IRS Plans Aggressive Audits of Corporate Jet Owners
Audits are on the horizon for corporate jet owners. 99% of America will be unaffected BUT I see this as signaling a more aggressive IRS. While the heading mentions audits of corporate jet usage, I won’t be talking much about the particulars of such audits. Like a canary in a coal mine, these audits of corporate jet usage are a warning that audits are likely going to increase for us all. Here’s why.
IRS Budget Increased – Meaning More Auditors
The Inflation Reduction Act increased the IRS’ budget by a significant amount. Well above prior years. After years of being squeezed, the IRS now fully intends to take advantage of the increase to both upgrade its computers and add more IRS agents. One of the big jobs for these new agents is to increase the audit rate. For many years, American have complained loudly and often that audits only seem to hit low- and middle-class citizens. TIGTA (the Treasury Inspector General of Tax Administration), a government agency, has also been after the IRS for its failure to meaningful audit large companies and wealthy taxpayers.
Stinging from all the criticism (both inside and outside the government), the IRS is now rolling out new initiatives targeting big businesses and wealthy individuals. So, when I say the IRS is targeting corporate jets, what I really saying is that the IRS is planning wide ranging audits targeting particular areas abuse. I linked to the IRS newswire article above and in it the IRS announces other initiatives as well. Beyond the corporate jets, IRS is also targeting large corporations and partnerships. It is also looking into particular tax schemes (which are as varied as specialty beers) using AI (yes, even the IRS has hopped on the AI bandwagon).
On top of that, the IRS is finally getting around to collection from deadbeat millionaires who haven’t paid their taxes. According to the article, the IRS has collected $486 million so far from 1,600 millionaires with a balance due.
So What?
You may be thinking this is great. Finally, the IRS is going after the rich and privileged who have been evading taxes. I agree. Great news that every taxpayer is going to be treated as equals. The same rules for everyone. Unfortunately, there is another side to this. The IRS can’t just throw all the new agents into complex audits of large companies or high-income taxpayers. They have to start somewhere. Which means you can probably expect more audits of low- to middle-income taxpayers.
I think the old saying that a rising tide lifts all boats applies here. With more agents comes more audits and with more audits comes a wider range of taxpayers impacted. So regardless of where you place yourself on the income scale your risk of an audit has likely increased and that will be true for some time due to the budget increases.
Summary
In short, I thought this article was interesting (as it would be a tax nerd) but it made me think about its wider impact. My take is that taxpayers should be careful in this new world of a larger and more well funded IRS. I think it will mean a more aggressive IRS. While you may not be a millionaire or running a large company, you may be impacted. Like tossing a rock into a pond, there will be ripples that spread far and wide and you could find yourself under audit as a consequence.
Regardless of your position in society (rich, poor, blue collar, professional) you should prepare yourself for an audit. Now more than ever. Keep good records. Talk with an accountant if your tax situation is complicated. Be scrupulous about keeping personal and business matters separate. Remember – the IRS is coming out swinging now.
James D. Wade, Esq.
Beacon Tax Advocates, LLC
57 Portland Road, Ste. 3
Kennebunk, ME 04043
207-502-7181
jwade@beacontaxadvocates.com
www.beacontaxadvocates.com