Companies can write off the upfront cost of purchasing planes, but when it comes to flights on those aircraft, the law limits write-offs to business trips. When executives use a plane for personal purposes, the company can’t deduct that — and the executives are supposed to report the trips on their own tax returns as income received.
“If a personal vacation trip was taken on that corporate jet, the company should avoid taking the business deduction,” Werfel said in a news conference Wednesday. “What we believe is happening is 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 new audit campaign focused on airplanes is just one of many steps Werfel has taken as commissioner to increase scrutiny on high-wealth taxpayers and large corporations. Agency officials have said that they can collect hundreds of billions from tax cheats as long as lawmakers don’t strip the IRS of previously approved funds.
ProPublica highlighted billionaires’ use of private planes to obtain large tax deductions last year in a series of articles about how wealthy people avoid taxes.
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