IRS announces new audit of corporate jets in crackdown on wealthy tax cheats

The IRS is launching a major push to audit corporate jet use in an effort to crack down on wealthy taxpayers who are abusing the perk, officials said Wednesday.

Commissioner Danny Werfel said the agency suspects some people are taking flights and listing them as business expenses when they are, in fact, being used for personal reasons.

He said the IRS has been unable to devote resources to the matter because of budget cuts. But thanks to Democrats’ IRS cash infusion from 2022, he’s now got the money to ramp up audits.

That means leveraging advanced analytics to try to spot patterns that suggest someone is misusing the business tax break.

“Personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin. With expanded resources, IRS work in this area will take off,” Mr. Werfel said.

The tax write-off for private plane use has long irked critics, particularly when it was tweaked in then-President Trump’s 2017 tax cut package.

The IRS says businesses are allowed to take a tax deduction for expenses of maintaining a corporate jet, but they must be scrupulous about subtracting out personal use.

Mr. Werfel’s new push indicates he thinks many wealthy taxpayers are skirting those rules.

“We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law,” he said, promising other announcements to come about similar enforcement actions against the wealthy.

He is fighting hard to defend the cash infusion against Republicans’ calls to claw back the money. Part of his defense is arguing that the money is being spent to pursue egregious cases of tax avoidance.

That includes a spate of audits on large partnerships and a new effort on collecting tax debts from high-income taxpayers.

At the same time, Mr. Werfel has promised that audits for those making less than $400,000 won’t rise above the level they were at in 2018, when they were near historic lows.

That year, the IRS audited just two out of every 1,000 tax returns for those making between $50,000 and $200,000. By contrast in 2010, those making $50,000 to $100,000 were audited at a rate of 7 per 1,000, and those making $100,000 to $200,000 were audited at a rate of eight per 1,000.