Can I put client tax returns into ChatGPT or another AI tool?
Only after you know what the tool does with the data. The IRS's June 2026 guidance tells practitioners to "strictly handle all client data using only secure, enterprise-approved AI" and to "never upload sensitive data to unsecured sites." Section 7216 also limits what you may disclose without the client's written consent. Check the tool's training, retention and location terms on its own pages first.
Source: IRS OPR alert 2026-19; 26 U.S.C. 7216.
Do I need my client's consent under Section 7216 to use an AI tool?
Not always. Without an exception, a preparer needs the taxpayer's written consent before disclosing return information. But the regulations let a preparer disclose, without consent, to another preparer in the United States who provides auxiliary services, as long as those services are not substantive determinations or advice affecting the client's tax liability. The regulations' definition of a preparer includes "a person who develops software that is used to prepare or file a tax return." The rules never mention AI, so whether a given tool fits an exception is a question for your tax counsel.
Source: Treas. Reg. 301.7216-3(a)(1); 301.7216-2(d)(1); 301.7216-1(b)(2)(i)(B).
What has the IRS said about tax professionals using AI?
The IRS Office of Professional Responsibility issued introductory guidelines on June 24, 2026. They say "outsourced or third-party AI tools should be vetted," warn of "unauthorized disclosure of sensitive taxpayer information, especially when data is uploaded to unsecured or public systems," and tie AI use to Circular 230 duties on due diligence, fees, competence, procedures and written advice.
Source: IRS OPR alert 2026-19.
Will the AI vendor train on my clients' data?
Check each vendor's own terms. Blue J says customer data is not used to train AI models, and Thomson Reuters says your content is not used to train CoCounsel's AI features. For Bloomberg Tax, the only statement we found is a quote from Will Matthews, Bloomberg Tax's director of product management: "we never train any LLM with any user information." ChatGPT Enterprise and Claude Enterprise both say they do not train on your business data unless you opt in.
Source: each tool's card in the ranked guide, with links to its own pages.
Doesn't ChatGPT Enterprise or Claude Enterprise already cover this?
They cover training: both say they do not train on your business data unless you opt in. Retention is a separate question. OpenAI lets qualifying organizations set how long it keeps business data, so check what your plan keeps and for how long. Claude Enterprise is sold with a 20-seat minimum. Neither is built for tax work.
Source: openai.com/business-data; claude.com/pricing.
Where is my clients' data stored?
It depends on the tool. Blue J stores and processes data in the U.S., in Amazon Web Services' Northern Virginia region. Thomson Reuters says CoCounsel prompts are processed and hosted in the U.S. All Faradex services run in the U.S. We found no published data location for Bloomberg Tax's AI.
Source: bluej.com/security; CoCounsel security; faradex.ai.
Can data I put into an AI tool be subpoenaed?
It depends on what the provider keeps. CoCounsel keeps conversations and documents for the life of the account unless you delete them, and Blue J deletes uploaded files older than 24 hours every day. Faradex can be subpoenaed like any U.S. company, but your prompts and documents exist only in memory, so there is nothing on disk to produce. You cannot subpoena what does not exist. You cannot preserve what was never stored.
Source: each tool's card in the ranked guide.
How much do AI tax tools cost?
Published prices, checked November 10, 2026: Faradex is from $120 a month with no user minimum. Blue J's Individual plan is $1,498 a year per user, and its Team plan is priced on request. CoCounsel Tax Essentials is $1,300 a year for one user. Bloomberg Tax said in March 2025 that its AI comes at no extra charge with the platform, but we found no published platform price.
Source: faradex.ai; bluej.com/pricing; CoCounsel Tax pricing; Bloomberg Tax.
Does Faradex do tax research or e-filing?
No. Faradex is a private AI Workspace your firm uses for research, drafting and analysis on client documents. It has no tax research library, tax forms, e-filing or tax software integrations, so use it alongside a tax research tool such as Blue J or CoCounsel Tax.
Source: faradex.ai.
Is Faradex SOC 2 compliant?
We are SOC 2 compliant. Specifics can be found at https://faradex.ai/security.
Source: faradex.ai/security.
What does the FTC Safeguards Rule require when I use an AI vendor?
The rule treats tax preparation firms as financial institutions. If a vendor handles client information, the rule says you must require "your service providers by contract to implement and maintain such safeguards," and keep "periodically assessing your service providers." IRS Publication 4557 adds that the rule requires a written information security plan.
Source: 16 CFR 314.2 and 314.4(f); IRS Pub 4557.
Where can I compare the tools side by side?
The ranked list, with prices, how each tool is bought and what each does with client data, is on the Top AI Tax Tools guide.