I recently had my first case of tax return errors that originated, at least in part, from AI-assisted preparation. The error was mine to catch. I did not catch it. The IRS did, and sent Letter 12C requesting an explanation. The minor error would not normally make any difference, but in this case it did.

The Case

This stemmed from a single errant checkmark on a return I recently prepared for tax year 2007. Working on a 2007 return in 2026 is itself unusual, and that is precisely why this case came to me rather than a conventional tax preparer. The unusual nature of the situation is also why I am omitting identifying details here.

The Technology Gap

The software and workflows we use today are much different from the ones used in 2007, and running legacy tax software nearly two decades later is not straightforward. I used AI to help bridge that gap.

The first error had no effect on the tax owed; it simply required an explanation. But it carried forward into the following year’s return, where the downstream effect produced a $900 increase in tax liability. A small oversight compounded.

What I Conclude

1. Modern tax software certainly would have detected and prevented this error automatically.
2. Current AI-generated returns would not reliably have caught the error; the gap works in both directions.
3. My own working assumption, that a simple, correctable error is not a serious matter, is not necessarily a view my clients share. That asymmetry matters.
4. I need to be clearer with clients that my role includes identifying and correcting errors when they surface, and that I do not represent my work as error-free.

The Broader Point

Unusual or complex fact patterns increase the risk of error. Some firms’ review processes would catch what I missed, but not every client can justify the cost of that level of review, and professional standards restrict us from recommending services whose projected cost exceeds their expected benefit.

That logic may be sound. But it should never be assumed that a client understands or accepts it without explanation. Correcting an error is more practical than preventing every possible one, and that too is something worth saying plainly, rather than leaving unstated.