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The IRS's AI guidelines, Circular 230 and the economics of your fees.
A research memo that used to take ten hours now takes four with an AI tool. One client pays by the hour and the invoice template still says ten. Another agreed to a flat fee in January. What should each be billed?
In June 2026, the IRS Office of Professional Responsibility (OPR) issued guidelines on using AI in federal tax practice. One passage warns that billing for time that wasn’t actually spent may violate Circular 230’s fee rule, and says AI cost savings should be passed on to clients openly. The AICPA has publicly objected. If you bill hourly and your staff use AI, the warning applies to invoices you’re sending now. If you charge fixed fees, whether it applies at all is the point in dispute.
Dr. Jason Dean, an economist, works through the question with one fictional CPA, Lena Park, and keeps her numbers consistent from the first slide to the last. You’ll read the OPR paragraph word for word and see what kind of document it is. You’ll separate the four things people call “savings”: time saved on the task, cash the firm no longer spends, capacity released, and the change in the client’s bill. And you’ll see why the billing contract, more than the guidance, decides who keeps the gain.
The course then covers the rules underneath: who Circular 230 covers, what section 10.27 says about unconscionable fees and the one decided case we found applying it, and how the willfulness and recklessness thresholds in section 10.52 decide which parts of the guidance can lead to discipline. OPR’s case and the AICPA’s case are each argued at full strength and tested against the numbers, ABA Formal Opinion 512, and survey evidence on how firms are actually pricing AI work. An economics section explains when competition passes savings on to clients.
The second half follows Lena’s rollout and what each step adds to her cost: competence and diligence when choosing a tool; section 7216 disclosure, the routes that don’t need consent, and how to get consent properly; the FTC Safeguards Rule; fabricated citations and the Tax Court cases so far; section 6694 preparer penalties; and firm procedures under section 10.36. It ends with three billing models a firm can defend, Lena’s fee decision, and a worked engagement-letter clause and Form 1040 consent form, including the four mistakes that make a consent invalid.
Eight active-learning checks with built-in thinking time, and a reflection on your own firm.
WHO SHOULD TAKE IT
CPAs, enrolled agents, tax managers and firm owners who use or are adopting AI tools, set fees, or sign off on engagement letters.
Note: General educational information only, not legal, tax or accounting advice; no professional relationship is created. Rules and guidance as of October 2026; the OPR guidance is informal and may be clarified. Interpretations and recommendations are the instructor’s own views, not those of King’s University College at Western University. Not affiliated with or endorsed by the IRS, Treasury, the AICPA or the ABA. Lena Park and the running example are fictional; sample wording is illustrative, not a form.
Associate Professor of Economics | King's University College at Western
#Dr. Jason Dean **Associate Professor of Economics and Applied Economist** Dr. Jason Dean is an Associate Professor of Economics at King’s University College at Western University and holds a PhD in Economics from McGill University. He teaches university students and working professionals, drawing on experience in academic research, economic consulting, public policy and the practical use of artificial intelligence. His CPD work covers applied economics and emerging AI tools. His approach is practical and evidence-based: explain how something works, identify the assumptions and limitations, and give learners a framework they can use in their own work. Jason has worked extensively with generative AI since the emergence of ChatGPT, incorporating it into teaching, research and professional education. He has delivered three presentations for Haver Analytics, most recently a June 2026 session on Model Context Protocol (MCP) servers. He has also presented on AI for the Canadian Chamber of Commerce and the Toronto Association for Business and Economics. His presentations have covered AI productivity tools, copyright, privacy, emerging capabilities and the practical implications of using AI in professional work. Before joining King’s, Jason worked as an associate and health economist at Analysis Group and as an economic research analyst at CEP News. His consulting work contributed to published studies of healthcare costs and treatment outcomes. He has also taught economics to CPA students at Sheridan College. Jason’s teaching career has taken him across Canada, Japan and China. In 2024, he was a visiting professor in Canadian Studies at Kwansei Gakuin University in Japan, where he taught Canadian Business Culture