── ── Vendor due-diligence guide · 2026
SOC 2 and AI tax software: what the rules actually require.
No law requires tax software to hold SOC 2 — it's a voluntary AICPA attestation. The legal duties sit with you: the FTC Safeguards Rule makes professional tax preparers financial institutions that must run a written information security plan and oversee their service providers, and IRC §7216 restricts what any vendor may do with return data — including training AI models on it. So the practical answer: demand the SOC 2 Type II report as your vetting evidence, and ask the six questions the certification doesn't cover. Below, with one honest disclosure — the vendor writing this guide isn't SOC 2 certified yet, and says so.
By Brad Ju, Co-founder, deciqAI · Last updated August 28, 2026
What binds whom
The confusion in "does it need SOC 2" is about who carries the obligation. Four of the five rows below bind your firm whether or not any vendor is certified.
| Rule | Who it binds | What it requires |
|---|---|---|
| FTC Safeguards Rule (16 CFR Part 314, under GLBA) | Your firm — legally binding | Professional tax preparers are financial institutions under the rule: you must maintain a written information security program, and you must take reasonable steps to select and oversee service providers capable of safeguarding client data. The vendor-vetting duty is yours, not the vendor's. |
| IRS written security plan (WISP) | Your firm — legally binding | The IRS states plainly that FTC regulations require professional tax preparers to create and enact security plans to protect client data. Pub 4557 is the checklist; Pub 5709 is the how-to for writing the WISP; the PTIN renewal asks about it. |
| IRC §7216 and §6713 | Preparers and their software chain — legally binding | Knowing or reckless disclosure or use of tax return information beyond preparing the return carries criminal exposure (§7216) and civil penalties (§6713). Uses beyond preparation generally require the taxpayer's consent under the §7216 regulations — which is exactly where 'does the AI train on client data' stops being a preference and becomes a compliance question. |
| State breach-notification laws | Your firm — legally binding | All fifty states have breach-notification statutes, and the IRS asks preparers to report data theft to their IRS Stakeholder Liaison. Your incident-response plan has to exist before the incident. |
| SOC 2 (AICPA Trust Services Criteria) | Nobody — voluntary attestation | SOC 2 is not a law and no statute requires software to hold it. It is a CPA-firm attestation that a vendor's controls meet the AICPA's Trust Services Criteria — which makes it the standard evidence you collect to satisfy YOUR Safeguards-Rule duty to vet providers. The obligation is yours; SOC 2 is how a vendor helps you discharge it. |
Sources: IRS "Protect Your Clients; Protect Yourself" (which states that FTC regulations require professional tax preparers to create and enact security plans), IRS Pub 4557 and Pub 5709, 16 CFR Part 314, IRC §7216 and §6713, and the AICPA Trust Services Criteria — read August 28, 2026.
The seven things to actually require
This is the vendor-vetting evidence your WISP should be able to point to — SOC 2 is item one, and the AI-specific items are the ones the certification doesn't cover.
The actual SOC 2 Type II report — not the badge
Type I describes control design at a point in time; Type II tests whether controls operated over a period (typically 6–12 months). The report names the scope, the period, and the exceptions the auditor found.
Red flag: "SOC 2 compliant" on a marketing page with no report available under NDA. Compliance isn't a self-declared state — it's an attestation with a document behind it.
Whether client data trains AI models — in writing
Using return information beyond preparing the return generally requires taxpayer consent under the §7216 regulations. A vendor training foundation models on your clients' returns without consent architecture is your compliance problem, not just theirs.
Red flag: Vague answers like "we use data to improve our services." The answer you need is binary and contractual: client data does or does not train models.
Encryption specifics, verified not asserted
"Bank-level encryption" is marketing. The real answers are: TLS version in transit, what exactly is encrypted at rest and with what, and how credentials and OAuth tokens are stored.
Red flag: Blanket "encrypted at rest" claims with no specifics of scope. A vendor that states exactly where encryption applies — and where it hasn't verified — is being more honest, not less secure.
Data retention, deletion, and export
The Safeguards Rule expects data disposal when no longer needed. You need to know what happens to client data when an engagement ends or you leave the platform — and whether you can get it out.
Red flag: No documented deletion policy, or deletion "on request" with no timeline.
Subprocessors and where data lives
AI products routinely route data through model providers. Each subprocessor is inside your Safeguards-Rule oversight duty, and cross-border storage changes your exposure.
Red flag: No subprocessor list. If the vendor can't say which model providers see client data, neither can you — and you're the one with the WISP.
Access controls and an audit trail
Who at the vendor can see client data, under what conditions, and is access logged? An append-only audit trail turns "we think nobody accessed it" into a checkable claim.
Red flag: Support staff with standing access to client files and no logging. That is one phished vendor account away from your breach-notification obligations.
Breach notification terms — with a clock
Your state-law notification duties run on deadlines. The vendor contract needs a notification commitment fast enough that you can meet yours.
Red flag: "Prompt notification" with no defined hours. Prompt is not a number.
The judgment calls
"The vendor says SOC 2 compliant but won't show the report"
Our pick: Treat it as unverified — ask for the report under NDA
A SOC 2 attestation produces a report: scope, period, criteria, and the exceptions the auditor found. Vendors routinely share it under NDA — that's what it's for. A badge without a report is a claim, not evidence, and the Safeguards Rule puts the vetting duty on you. The same discipline applies in reverse: a report that covers only the marketing site, or a Type I from three years ago, doesn't cover the product carrying your client files today. Read the scope line before the logo.
