With new AI tools and fresh resources, the IRS is planning to address its concerns surrounding business aircraft deduction noncompliance, Werfel told Congress.
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The IRS is using additional resources and new AI tools as it delves into the possible noncompliance issues with the largest U.S. corporations and partnerships, including in the area of corporate aircraft use, IRS Commissioner Daniel Werfel told lawmakers this week.
During a U.S. Senate Finance Committee hearing on the 2025 budget, as well as the 2024 filing season, Werfel reiterated that the agency is “closely examining potential noncompliance” and had opened audits of more than 75 of the largest U.S. partners that on average have more than $10 billion in assets across industries.
He pointed to the recent announcement of plans to also begin “dozens” of new audits on corporate aircraft involving personal use as “another illustration of how our long-term funding is helping us more fully address high-risk compliance areas.” These audits will focus on aircraft usage by high-income taxpayers, in addition to large corporations and partnerships.
“The IRS has concerns that the use of these jets is not being properly allocated between business and personal activities,” he said. “We are concerned people are using business aircraft for personal use, which means the businesses are taking deductions they may not be fully entitled to.”
He conceded that this is a complex area, and in the past the IRS staff has been stretched thin. “With expanded resources, these aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities,” he maintained.
Finance Committee Chairman Ron Wyden (D-Oregon) acknowledged the new effort “to root out the abuse of tax breaks for corporate jets—high-flying executives who take tax write-offs for personal travel,” and said he believes the IRS should expand this effort to corporate yachts, where “the abuses are even more blatant.”
The notifications of audits surrounding business aircraft use are anticipated to pick up in the next several months. NBAA has been monitoring this effort closely.
IRS Chief Expresses Concern About Bizjet Deductions
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The IRS is using additional resources and new AI tools as it delves into the possible noncompliance issues with the largest U.S. corporations and partnerships, including in the area of corporate aircraft use, IRS Commissioner Daniel Werfel told lawmakers this week.
During a U.S. Senate Finance Committee hearing on the 2025 budget, as well as the 2024 filing season, Werfel reiterated that the agency is “closely examining potential noncompliance” and had opened audits of more than 75 of the largest U.S. partners that on average have more than $10 billion in assets across industries. “We are concerned people are using business aircraft for personal use, which means the businesses are taking deductions they may not be fully entitled to,” he noted.
Werfel conceded that this is a complex area, and in the past the IRS staff has been stretched thin. “With expanded resources, these aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities,” he maintained.
Finance Committee Chairman Ron Wyden (D-Oregon) acknowledged the new effort “to root out the abuse of tax breaks for corporate jets—high-flying executives who take tax write-offs for personal travel.”
The notifications of audits surrounding business aircraft use are anticipated to pick up in the next several months. NBAA has been monitoring this effort closely.