and Canadian Economic History. He has also taught Labour Economics at Wuhan University of Technology and Labour Economics and International Trade and Finance at Renmin University in Beijing. His experience teaching in China later prompted him to develop his Economics of China course at King’s. His Canadian teaching experience also includes Wilfrid Laurier University, McMaster University Continuing Education and McGill University. Jason has contributed assessment questions, digital learning activities and instructional materials to economics resources for McGraw-Hill and Pearson. His research examines questions with practical consequences for households, workers and employers. What happens when immigrants cannot find work related to their education? How does a fall in income affect a renter’s ability to move? Do Canadian housing and stock markets share a long-run relationship? His work has appeared in journals including *Applied Economics*, *Regional Science and Urban Economics*, *Cliometrica* and the *Journal of Housing Economics*. As an Associate Researcher with the Montreal Economic Institute, Jason studies how taxes and benefit reductions affect the financial return to work. His policy publications examine the circumstances of low-income seniors, people taking second jobs and workers moving off income assistance. He has also provided media commentary on housing, labour markets, artificial intelligence and the Canadian economy. Jason also holds an MA in Economics from the University of Guelph and an Honours BBA from Wilfrid Laurier University. --- ## MONTREAL ECONOMIC INSTITUTE | RESEARCH REPORTS - **“End Penalties That Punish Low-Income Seniors Who Work”** (2026), with the collaboration of Gabriel Giguère. - **“The Benefits of Eliminating the Middle-Income Tax Bracket”** (2025), with the collaboration of Emmanuelle B. Faubert. - **“Full-Time Struggle and Two-Job Juggle: A Tax Holiday for Canadians to Fight Rising Costs”** (2024), with the collaboration of Renaud Brossard. - **“Canada’s Welfare Wall: Enhancing the CWB for Full-Time Employment”** (2023), with the collaboration of Renaud Brossard. - **“Labour Shortages: Helping a Trapped Pool of Potential Workers Help Themselves”** (2023), with the collaboration of Célia Pinto Moreira. --- ## POLICY COMMENTARY - **“It’s time to give the middle class a real tax break.”** *The Hamilton Spectator*, March 17, 2025. - **“Hey Ottawa, workers with two jobs could use a break.”** *The Hamilton Spectator*, January 13, 2024. - **“Workers Benefit not working for workers.”** *Financial Post*, May 4, 2023. --- ## PEER-REVIEWED RESEARCH | ECONOMICS - Dilmaghani, M., and Dean, J. **“Sexual orientation and intra-household specialization before and after the legal recognition of same-sex marriage in Canada.”** *Applied Economics*, 56(29), 3460–3484 (2024). - Singh, A., McFarlane, A., Dean, J., and Erenburg, G. **“Are Canadian Residential Real Estate and Stock Markets Segmented or Integrated?”** *Empirical Economics Letters*, 23(7) (2024). - Dean, J., and Steele, M. **“Income decline, financial insecurity, landlord screening and renter mobility.”** *Regional Science and Urban Economics*, 95, 103797 (2022). - Dean, J., and Geloso, V. **“The linguistic wage gap in Quebec, 1901 to 1951.”** *Cliometrica*, 16, 615–637 (2022). - Dilmaghani, M., and Dean, J. **“Sexual orientation and homeownership in Canada.”** *Journal of Housing Economics*, 49, 101688 (2020). - Dean, J. **“Does it matter if immigrants work in jobs related to their education?”** *IZA Journal of Development and Migration*, 8, Article 7 (2018). - Dilmaghani, M., and Dean, J. **“Labor Market Attainment of Canadian Jews During the First Two Decades of the 20th Century.”** *Contemporary Jewry*, 38, 49–77 (2018). - Dean, J., and Dilmaghani, M. **“Economic Integration of Pre-WWI Immigrants from the British Isles in the Canadian Labour Market.”** *Journal of International Migration and Integration*, 17(1), 55–76 (2016). - Dilmaghani, M., and Dean, J. **“Religiosity and female labour market attainment in Canada: the Protestant exception.”** *International Journal of Social Economics*, 43(3), 244–262 (2016). --- ## COAUTHORED RESEARCH | HEALTH ECONOMICS AND OUTCOMES - **“Systematic review of long-acting injectables versus oral atypical antipsychotics on hospitalization in schizophrenia.”** *Current Medical Research and Opinion*, 30(8), 1643–1655 (2014). - **“Burden of schizophrenia on selected comorbidity costs.”** *Expert Review of Pharmacoeconomics & Outcomes Research*, 14(2), 259–267 (2014). - **“Impact of omalizumab on emergency-department visits, hospitalizations, and corticosteroid use among patients with uncontrolled asthma.”** *Annals of Allergy, Asthma & Immunology*, 109(1), 59–64 (2012). --- ## OTHER RESEARCH REPORTS - Dean, J., and Dilmaghani, M. **“Religious Diversity and Labour Market Attainment: Nova Scotia and New Brunswick, 1911–2011.”** Atlantic Research Group on Economics of Immigration, Aging and Diversity (2015).