IRS to ramp up audits of private jet usage

The Internal Revenue Service said Wednesday it is stepping up audits of corporate jets to collect more unpaid taxes as part of a crackdown on wealthy taxpayers.

The tax collector’s office plans to conduct 30 to 40 audits of companies and wealthy individuals who may be flying on corporate jets for leisure purposes to reduce their taxes by treating the trip as a business expense.

IRS officials announced Wednesday that the audit will target aircraft used by large corporations, partnerships and wealthy taxpayers to determine if they are fraudulently designating business trips.

Executives and shareholders who use corporate jets or other assets for personal reasons will be required to report those instances to the IRS as personal income, Service Director Danny Warfel told reporters. .

The IRS will begin conducting these corporate jet audits this spring.

Holly Pass, director of the IRS’ large business division, said the new audit is under the authority of two separate sections of the tax law and Treasury regulations that have special provisions for aircraft: the qualified business use tax law. It is said that it will be carried out.

The corporate jet audit is part of the Internal Revenue Service’s larger effort to go after wealthy individuals and companies accused of dodging taxes, and is part of the first $80 billion funding boost provided in Democrats’ Inflation Control Act. This is a key priority of the Biden administration, made possible by the

Republicans and Democrats agreed to scrap $20 billion of that money in a deal last summer to avoid a national debt default.

“Until the Inflation Control Act was enacted, more than a decade of budget cuts had left the IRS with no choice but to pay for the increasingly complex tools the wealthiest taxpayers use to hide and manipulate their income to avoid taxes. “We were unable to respond to a suite of tools,” the IRS said in a statement. It was released on Wednesday.

The IRS goes after partnerships and “pass-through entities,” a variety of business designations that allow owners to report business income on their personal tax returns.

According to projections, more than $182 billion in personal business income that was supposed to be paid to the government in 2021 was not collected by the IRS. The total tax gap in 2021 is projected to be $688 billion.