Free template
Engagement letter AI clauses
Pick the clauses that fit your firm and get a section on AI use to paste into your engagement letter: how you use AI, who reviews the work, how providers keep data confidential, and what clients can choose.
Clauses
Adds the Section 7216 consent clause.
Include
What you use AI for
Your providers
Tick only if your provider agreements say so. The AI vendor questionnaire has the questions to ask.
Use of technology, including artificial intelligence
[Firm name] ("we," "us") uses software in providing our services, including tools that use artificial intelligence ("AI"). We may use AI tools for tasks such as reading and organizing the documents you send us; entering data into our working papers and returns; drafting schedules, reconciliations and other working papers; and researching technical questions and summarizing what we find.
Why: Tells the client plainly that AI tools are part of the work and what they're used for.
AI tools assist our professionals; they don't replace their judgment. A member of our team reviews AI-assisted work before we rely on it or deliver it to you, and we remain responsible for the services we provide under this letter.
Why: Makes clear that a person checks AI-assisted work and that the firm, not the tool, stands behind it.
Some of the AI tools we use are provided by third parties. Before your information is processed by such a provider, we require the provider, by contract, to keep it confidential and to maintain safeguards to protect it.
Why: AICPA Interpretation 1.700.040 calls for either a confidentiality agreement with a third-party service provider or the client's specific consent before disclosing confidential client information to it. The FTC Safeguards Rule, which covers tax preparation firms, requires contracts that spell out security expectations for service providers.
Federal law limits how we may use and disclose your tax return information. Where the law requires your written consent before we use or disclose it, including any disclosure to a tax return preparer located outside the United States, we will ask you to sign a separate consent form that explains your choices.
Why: Under Section 7216 and its regulations, some uses and disclosures of tax return information need the client's separate, signed consent, including disclosures to a preparer outside the United States.
If you would prefer that we not use AI tools in your engagement, or not for particular information, please tell us in writing. We will let you know whether that affects the timing or fees of our services.
Why: Gives clients who'd rather not have AI used on their work a way to say so, and sets expectations about the effect.
The “Why” notes are for you and aren’t copied. Have your own counsel review the final letter.
The rules behind the clauses
- AICPA Interpretation 1.700.040, on disclosing information to a third-party service provider. The Journal of Accountancy summarizes it this way: the member should “enter into a contractual agreement with the TPSP to maintain the confidentiality of the information” or obtain the client’s specific consent before disclosing confidential client information.
- The FTC Safeguards Rule, which lists tax preparation firms among the financial institutions it covers. On service providers, the FTC says firms must select providers that can maintain appropriate safeguards, and that “Your contracts must spell out your security expectations.”
- Section 7216 and its regulations, which require the taxpayer’s written consent before some uses and disclosures of tax return information.
Before you send it
- Confirm what your providers’ contracts say about confidentiality, data location and model training.
- Make the letter match your internal rules. The AI acceptable use policy template lists approved tools and review requirements.
- For tax clients, prepare any Section 7216 consents as separate documents.
- Have your counsel or professional liability insurer review the final language.
Engagement letter AI clauses: questions
- Do I have to tell clients that my firm uses AI?
- It depends on what the tools do with client information. Under AICPA Interpretation 1.700.040, a member disclosing confidential client information to a third-party service provider either has a contract with the provider to keep it confidential or obtains the client's specific consent first. Section 7216 adds consent requirements for some uses and disclosures of tax return information. Telling clients in the engagement letter also sets expectations, whatever the rules require.
- Where does the AI clause go in an engagement letter?
- A natural place is next to the letter's confidentiality or service-provider terms, or in the standard terms and conditions attached to the letter.
- Should the letter say our providers don't train on client data?
- Only if your contracts say so. Check each provider's terms or ask with the AI vendor questionnaire; the generator leaves the sentence out unless you tick the box.
- Does this replace a Section 7216 consent?
- No. A consent has to be a separate, signed document. The tax clause tells clients you'll ask for one when it's needed; build the form itself with the Section 7216 consent generator.
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Sources
Official documents read on October 29, 2026. Vendor facts are sourced on each listing.