"They're SOC 2 certified — but they train models on client data"
Our pick: SOC 2 doesn't answer the §7216 question. Ask it separately
SOC 2 attests to security controls against the Trust Services Criteria. It says nothing about whether the vendor's use of return information is one the §7216 regulations permit without taxpayer consent. An AI vendor can hold a clean Type II and still be using client returns to train models in a way that creates consent obligations in your engagement letters. The two questions are orthogonal — a security-certified vendor with the wrong data-use posture is still the wrong vendor for a tax practice.
"We're a two-person firm — do we really need a WISP?"
Our pick: Yes — the requirement doesn't scale down to zero
The IRS's own guidance says it directly: FTC regulations require professional tax preparers to create and enact security plans to protect client data, and the PTIN renewal asks about your data-security responsibilities. Pub 5709 exists precisely so a small firm can write a proportionate WISP without hiring a consultant — the plan for a two-person firm is short, but it has to exist, name a responsible person, and cover the vendors you use. Choosing software with real security evidence is part of what the plan documents.
"What about the AI being wrong, not just leaky?"
Our pick: Different risk, different test — demand provenance, not confidence
Security controls protect data; they don't make outputs true. For AI tax software the parallel question is whether a number the system produces can be traced to its source — the document it came from, the computation applied, the authority behind it — so a reviewer can verify rather than trust. That's an evaluation axis SOC 2 doesn't touch, and it's worth the same rigor: ask the vendor to show, for one real figure, the click-path from output back to source.
"The vendor doesn't have SOC 2 yet — automatic no?"
Our pick: Not automatically — but the burden of evidence shifts to them
SOC 2 Type II takes an audit period plus an auditor, so young vendors often genuinely don't have one yet — deciqAI is in that camp, and our security page says so plainly rather than implying otherwise. What substitutes isn't a promise: it's a completed security questionnaire, specific verified control claims (what's encrypted, where, and what isn't verified yet), a binary no-training answer, and contractual breach-notification terms. A vendor without the certification but with that evidence can be a defensible WISP entry. A vendor with neither is not.
How deciqAI answers this checklistOur product
We hold ourselves to the standard this page sets, which means disclosing the uncomfortable row first: deciqAI is not yet SOC 2 certified, and our security page says so plainly rather than leaving it ambiguous. What we run today and state as commitments: no training on customer data, engagement-scoped data isolation, human approval on outbound actions, an append-only audit trail, TLS in transit, AES-256-GCM for stored credentials, and AWS hosting in the US — claimed exactly where verified and no further. Firms doing vendor due diligence can send their security questionnaire to [email protected].
FAQ
Is SOC 2 legally required for tax software?
No statute requires software to hold SOC 2 — it's a voluntary AICPA attestation, not a law. What the law does require: your firm, as a professional tax preparer, must maintain a written information security program and oversee its service providers under the FTC Safeguards Rule (16 CFR Part 314), and the IRS states that FTC regulations require preparers to create and enact security plans. SOC 2 is the standard evidence a vendor supplies so you can meet that oversight duty.
What's the difference between SOC 2 Type I and Type II?
Type I is a snapshot: an auditor's opinion that controls were suitably designed at a point in time. Type II tests whether those controls actually operated effectively over a review period, typically 6 to 12 months, and reports the exceptions found. For due diligence on software that will hold client tax data, Type II is the meaningful document — and reading its scope and exceptions matters more than the fact of its existence.
What is a WISP and do I need one?
A written information security plan — the document the FTC Safeguards Rule requires of professional tax preparers as financial institutions. IRS Publication 4557 covers safeguarding taxpayer data and Publication 5709 walks through writing the plan; the PTIN renewal asks about your data-security responsibilities. It must name a responsible individual, assess risks, and cover service-provider selection and oversight — which is where your software choices get documented.
Can AI tax software train on my clients' data?
Only within the limits of the §7216 regulations. Use or disclosure of tax return information beyond preparing the return generally requires the taxpayer's consent, with criminal exposure under IRC §7216 and civil penalties under §6713 for violations. So the question to put to any AI vendor is binary and contractual: does client data train models — yes or no, in writing. deciqAI's answer is no: customer data is not used for training, and our security page states it as a commitment.
What security questions should I send an AI tax vendor?
Seven, minimum: the SOC 2 Type II report itself (scope, period, exceptions); whether client data trains models, in writing; encryption specifics in transit and at rest; retention, deletion, and export; the subprocessor list, including model providers; access controls and audit logging; and breach-notification terms with defined hours. Most vendors answer these in a standard security questionnaire — the ones who can't are answering a different way. Educational content, not legal advice; your WISP and engagement letters deserve professional review.
Is deciqAI SOC 2 certified?
Not yet — and we'd rather say that plainly than imply otherwise. What deciqAI runs today: engagement-scoped data isolation, no training on customer data, human approval on outbound actions, an append-only audit trail, TLS in transit, AES-256-GCM encryption for stored credentials, and AWS hosting in the US. Our security page states exactly what we've verified and what we haven't, and firms doing vendor due diligence can send their questionnaire to [email protected].
General information, not legal advice. The Safeguards Rule, §7216 regulations, and state breach statutes apply to your facts in ways a licensed professional should confirm — this page maps the terrain so that conversation starts in the right place.
Useful resources
- IRS: Protect Your Clients; Protect Yourself →
- IRS Publication 4557: Safeguarding Taxpayer Data →
- IRS Publication 5709: How to Create a Written Information Security Plan →
- FTC Safeguards Rule (16 CFR Part 314) →
- deciqAI security page — including what we are not yet →
- AI tax tools that cite their sources →
- How we source our numbers — deciqAI methodology →
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