow it. The regulations allow some disclosures without consent and require a written, signed consent for others. Here is what the statute, the regulations and Rev. Proc. 2013-14 say, and how they bear on software and AI tools. This is a summary, not legal advice.

Explainer. Updated October 15, 2026. By AI Accounting Vendors. 8-minute read.

Key points

What it covers: Information furnished to a tax return preparer in connection with preparing an income tax return, including the taxpayer's name, address and identifying number.
Penalties: Criminal: a misdemeanor with a fine of up to $1,000 ($100,000 in identity-theft cases), up to a year in prison, or both. Civil: $250 per disclosure or use, up to $10,000 a year.
No consent needed: Some disclosures, such as within the firm in the U.S., to another U.S. preparer for preparation, and to software or equipment contractors as necessary with written penalty notice, are allowed by regulation.
Consent needed: Other uses and disclosures, and disclosures to preparers outside the U.S., need the taxpayer's written, signed and dated consent before the fact.

What Section 7216 covers

The statute (opens in a new tab) applies to any person in the business of preparing, or providing services in connection with preparing, income tax returns, and to anyone who prepares a return for another person for compensation. It prohibits knowingly or recklessly disclosing return information, or using it for any purpose other than preparing the return, except as the regulations permit. The key terms are defined in 26 CFR 301.7216-1 (opens in a new tab):

Tax return: Any return or amended return of income tax imposed by chapter 1 of the Internal Revenue Code.
Tax return information: “Any information, including, but not limited to, a taxpayer's name, address, or identifying number, which is furnished in any form or manner for, or in connection with, the preparation of a tax return of the taxpayer.”
Tax return preparer: Anyone in the business of preparing returns, and anyone providing auxiliary services in connection with preparing them, including a person who develops software used to prepare or file a return and any Authorized IRS e-file Provider.
Disclosure: “The act of making tax return information known to any person in any manner whatever.”
Use: Any circumstance in which a tax return preparer refers to, or relies on, tax return information as the basis to take or permit an action.

Section 7216 penalties

Penalties for improper disclosure or use of tax return information
Penalty	Amount	Source
Criminal (misdemeanor)	Fine of up to $1,000 ($100,000 where the identity-theft rule in section 6713(b) applies), up to 1 year in prison, or both, plus costs of prosecution	26 U.S.C. 7216(a) (opens in a new tab)
Civil	$250 per disclosure or use, up to $10,000 per calendar year	26 U.S.C. 6713(a) (opens in a new tab)
Civil, identity-theft cases	$1,000 per disclosure or use, up to $50,000 per calendar year	26 U.S.C. 6713(b) (opens in a new tab)

The criminal penalty applies to knowing or reckless conduct. The statute also says the prohibition doesn't apply to a disclosure or use permitted by the regulations, which is why the exceptions below matter.

26 CFR 301.7216-2 (opens in a new tab) lists disclosures and uses permitted without the taxpayer's consent. Those most relevant to a firm's day-to-day work:

Within the firm, in the U.S. Disclosure to another officer, employee or member of the same preparer, for the purpose of performing services that assist in preparing the return. If that person is outside the U.S., the taxpayer's prior consent is required.
To another U.S. preparer for preparation or auxiliary services. Allowed for preparing or assisting in preparing the return, but not for the second preparer to make substantive determinations or give advice affecting tax liability without consent.
To software and equipment contractors. A preparer may disclose return information to a person under contract for programming, maintenance, repair, testing or procurement of equipment or software used for return preparation, only to the extent necessary. Each individual who receives it must get written notice of the 7216 and 6713 penalties, and the regulation says such contractors are tax return preparers themselves.
For other services by accountants and lawyers. A preparer lawfully practicing law or accountancy may use the information, or share it within the firm, to provide other legal or accounting services to the same taxpayer.

The regulation has other exceptions as well, for example for court orders and quality or peer reviews. Read the full list before relying on one.

Unless the statute or 301.7216-2 authorizes it, a preparer may not disclose or use return information before obtaining written consent (26 CFR 301.7216-3 (opens in a new tab)). The regulation sets these requirements:

Before, in writing. The taxpayer must provide written consent before the disclosure or use.
Named parties. The consent must name the preparer and the taxpayer.
Purpose and recipients. A consent to disclose must state the purpose and, with limited exceptions, the specific recipient or recipients.
The information. It must specify the tax return information to be disclosed or used.
Signed and dated by the taxpayer.
Separate documents. One document can cover several uses, or several disclosures, but not both: uses and disclosures need separate documents.
Duration. If the consent doesn't say how long it lasts, it's effective for one year from the date signed.
Timing for solicitation. A preparer may not ask for consent to use or disclose information to solicit unrelated business after handing the taxpayer the completed return for signature.

Outside the United States

Disclosing return information to a preparer located outside the U.S. requires the taxpayer's prior consent. For Form 1040-series taxpayers, a U.S. preparer generally can't obtain consent to send the taxpayer's Social Security number abroad and must redact or mask it before disclosure, unless the SSN is sent through an "adequate data protection safeguard" as defined in IRS guidance and the consent meets the related requirements.

