No, AI Cannot File Your R&D Tax Credit.

We talk about AI all the time at RK Partners, like every business does now. Whether or not your business uses it, if you use it for personal research, or disavow it completely, AI is here, and it’s not going anywhere. Our clients ask about it all the time, and we’ve heard other outside consultants employ it extensively. Without a doubt it’s a very powerful tool when utilized properly, but with taxes, extreme caution should be used when AI is part of the process.

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On June 24, 2026, the IRS Office of Professional Responsibility issues formal guidance on AI use in federal tax practice. This isn’t a blog or a think piece on the morality of AI. It’s a legitimate formal release from the same office that oversees Circular 230, which is the set of rules that governs every single practitioner who represent clients before the IRS. When the OPR publishes guidance, it’s important to understand it clearly.  

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What the IRS Said

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The guidance acknowledges that AI is everywhere in professional services, including tax. It distinguishes specifically between standard AI tools embedded in platforms like legal research software and generative AI, which creates original content on demand. The IRS then does something important by walking through five specific sections of Circular 230 and explains how each one applies when a practitioner uses AI. This isn’t vague cautionary language – they’re binding professional obligations.

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The ones that are most important to someone filing an R&D tax credit:

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Section 10.22: Due Diligence. Practitioners must exercise due diligence in preparing tax returns, documents, and representations to clients and the IRS. The IRS's AI guidance makes clear that practitioners remain responsible for verifying AI-generated work and cannot rely solely on AI. Human review is required.

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Section 10.35: Competence. Practitioners must possess the knowledge, skill, thoroughness, and preparation necessary for the engagement. When using AI, that includes understanding the technology's capabilities and limitations, recognizing where it may fail, and evaluating whether its output is appropriate and accurate.

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Section 10.37: Written Advice. Written advice concerning federal tax matters must be based on reasonable factual and legal assumptions. The IRS cautions that uncritical reliance on AI-generated analysis (particularly where the reasoning or supporting authority cannot be verified) may not satisfy this standard.

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The guidance also raises something most business owners don’t think about: data privacy. When client information gets uploaded to an AI platform, that data can be repurposed within the AI algorithm, and the IRS is explicit when stating that practitioners must use secure, enterprise-approved AI systems. Any willful mishandling of taxpayer information may lead to disciplinary action.

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Real-World Consequences

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The IRS guidelines point to a pattern of courts sanctioning attorneys for submitting AI-generated filings that contained citations that were made up and/or false. Penalties have included financial sanctions, public censure, mandatory ethics courses, and in some cases, removal from the representation.

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The guidance also references a published government report containing invented judicial quotes, references to nonexistent reports, and books attributed to the wrong authors, all apparently generated by AI. That situation was resolved when the firm agreed to partially refund feeds paid, which is a meaningful consequence as well as an embarrassing one.

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These examples aren’t hypothetical. They’re documented outcomes and the IRS is signaling that the same scrutiny is coming to tax filings.

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Why This Matters for R&D Tax Credits

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R&D Tax Credits are one of the most nuanced areas of the U.S. Tax Code and require an in depth knowledge of both the tax code and the clients sector from a technical perspective. The four-part test under IRC §41 requires a practitioner to evaluate specific activities against a fact-intensive standard, which means the documentation within the claim needs to be prepared by a professional who understands the code and does not rely on AI to compile it.

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At RK Partners, we conduct detailed interviews with your engineers, scientists, and technical team members. We map what they’re doing to the statutory requirements, review payroll records, project logs, and supply costs, and build a record that holds up to examination.

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AI can be helpful when it comes to organizing notes and summarizing specific information fed to it. It cannot work alongside your CFO, CPA, and lead engineer to understand whether the uncertainty your team was working through meets the elimination of uncertainty prong of the four-part test. That takes a human being who has worked in the space, identified these activities, and knows the law. The IRS just said the same thing, officially.

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What to Ask Your R&D Tax Credit Professional

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If you’re working with a consultant or CPA on an R&D tax credit claim, a few questions are worth asking:

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1. Who is reviewing the final claim, and what are their credentials?

2. How is your team documenting the connection between activities and the four-part test?

3. If the IRS examines this claim, who will represent the business, and do they know the business and claim well enough to confidently defend it?

4. How is communication handled during the process?

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A qualified firm will have direct answers to all these questions. If AI is doing the heavy lifting without a qualified professional behind it, then there is an underlying risk that you need to understand before filing.