IRS needs resources for corporate jet abuse crackdown
More audits of corporate jets, better service for normal taxpayers. That’s the good-news story the Irs has to tell about how funding the agency benefits the country.
For years, it had been starved of resources, making do with ancient IT, terrible customer service and a shrunken enforcement team, which sometimes allowed brazen tax fraud to run rampant. Then, in 2022, President Joe Biden and congressional Democrats decided to remedy these problems through an $80 billion investment in the agency.
Republican lawmakers have been trying to claw that money back ever since. Meanwhile, right-wing commentators have frightened voters into believing that the $80 billion is being used to hire an army of 87,000 gun-toting IRS agents to bust down the doors of law-abiding, middle-class taxpayers.
It’s all nonsense. If you want to know what the IRS has actually been doing with this money, consider a couple of examples from this past week.
On Wednesday, the IRS announced a program to audit companies for the use (and abuse) of corporate jets. Some have treated flights used for executives’ personal vacations as deductible business expenses — which they are not — to dodge tax responsibilities.
“This is one of many areas that has not been closely scrutinized during the past decade as agency resources shrank,” IRS Commissioner Daniel Werfel said.
The corporate jet enforcement program is part of a broader IRS effort to ensure large corporations, complex partnerships and high-income individuals pay what they legally owe. At the very least, the IRS aims to return audit rates of these groups to their historical levels after many years of decline. Anemic tax enforcement of the wealthy and large corporations has contributed to the government’s funding shortfall as well as perceptions that some don’t pay their fair share.
Execs with private jets have little chance of being confused with the regular, middle-class Americans taught to fear the apocryphal army of IRS agents.
Meanwhile, the IRS is investing in more advanced data-science capabilities to improve decisions about whom to target for audits in the first place. The idea is to avoid pulling compliant taxpayers into the auditing dragnet.
Law-abiding Americans might reasonably worry that additional IRS resources could be deployed against them because audits often conclude that an audited taxpayer doesn’t owe any more money. These “no-change” audits are wasteful for the agency and stressful and expensive for those who endure them.
Also last week, the IRS expanded its “Direct File” pilot program, which lets Americans file their 2023 federal tax return online for free directly with the IRS, rather than through a third party such as TurboTax.
For now, the program is very limited. As of Thursday, it became available to the public in only 12 states for brief windows of time while the agency tests handling heavier volume. It has a live-human chat function, but it can only process simple tax returns (no gig-economy income, no health-premium tax credits).
Still, it’s a step in the right direction and exactly the kind of pro-taxpayer thing the agency should be advertising.
When I was shown a Direct File demo, I was struck by how frequently the software notified taxpayers they might be leaving money on the table because of the software’s current limitations. IRS officials told me that an accurate return is not one that forces taxpayers to pay the highest possible amount, but one in which taxpayers receive everything to which they’re legally entitled.
This approach differs from the punitive image often projected by IRS boosters and critics.The IRS should shout it from the rooftops: tougher on tax cheats, and more helpful for the rest of us.