Rev. Proc. 2013-14 for Form 1040 filers

For individual (Form 1040-series) taxpayers, Rev. Proc. 2013-14 (opens in a new tab) adds format and content rules, effective for consents obtained on or after January 14, 2013:

Each separate disclosure or use needs its own written consent document, on paper or electronic. It may be attached to an engagement letter.
Paper consents must be on 8½ by 11 inch or larger paper, with all text in at least 12-point type, and the text on each page must relate only to the consent.
Electronic consents appear on screen, with text relating only to the consent apart from navigation, and must be signable, dated and printable.
Each consent must contain the mandatory statements in section 5.04, which begin "Federal law requires this consent form be provided to you," explain that the taxpayer doesn't have to sign to engage the preparer and that a consent obtained by conditioning services on it isn't valid, and say how to contact the Treasury Inspector General for Tax Administration (TIGTA).
Consents that may result in disclosure to a preparer outside the U.S. need an additional statement saying so.
An electronic signature must show the taxpayer's affirmative, knowing consent, for example a PIN of at least five characters or a typed name that the software doesn't fill in for the taxpayer.

Copy the mandatory statements from the revenue procedure (opens in a new tab) itself rather than paraphrasing them.

Section 7216, cloud software and AI tools

The regulations were written before today's cloud and AI tools, and they don't mention either. The closest provision is the contractor rule above: return information may go to a contractor for programming, maintenance, repair, testing or procurement of software used for return preparation, only as far as necessary, with written penalty notice, and the contractor becomes a tax return preparer subject to 7216.

An IRS National Tax Forum presentation from 2023, which isn't authoritative guidance, describes the preparer definition as reaching "service providers with respect to processing and with respect to computer and data maintenance," and describes 301.7216-2(d) as permitting outside processing without consent where the processor is in the U.S. and makes no substantive decisions (IRS presentation (opens in a new tab)).

We found no IRS guidance on whether a general AI assistant such as ChatGPT or Claude fits within these exceptions. Points worth working through with counsel:

Is the tool used to prepare the return, or for something else, such as drafting marketing or advisory content? Uses outside preparation generally need consent.
Where does the vendor process data? Disclosure to a preparer outside the U.S. needs consent, and SSNs need masking or the adequate-safeguard route.
Do the vendor's terms let it use your clients' information for its own purposes, such as training models? See AI chatbots for accounting for each assistant's terms by plan.
Do you have a contract, and have the people at the vendor who receive the information been given written penalty notice?

Where an exception clearly doesn't apply, the options are a compliant consent or keeping the information out of the tool.

The AICPA Code's third-party service provider rule

AICPA members have a parallel obligation. As the AICPA's Journal of Accountancy describes interpretation 1.700.040, before disclosing confidential client information to a third-party service provider, a member should either have a contractual agreement with the provider to maintain confidentiality and reasonable assurance that it has appropriate procedures, or obtain the client's specific consent. The same article says members must determine whether a 7216 auxiliary service provider is also a third-party service provider under the Code (Journal of Accountancy (opens in a new tab)). The Code's separate "Use of a Third-Party Service Provider" interpretation, under the Integrity and Objectivity Rule, has its own client-facing requirement, for which the AICPA has published sample client disclosure language (opens in a new tab).

Before client return data goes into a new tool

Section 7216 checklist for software and AI tools

Identify the specific 301.7216-2 exception you're relying on, or get a compliant consent.
Confirm the tool is used to prepare the return, not for another purpose.
Find out where the vendor and its subprocessors process data; outside the U.S. needs consent, and SSNs need masking or the adequate-safeguard route.
Read the vendor's data-use and training terms, using the AI vendor questionnaire.
Put a contract in place and give written 7216 and 6713 penalty notice where the contractor rule applies.
For Form 1040 clients, build consents from Rev. Proc. 2013-14's mandatory language, one document per use or disclosure.
Record the tool in your written information security plan and vendor oversight list.

Section 7216 consent: questions

What is a Section 7216 consent?: A written consent, signed and dated by the taxpayer, that allows a tax return preparer to disclose or use the taxpayer's return information for a purpose not otherwise permitted by the regulations. It must be obtained before the disclosure or use.
When is 7216 consent required?: Whenever a preparer discloses or uses tax return information in a way not authorized by the statute or 26 CFR 301.7216-2, and for disclosures to preparers located outside the U.S. Disclosures within the firm in the U.S. to help prepare the return, and to software contractors as necessary with written penalty notice, don't need consent.
What is the penalty for violating Section 7216?: Criminally, a misdemeanor with a fine of up to $1,000 ($100,000 in identity-theft cases), up to one year in prison, or both. The civil penalty under section 6713 is $250 per disclosure or use, capped at $10,000 a year, or $1,000 and $50,000 in identity-theft cases.
How long does a 7216 consent last?: As long as the consent states. If it doesn't specify a duration, it's effective for one year from the date the taxpayer signed it.
Can tax preparers use AI tools with client data?: We found no IRS guidance that addresses AI tools specifically. The closest rule allows disclosure to contractors for software used in return preparation, as necessary and with written penalty notice. Uses outside preparation, and disclosures outside the U.S., need consent. Confirm with counsel.
Can a consent be part of the engagement letter?: Rev. Proc. 2013-14 requires each consent to be a separate written document but says it may be provided as an attachment to an engagement letter.

Sources

Official documents read on October 15, 2026. Vendor facts are sourced on each listing.