On February 21, 2024, the Internal Revenue Service (IRS) issued a number of updates regarding the use of business aircraft by large corporations, partnerships, and high-income individuals as part of a “campaign” to address issues the agency has identified. announced plans to conduct ten audits. Areas with high potential for non-compliance. The plan follows increased enforcement by the IRS using new funds provided by the Inflation Control Act. Increased scrutiny of the use of business aircraft will have a significant impact on both companies as well as the executives, employees and shareholders who use their aircraft, with many potentially facing liability. there is.
IRS audits focus on ensuring that companies are properly accounting for business and personal aircraft use. In practice, this means that companies are prepared to face greater scrutiny when allocating expenses related to aircraft operations and maintenance, and submit appropriate documentation to justify business deductions. means it is necessary. Failure to properly allocate and account for business and personal travel can lead to increased tax liability and penalties for both businesses and their employees.
what does this mean to you
The IRS noted multiple times in its announcement that accounting for aircraft use is a complex area of tax law. By taking appropriate precautions and ensuring proper records are kept, both companies and their executives can limit their exposure to tax liability even in the face of increased IRS scrutiny. can.
inquiry
If you or your company owns an aircraft, contact David Agee, Michael Cosby, Lana Yaghi, or a member of Husch Blackwell's Business Aviation team to ensure that your previous aircraft use complies with applicable tax laws. We recommend that you confirm that you have done so and that your future use of the aircraft is compliant. Usage accounting remains compliant.