The National Tax and Accountants’ Association (NTAA) has urged the Tax Practitioners Board (TPB) to enhance its recent draft guidance regarding the obligations of tax agents using AI-assisted services. Released last month, the draft guidance, known as TPB(I) D62/2026, aims to clarify practitioners’ responsibilities under the Code of Professional Conduct in relation to artificial intelligence. However, the NTAA contends that the guidance falls short of addressing the complexities tax practitioners face in a rapidly evolving technological landscape.
The NTAA expressed concerns that the information sheet does not adequately provide the practical guidance necessary for practitioners to navigate compliance confidently. One of the main critiques focuses on the assumption that practitioners actively choose to input information into AI tools. The association highlighted that many AI features are now integrated by default into existing software platforms like Xero, MYOB, QuickBooks, and Microsoft 365. Consequently, practitioners may not consciously decide to expose client data, yet the AI tools still access it.
The integration of AI into practice management platforms is expanding. For instance, Xero recently partnered with Anthropic to enhance its AI assistant, JAX (Just Ask Xero), which analyzes financial performance metrics and identifies unpaid invoices. According to the NTAA, this processing of client data occurs seamlessly in the background, often without the practitioner’s awareness. Microsoft’s suite, including Outlook and Word, similarly employs AI capabilities that operate invisibly while users engage with their client files.
The NTAA cautioned that this increased use of AI could represent significant compliance risks, which the draft guidance does not adequately address. One particular area of concern involves paragraph 22 of the draft, which discusses client permission under Code Item 6, related to confidentiality and informing clients about sharing their information with third parties. Practitioners are required to provide details on where the data will be sent and stored. However, the NTAA argued that the practical implementation of this requirement poses challenges.
Practitioners often lack clarity regarding the specifics of AI processing. For example, a tax agent using Xero may find it difficult to ascertain where client data processed by JAX is stored, what third-party AI providers are involved, or how data flows between platforms. This information is typically controlled by software vendors and can change without notice, complicating compliance efforts.
To address these challenges, the NTAA has recommended that the final TPB information sheet clarify that merely listing relevant AI-enabled products or software providers in client notifications would suffice for compliance with the disclosure obligations under Code Item 6. They argue that requiring practitioners to disclose every specific AI sub-processor and processing arrangement would impose an excessive compliance burden and necessitate information that is not readily available.
The association advocates for a balanced approach, suggesting that practitioners should identify third-party software providers involved in data processing, accompanied by a general statement about their approach to AI use and data security. They emphasize that the final guidance should explicitly acknowledge the complexities surrounding embedded AI use and offer practical disclosure guidelines tailored to the realities of modern software.
As AI continues to underpin critical functionalities across various software platforms, the NTAA’s recommendations underscore the need for regulatory bodies to adapt guidance to the evolving technological landscape. This will not only help practitioners navigate their compliance obligations but also ensure that client data is handled securely and responsibly.
See also
OpenAI’s Rogue AI Safeguards: Decoding the 2025 Safety Revolution
US AI Developments in 2025 Set Stage for 2026 Compliance Challenges and Strategies
Trump Drafts Executive Order to Block State AI Regulations, Centralizing Authority Under Federal Control
California Court Rules AI Misuse Heightens Lawyer’s Responsibilities in Noland Case
Policymakers Urged to Establish Comprehensive Regulations for AI in Mental Health
