I.R.S. to Crack Down on Corporate Jet Users Who Abuse Tax Code

The News

The Internal Revenue Service said on Wednesday that it would begin cracking down on corporate jet owners that abused the tax code by claiming millions of dollars in deductions on airplanes that were sometimes being used for personal travel.

The scrutiny of corporate jet use will involve new data analytics tools, which the I.R.S. has been developing with the $80 billion in funds it was granted through the Inflation Reduction Act of 2022, to determine when executives or other company officials might be using corporate planes for vacations and private trips. The agency plans to begin dozens of new audits that will focus on large companies, partnerships and wealthy taxpayers.

“These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities,” Daniel Werfel, the I.R.S. commissioner, said in a briefing to announce the initiative.

Why It Matters

The agency’s focus on corporate jet use is taking place as it is under pressure to show that it’s making good use of the infusion of funds it was given by Congress. Lawmakers have already agreed to take back $20 billion of the $80 billion that it received, and Republicans in Congress, who have for years tried to starve the I.R.S. of resources, have been trying to rescind more of its money.

The Biden administration estimates that nearly $700 billion per year of tax revenue that is owed to the federal government goes uncollected. It has pledged to chip away at that so-called tax gap with more audits of companies and the rich.

Last month, the I.R.S. said it had collected $482 million from 1,600 millionaires since it ramped up its enforcement efforts.

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