A recent article in The Wall Street Journal highlighted the IRS crack down on the personal use of corporate jets by high-income individuals. With millions of dollars in tax deductions at stake, the agency is launching audits to ensure compliance and fairness.
Key Points:
IRS Audits Corporate Jets
The IRS will audit dozens of companies over executive use of corporate jets.
Focus on large corporations, partnerships, and high-income individuals.
IRS Commissioner Danny Werfel highlights a lack of robust record-keeping.
Objective and Scope
Ensuring high-income groups aren't evading taxes on personal jet use.
Initial audits cover multinational corporations, domestic corporations, and complex partnerships.
Follow-up audits will target individuals underreporting personal trips as income.
Broader IRS Efforts
Part of a larger initiative funded by the Inflation Reduction Act.
Increased enforcement on wealthy taxpayers who underreport income or fail to pay taxes.
More audits on large partnerships.
Tax Deductions for Jet Use
Businesses get tax deductions for business-related flights.
Executives often take personal trips on company jets, citing safety and efficiency.
Companies must track and report business versus personal use accurately.
Rising Costs of Personal Flights
Spending on executive personal flights has increased.
Large publicly traded U.S. companies spent $65 million on personal flights in 2022.
Meta and Las Vegas Sands are among the companies with significant spending.
Specific Cases
Meta: Over $24 million spent on personal flights for executives from 2015 to 2022.
Las Vegas Sands: Spent $3.2 million on executive flights in 2022.
Emerson Electric: CEO Lal Karsanbhai repays at four times the standard industry rate for personal trips.
Compliance and Transparency
Executives' personal travel on company jets typically counts as taxable income.
Some companies require repayment for personal trips.
Proper and timely record-keeping is essential to avoid IRS penalties.
The IRS’s crackdown on corporate jet usage aims to ensure fairness and compliance among the nation's wealthiest taxpayers. Companies and executives must maintain accurate records to justify tax deductions and avoid penalties.
Executives looking to optimize their corporate jet and executive perk planning can rely on Mark Sullivan Consulting for expert guidance. With extensive experience in IRS audits and tax compliance, we ensure your records are precise and deductions maximized. Stay compliant and protect your assets by partnering with our knowledgeable team. Contact Mark Sullivan Consulting today to navigate the complexities of executive perks with confidence and ease.
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About the author
Mark W. Sullivan, EA founded Sullivan Consulting in 1998. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.
Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.
Copyright 2024
Mark Sullivan Consulting, PLLC.
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
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Additional references: "Are Executives Abusing Corporate Jets? The IRS Wants to Know." Ashlea Ebeling & Theo Francis, The Wall Street Journal (February 21, 2024)
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