Initially, there was public attention on the monitoring of private jet usage by celebrities like Taylor Swift.
Now, the Internal Revenue Service (IRS) is intensifying its scrutiny of businesses’ utilization of private aircraft.
The tax agency announced its intention to enhance audits of corporate jets, focusing on how these aircraft are employed by executives for personal purposes and subsequently claimed as tax deductions.
IRS Initiates Audits on Corporate Jet Usage
Leadership within the IRS disclosed on Wednesday that the agency will commence numerous audits concerning the usage of private jets by businesses, particularly scrutinizing personal usage by executives and the associated tax deductions.
This initiative aligns with the IRS’s ongoing commitment to combating tax evasion among high-wealth individuals and businesses that exploit tax loopholes to the detriment of American taxpayers.
Benefiting from substantial new funding as a result of the 2022 Inflation Reduction Act (IRA), the IRS is augmenting its workforce by hiring additional enforcement agents to bolster auditing activities.
In tandem with this endeavor, the IRS is targeting businesses that circumvent tax regulations, including those permitting executives to utilize corporate jets for personal purposes in contravention of tax laws.
Tax Audits Target Corporate Jet Utilization
The audits will concentrate on the utilization of aircraft by large corporations and affluent taxpayers, assessing whether the tax purposes of jet usage are accurately allocated, as indicated by the IRS.
Under the Tax Cuts and Jobs Act, enacted during the Trump administration, provisions were made for 100% bonus depreciation and expense of private jets. This allowed taxpayers to deduct the entire cost of aircraft purchased and put into service between September 2017 and January 2023.
Werfel stated that the federal tax agency will utilize resources allocated from the Democrats’ Inflation Reduction Act to conduct more rigorous examinations of private jet usage. This area has received limited scrutiny over the past decade due to significant funding cuts.
