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The Internal Revenue Service (IRS) has announced plans to audit the personal use of corporate jets, as part of a broader push to target tax evasion among the wealthy. The IRS will use funds from the Democrat-backed Inflation Reduction Act to boost enforcement efforts, with IRS Commissioner Danny Werfel stating the audits will help ensure high-income groups meet their tax obligations. The IRS has used funds from the same act to collect over $482 million in unpaid taxes from 1,600 millionaires and is also working to improve taxpayer services and digitize historical paper documents.
IRS Auditing Corporate Jet Use for Tax Compliance
The Internal Revenue Service (IRS) announced on Wednesday plans to commence a series of audits scrutinizing the personal use of corporate jets. This move is part of the IRS’ intensified enforcement to ensure tax compliance.
This initiative is a function of the Biden administration’s Inflation Reduction Act, which is aimed at penalizing affluent tax evaders, while Republicans strive to reduce the agency’s funding.
“Our goal is to ensure high-income groups are fulfilling their tax obligations. The use of advanced analytics provided by the Inflation Reduction Act will facilitate this process,” explained IRS Commissioner Danny Werfel.
Approximately 10,000 corporate jets operate in the US. These jets qualify for significant business tax deductions, but only for business travel. The IRS aims to establish if personal trips, such as CEO’s vacations, are incorrectly claimed as deductions and whether personal use of corporate jets is correctly added to income.
Modernizing the IRS and Enhancing Taxpayer Services
This is part of a broader endeavor to modernize the IRS. Utilizing funds from the Inflation Reduction Act, the IRS has successfully collected more than $482 million from defaulting millionaires.
Furthermore, the IRS is working to enhance taxpayer services by employing additional staff to answer calls from taxpayers and launching a free, direct tax filing service, Direct File.
The IRS is additionally undertaking the digitization of over 1 billion paper documents currently stored across IRS campuses. This move will advance the agency’s technology to handle paper tax returns more efficiently.
Republican Actions Towards IRS Funding
The Inflation Reduction Act, passed in 2022 without Republican support, allocated about $80 billion to the IRS for a decade. The administration affirmed that this won’t result in tax increases for those earning less than $400,000 annually.
Nevertheless, Republicans have expressed concerns that these funds might be used to harass middle-class taxpayers, and have attempted to retract the funding. Despite these efforts, the Democrat-controlled Senate has maintained most of the allocation, except for $20 billion conceded in a debt ceiling deal and an accelerated cut to avert a government shutdown.
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