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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowFirst, there were trackers on Taylor Swift and other celebrities’ private jet usage. Now, there will be more scrutiny on executives’ personal use of business aircraft who write it off as a tax expense.
IRS leadership said Wednesday that the agency will start conducting dozens of audits on businesses’ private jets and how they are used personally by executives and written off as a tax deduction—as part of the agency’s ongoing mission of going after high-wealth tax cheats who game the tax system at the expense of American taxpayers.
The audits will focus on aircraft used by large corporations and high-income taxpayers and whether the tax purpose of the jet use is being properly allocated, the IRS says.
“At this time of year, when millions of hardworking taxpayers are working on their taxes, we want them to feel confident that everyone is playing by the same rules,” IRS Commissioner Daniel Werfel said on a call with reporters to preview the announcement. Tax season began Jan. 29.
“These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities,” he said.
There are more than 10,000 corporate jets in the US., according to the IRS, valued at tens of millions of dollars and many can be fully deducted.
The Tax Cuts and Jobs Act, passed during the Trump administration, allowed for 100% bonus depreciation and expensing of private jets—which allowed taxpayers to write off the cost of aircraft purchased and put into service between September 2017 and January 2023.
Werfel said the federal tax collector will use resources from Democrats’ Inflation Reduction Act to more closely examine private jet usage—which has not been closely scrutinized during the past decade as funding fell sharply in the last decade.
“Our audit rates have been anemic,” he said on the call. An April 2023 IRS report on tax audit data states that “continued resource constraints have limited the agency’s ability to address high-end noncompliance” stating that in tax year 2018, audit rates for people making more than $10 million were 9.2%, down from 13.6% in 2012. And in the same time period, overall corporate audit rates fell from 1.3% to .6%.
Mike Kaercher, senior attorney advisor at the Tax Law Center at NYU said in a statement that the IRS should also revisit how it values personal use of corporate aircraft, beyond just how flights are reported.
“The current rules allow these flights to be significantly undervalued, enabling wealthy filers to pay much less in taxes than fair market value would dictate, and it’s within the IRS’ authority to revise these rules,” Kaercher said.
Werfel said audits related to aircraft usage could increase in the future depending on the results of the initial audits and as the IRS continues hiring more examiners.
“To be clear, that doesn’t mean everyone in a high-income category partnership or corporation is evading or avoiding their tax responsibility,” Werfel said. “But it does mean that there’s more work to do for the IRS to make sure people are paying what they owe.”
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Nice work!!
Don’t mind the open border, runaway inflation or the Biden crime family
I do believe 91 indictments is more proof of a crime family than zero. Or perhaps the MAGA republicans are just inept at proving anything they claim.
well, open border, runaway inflation, and the myth of the Biden Crime Family would not fall within the jurisdiction of the IRS. And soon, perhaps, the latter will not longer be a “thing” as the MAGgots run out of non-felons whose testimony can pass a giggle test, much less any test that would be applied in a Senate Impeachment hearing or any criminal prosecution.
Jordan should be glad no one conducted such hearings on his involvement with sexual predators and the Ohio State wrestling team…those folks were not, unlike the witnesses against the Bidens, making it all up.
What the IRS can and should be doing is more audits. But the last few passes of budget talks have all featured Republican calls to cut IRS funding. The Republicans insist the IRS is coming after the “little person”. Yet pretty much every major audit initiative funded over the past few years has targeted the wealthy whom, as the IRS notes, have seen their audit rates drop over the last decade due to loss of budget to hire the staff to audit the wealthy. Or to make substantial improvements in their IT systems, which would greatly assist the “little people.” The Republican know where the butter for their bread comes from…very wealthy Republican business owners who don’t want the IRS poking around in their business.
In defense of the Republicans, compared to some of the billionaires who do things like buy Supreme Court justices, maybe their idea of a “little person” is someone worth “only” 40-50 million.
The IRS should be doing this in the normal course. Just like business usage of your car or your boat.
I believe many corporations allow their executives to use Corporate Jets for personal use. They calculate the cost at the price of a first class commercial airline ticket for the route flown – which of course significantly undervalues the true benefit of the perk. IRS should change the rules to set the value at what a private charter would cost.
Even that would be a deal for the Executive, since it is considered imputed income.