Jet travel as a regular corporate business expense is going to increasingly be subject to review by the Internal Revenue Service, according to a just-released announcement by the agency.
“Aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities,” IRS Commissioner Daniel Werfel remarked to reporters in disclosing that the agency will begin auditing jet travel deductions.
The IRS has raised the possibility that jet travel expenses declared as legitimate business expenses may, if used for personal reasons, be illegal. “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,” said Werfel.
The audits, which are set to begin later this spring, will be advanced in pursuance of a tax code section centered on jet travel as a business expense.
The jet travel deductions, notes The Hill newspaper, is part of a wider effort on the part of the IRS to “go after wealthy individuals and businesses who are allegedly skirting their tax bills.”
While the IRS allows for deducting the initial cost of a corporation purchasing a plane, allowable deductions are more restrictive when it comes to the actual use of those vehicles.
“If a personal vacation trip was taken on that corporate jet, the company should avoid taking the business deduction,” said Wefel.
“What we believe is happening is that there’s not enough robust record-keeping going on, and there is systemic overstating of these business deductions, and that’s what we’re looking to tackle.”
The IRS jet auditing effort, notes the Washington Post, “is just one of the many steps Werfel has taken as commissioner to increase scrutiny on high-wealth taxpayers and large corporations.”
Deducting corporate jet travel has been a heated subject for tax reformers who have contended that corporate leaders have for years abused the system.
Last year the site ProPublica, after conducting an extensive investigation of the practice, declared: “While the tax deductibility of private jets isn’t the most important feature of U.S. tax law, the fact that billionaires’ luxury rides come with missions in tax savings says a lot about how the system really works.”
In announcing the jet travel audits, Werfel also remarked that IRS is “adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaire, pay what is legally owed under federal law.”
In an ominous sentence, depending upon one’s point of view, Werfel added: “The IRS will have more announcements to make in this important area.”
By Garry Boulard
