KYE Tax Governance Pack™ for AI-generated tax positions & filings.
When an AI agent drafts a tax position, a return entry, a transfer-pricing determination, or an advisory memo and that position starts to move toward being filed with a tax authority, advised to a client, or booked as a financial-statement reserve, the consequential moment has arrived. The KYE Tax Governance Pack™ governs that action boundary: it binds every consequential action to a named preparer's authority, records the preparer's due diligence before the action, holds the position advisory until a named signing professional signs off, and seals it into a replay-provable provenance record. KYE Protocol™ governs whether the position may proceed — it does not compute tax, determine the correct tax treatment, or judge whether a position is correct.
AI now drafts tax positions — and the action boundary is where professional liability concentrates.
Generative tax assistants, return-prep copilots, transfer-pricing engines, and advisory drafting tools are producing positions that move quickly toward filing, advice, and the financial statements. The high-value problem is not the computation — it is the action boundary. Three facts converge:
- The consequential moment is the filing, not the draft. A position in a model's output is inert; a position filed with a tax authority, advised to a client, or booked as a reserve is consequential. Professional standards and penalties attach at the moment a position proceeds — exactly where governance is weakest.
- The standards already exist; the enforcement of authority does not. IRS Circular 230's due-diligence and competence standards, the AICPA SSTS, OECD Pillar Two's GloBE rules, EU DAC6's mandatory disclosure of reportable arrangements, UK MTD's digital record-keeping, and SOX §404's tax-provision controls define what is required. KYE Protocol™ governs whether an AI-generated position may proceed under those standards, under whose authority, with due diligence recorded before the action.
- Provenance is now an audit expectation. A tax-provision figure booked under SOX §404, an MTD figure with an unbroken digital link, and a Pillar Two GIR datapoint must each carry documented data integrity and lineage. KYE Protocol™ produces a signed, replay-derivable provenance pin at the moment the action commits.
- This is a governance wedge, not a tax engine. KYE Protocol™ does not compete with the tax-calculation tools. It governs the action boundary they feed — the named-preparer authority + due-diligence + provenance layer the AI tax ecosystem currently lacks.
Survives an examiner or SOX spot check — due-diligenced, signed-off, and derivable from public keys alone.
- Due-diligenced by construction. An AI-generated position that moves toward a filing, advice, or booking must carry a recorded preparer due-diligence result — competence (Circular 230.35), reasonable-basis / substantial-authority (Circular 230.34 / SSTS No. 1), and a reportable-arrangement screen (DAC6 hallmarks + main-benefit test) where applicable. An unscreened, low-confidence, or undisclosed reportable position is refused at the action-admissibility gate.
- Sign-off-gated. A position stays advisory until a named preparer-of-record, engagement partner, or designated responsible tax officer records sign-off. Unreviewed AI-driven consequential actions are refused and routed dual-channel.
- Authority-bound. Every consequential action maps to a recorded named-preparer authority decision — the agent, the position artefact, the intended action, and the named professional under whose authority it proceeds. An AI authorised for one purpose cannot proceed under another.
- Replay-provable provenance. A signed provenance pin binds the model and version, the inputs and pinned source authorities, the due-diligence result, and the authority outcome — audit-grade data integrity a SOX reviewer, an HMRC examiner, or a tax authority can verify offline, against published keys alone, satisfying UK MTD digital links and OECD Pillar Two GIR lineage.
- Framework-anchored. IRS Circular 230, OECD Pillar Two, EU DAC, UK MTD, SOX §404, and AICPA SSTS each map to a control row — with a 90-day attestation cadence.
Every consequential tax action — authority-bound at the action boundary.
One coherent spine governs three specializations — return-prep, transfer-pricing, and advisory-memo — with no parallel packs. Each AI-generated position that moves toward a consequential action flows through the same four rules, on the canonical KYE Protocol™ envelopes.
- 1 — Position proposed. An AI agent produces a tax position, return entry, transfer-pricing determination, or advisory memo that begins to move toward filing, advice, or a booked reserve.
- 2 — Due diligence + authority check. The Action Admissibility™ Gate verifies a recorded preparer due-diligence result (competence + reasonable-basis + reportable-arrangement screen) and the named-preparer authority under which the position proceeds, under the §25 Edge Governance Safety Floor. No due diligence, no authority = no action.
- 3 — Advisory pending sign-off. The position is advisory until a named preparer-of-record, engagement partner, or responsible tax officer records sign-off. Low-confidence or unreviewed positions are refused and routed dual-channel.
- 4 — Provenance pin sealed. The runtime emits kye.purpose.request.v1 + kye.purpose.admissibility.v1 + kye.evidence.decision_map.v1 + kye.evidence.pack.v1 in lockstep, binding the model and version, the pinned source authorities, the named signing professional, and the Authority Finality™ outcome — signed and replay-derivable for a SOX, examiner, or tax-authority spot check.
Bound to the AI tax authority + due-diligence + provenance perimeter.
The pack binds the canonical KYE™ artefact set to the tax professional-standards perimeter. Every claim resolves to a control row on the bound framework — the six regulations are consumed by the rule pack, never re-mapped.
| Framework | Control area | Pack coverage |
|---|---|---|
| IRS Circular 230 | Preparer due diligence, competence, return positions, written advice, sign-off | partial |
| OECD Pillar Two | GloBE effective-tax-rate, top-up tax, GIR data lineage, scope / charging rule | partial |
| EU DAC (DAC6 / DAC7) | Reportable cross-border arrangements, hallmarks, main-benefit test, platform reporting | partial |
| UK MTD | Digital record-keeping, unbroken digital links, API filing integrity | partial |
| SOX §404 | ICFR over the tax provision, management review controls, documentation & data integrity | partial |
| AICPA SSTS | Reasonable basis, disclosure, reasonable inquiry, form & content of advice | partial |
Honest scope. KYE Protocol™ governs the authority, due diligence, sign-off, and provenance of the AI instruction at the action boundary — whether the position may proceed. It does not compute tax, determine the correct tax treatment, run the tax engine, or judge whether a position is correct. Partial coverage means the bound surface satisfies the control area when paired with the firm’s own tax analysis and attestation.
Qualified AI tax partners — apply through the Foundry.
The KYE Tax Governance Pack™ is a §68 sector product productised through the KYE Sector Pack Foundry™ Build tier; commercial distribution is value-based, qualification-gated, and disclosed under NDA to qualified applicants.