The IRS told you to charge less for AI work you no longer did

If AI cut the hours, you cannot bill for hours you did not work. In June the IRS said so in OPR Alert 2026-19. Circular 230 section 10.27 says you may not charge a fee the work no longer supports. Billing for time you did not spend, or billing twice for AI work, may break that rule, so pass the savings through on the invoice.

Clients already expect a cheaper return. March time still goes to mixed personal cards: a year of Amazon, Stripe dumped in January, no receipts.

You can take more clients at a lower fee when you stop spending March rebuilding books. The remaining work is review and advice.

The June IRS note

The IRS applied old practice rules to new AI tools. If a memo took two hours because a model wrote the first pass, an eight-hour bill is a problem when that pattern shows up across clients. Tell the client you used AI, and credit the time you saved. Bill the review. Leave the typing off the invoice if a model already did it.

Mixed personal cards take the hours

AI made memos faster. The pile of mixed charges is still there.

A 1040 still arrives as twelve months on one personal card. Staff guess which Target charge was toner and which was groceries. That is cleanup billed as tax prep.

If you keep the old fee and still rebuild the file in March, you lose the client or you absorb the cost. Spend March reviewing books the client already categorized during the year.

You still have to check

Due diligence did not change. Section 10.22 says you check returns and what you tell clients. OPR said review every AI draft for facts, citations, and math before it goes to a client or the IRS.

Section 10.35 now covers the tool. Know where it fails. Firm owners also have section 10.36: train staff, set data rules, vet the tools, write it down. A busy season with a lower fee and no AI policy leaves you with one intern pasting data into ChatGPT.

Do not paste a client's profit and loss into a public chatbot. Sections 6713 and 7216 cover leaking tax return data. Use only tools your firm approved.

More clients, lower fee

A lower fee only works if each file costs you less. Six hours of cleanup at a lower price is a pay cut. Forty minutes of exceptions plus an hour of planning is how you add files and keep margin.

The client still pays you. They pay for the review, the estimates, and the loan question. They stop paying you to sort a personal Visa.

We built KiwiBooks for that. The Expert console is free for accountants, enrolled agents, and bookkeepers. No seat fee. Unlimited clients. You invite the client. They keep a personal set of books plus a business.

Premium is $15 a month or $120 a year. It pulls the bank and proposes categories. Free still lets them type or import, scan receipts, send invoices, log mileage, and get a profit and loss, a balance sheet, and the tax center. New clients get seven days of Premium with no payment method, then land on Free. Their books remain in the account.

You see the ledger and the tax file as one spreadsheet mapped to IRS forms. After you review, you lock the period so the file cannot change. The client sees a simple view with no chart of accounts. The $15 can sit on the client's card or fold into your retainer. You still set your own fee.

Not every client will keep a business credit card. Say that in the engagement letter: the lower fee is for people who keep books during the year. If they send a personal statement in March, you bill the cleanup at the old rate.

You do not have to move the whole firm at once. Take a few returning Schedule C clients this month, keep their books current, and price the 2026 return as review and planning. Watch those March hours. If they drop, move more clients the same way.