Accounting firms · Security plan
How to add AI tools to your WISP, with a section you can copy.
The IRS sample plan for tax practices, Publication 5708, was last revised in August 2024 and doesn't mention AI. If your staff use an AI tool with client information, your written information security plan needs to cover it. Here's where it fits and what to write.
The short answer
Treat any AI tool that touches client information as a service provider. The FTC Safeguards Rule, which covers tax preparation firms, requires you to oversee service providers in three ways: choose ones that can protect the information, require those safeguards by contract, and reassess them periodically based on the risk they present.
Small firms don't get out of this. The rule exempts firms with information on fewer than 5,000 consumers from four of its requirements, and overseeing service providers isn't one of them.
In practice, we'd make four additions to your WISP: list each approved AI tool, say what data may go into it, add AI rules to your staff conduct rules, and review the tools when you review the plan. The section below covers all four.
This summarizes public rules and the IRS sample plan. Your obligations depend on your firm. Have your advisor review your WISP.
What the Safeguards Rule asks of service providers
The rule's service-provider requirement, in full, is to oversee service providers by:
- "Taking reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the customer information at issue"
- "Requiring your service providers by contract to implement and maintain such safeguards"
- "Periodically assessing your service providers based on the risk they present and the continued adequacy of their safeguards"
For an AI tool, the contract is usually the provider's business terms, which is one more reason to use a business plan. Personal ChatGPT, Claude or Gemini accounts are signed by the employee, not the firm, and you can't oversee a provider you don't have an agreement with.
Two other parts of the rule apply directly. It requires multi-factor authentication for anyone accessing your information systems, unless your Qualified Individual approves equivalent or stronger controls in writing, so turn it on for every AI account that handles client data. And if unencrypted information on 500 or more consumers is acquired without authorization, you must notify the FTC as soon as possible and within 30 days of discovery.
Where AI fits in the IRS template
IRS Publication 5708 is the Security Summit's sample WISP for small practices. It has no AI section, but four existing parts are the natural places for one:
| Part of Publication 5708 | What it says now | What to add |
|---|---|---|
| Where PII may be stored | Lists "online (web-based) applications, portals, and cloud software applications such as Box" | Each approved AI tool, by name and plan |
| Sharing PII with third parties | Lists tax software vendors, payroll services, IT support and others, and says access "will be the minimum required" | AI providers, and what data each may receive |
| Attachment B: rules of behavior | Staff conduct for safeguarding client PII | Personal AI accounts banned for client work, and what never goes in |
| Attachment F: people authorized to access PII | Names, roles, access level, dates granted and removed, including contractors | Who has a seat on each AI tool, and removing it the day someone leaves |
The template already requires evaluating third-party service providers "not directly involved with tax preparation and electronic transmission of tax returns" to make sure they can protect the PII you let them access. A general AI tool falls in that group. Publication 5708 also says any third party with access must meet the WISP's standards at a minimum.
An AI tools section you can copy
Copy this into your WISP, fill in the brackets, and keep the tool table current. It's written to sit alongside Publication 5708.
Section [X]: AI tools and service providers
1. Scope. This section covers any artificial intelligence tool used for firm work, including chat assistants and AI features inside other software, that receives client PII or tax return information.
2. Approved tools. Staff may use only the AI tools listed below, signed in with a firm account. Personal AI accounts may not be used for firm work.
Tool and plan: [for example, ChatGPT Business]. Account owner: [name]. Data allowed: [for example, no tax return information; client first names only]. Model training: [off by default / turned off on (date)]. Where data is processed: [United States / other / unknown]. Multi-factor authentication: [on]. Last reviewed: [date].
3. Before a tool is approved. [Name], our Qualified Individual, confirms the provider's business terms commit to protecting our data, that it doesn't use our data for model training, where data is stored and processed, and that multi-factor authentication is available. Tools that can't meet these aren't approved.
4. Tax return information. No tax return information goes into an AI tool unless [the firm has decided this use is permitted / the client has signed a Section 7216 consent naming the provider]. Information is limited to the minimum needed.
5. Never enter. Social Security numbers, bank or card numbers, passwords, or anything covered by a confidentiality agreement, in any AI tool.
6. Review. Every output is checked by a person before it goes to a client, agency or vendor.
7. Access. AI seats are listed on Attachment F and removed the day a person leaves the firm.
8. Mistakes. If client information goes into an unapproved tool, tell [name] the same day. It's handled under our security breach procedures (Attachment C).
9. Reassessment. We review each approved AI tool at least once a year with the rest of this plan, and whenever a provider changes its terms.
We'll find out which AI tools your staff already use, check each one against this section, and help you decide what's allowed. Then we fill in the table with you.
Questions to ask before approving an AI tool
These map to the rule's three oversight duties. Most providers answer them on their business pricing or privacy pages.
- Does it use our data to train its models? On which plans, and is it off by default?
- Where is our data stored and processed? Disclosing tax return information outside the United States needs client consent under Section 7216.
- How long does it keep our data, and can we delete it?
- Does it support multi-factor authentication and single sign-on, and can we remove a user ourselves?
- What contract terms cover our data: business terms of service, a data processing addendum, a security report?
Write the answers down with the date. That record is what "periodically assessing" looks like when someone asks.
Common questions
Does a small tax practice really need this?
Yes, if staff use AI with client information. The IRS says tax professionals are legally required to have a written information security plan. The FTC's small-firm exemption, for firms holding information on fewer than 5,000 consumers, doesn't cover the service-provider requirement.
Is ChatGPT a service provider under the Safeguards Rule?
If your firm puts customer information into it, treat it as one. That means a business account the firm controls, terms that protect the data, and a written review.
Is the IRS template enough on its own?
The IRS says Publication 5708 isn't an exhaustive discussion and isn't meant to replace your own plan. It's a starting point. AI is one of the things you have to add yourself.
Does adding AI to the WISP mean I don't need client consent?
No. The WISP covers how you protect information. Section 7216 covers whether you may disclose it at all. See Can accountants use ChatGPT with client tax data?
Sources
- 16 CFR § 314.4: elements of an information security program
- 16 CFR § 314.6: exceptions for small institutions
- FTC: Safeguards Rule, what your business needs to know
- IRS: Security Summit reminds tax pros they must have a WISP (July 29, 2025)
- IRS Publication 5708: Creating a Written Information Security Plan for your Tax & Accounting Practice (Rev. 8-2024)
- Treas. Reg. § 301.7216-2: disclosures outside the United States
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