NBAA Pushes Back On ‘An Audit In Search Of A Problem’

18

The National Business Aviation Association is questioning the Internal Revenue’s announcement this week that it plans to begin “dozens” of audits involving U.S. business aircraft use. The association notes that, as with any asset, corporate entities that use business aircraft are expected to comply with appropriate Securities and Exchange Commission (SEC) rules and federal tax laws.

Non-business use of corporate aircraft is a sticky point, but NBAA points out that directors of public companies may permit personal use of aircraft as long as appropriate SEC and IRS rules are observed.

NBAA also pointed out that, in some cases, directors will mandate that certain employees travel on company aircraft “out of safety and security concerns.” NBAA President and CEO Ed Bolen said, “For decades, studies have shown that companies utilizing business aircraft to successfully address some portion of their transportation challenges consistently outperform comparable companies without the asset.” He added, “Today’s announcement by the IRS amounts to nothing more than an audit in search of a problem, and an attempt to broadly paint with a negative brush the thousands of U.S. companies of all sizes that rely on business aircraft to effectively compete in a global marketplace.”

Mark Phelps
Mark Phelps is a senior editor at AVweb. He is an instrument rated private pilot and former owner of a Grumman American AA1B and a V-tail Bonanza.

18 COMMENTS

  1. “an attempt to broadly paint with a negative brush the thousands of U.S. companies of all sizes that rely on business aircraft to effectively compete in a global marketplace.”

    That’s exactly what the IRS is doing, just doing as they’re told.

  2. Why not start any “audit” with State and Federal officials first?
    They have the biggest abuse of questionable flights on taxpayer monies.

    • Because then they’d expose the self same people they rely on for their budgets? Never bite the hand that feeds you, ya know?

      • How many city mayors take their families to “trade talks” in Fiji? How many U.S. Senators have take their families on to Vail for the weekend?

        The idea that the same government is going after the validity of citizens that are doing the same thing that they do as “illegal” is just damnable; despicable.

        • Why don’t we start with your buddies on the Supreme Court? Clarence Thomas takes some interesting trips on private jets and private yachts, let’s take a look at his tax returns and the returns of the people paying for his trips. Does he report those trips as income, do they claim those trips as business expenses? Dig into it AJ and let us know what you come up with.

  3. Here’s a contrary thought: Go to any airport near a big college or pro football game, or basketball game, or any ski resort, and notice how many corporate jets are there. They are there primarily for entertainment, with or without potential customers in tow. Why should those bigwigs not have to justify a valid business purpose for those flights, or consider those flights as income to those executives? If you fly your Bonanza to a business meeting and deduct any of the costs thereof, you can damn sure bet the IRS will expect you to document everything.

  4. “Why should those bigwigs not have to justify a valid business purpose for those flights, or consider those flights as income to those executives?” Exactly. BTW, it’s perfectly in line with IRS regs to use a corporate aircraft for personal use. You just have to impute income on your W2 according to the SIFL (standard industry fare level) and pay the tax on that income. Plus, in my experience doing this with my aircraft the SIFL income is much less than the actual operational cost so it’s a great deal. If you’re the CEO of a fortune 500 the median pay is $14.7M per year. You can certainly afford the income tax on the already discounted rate to take the jet to the super bowl or to Aspen. If you take the family to Aspen and call it a business trip, then you’re cheating. I never understand why people complain about a little more IRS oversight, especially when the complaints come from people who are almost guaranteed not the be the target of that oversight. The article says the IRS “plans to begin “dozens” of audits involving U.S. business aircraft use”. They said dozens. Do you think those “dozens” include some guy flying his bonanza to a meeting or Tim Cook and Jeff Bezos?

    • Agreed. However how many politicians use government owned, including military, aircraft for their own use? They go on official business yet the business takes a day or less and they stay for a week and bring friends and family on the airplane with them. How about making them pay for the use of the airplane, at least for the additional people.

      Better yet anyone other than the president on official business flies coach or pays the up charge. If a political party wants to foot the bill then the politicians pay the tax on the benefit. Does the president pay taxes on using AF1 when he goes on vacation? No, we pay the freight.

      The question is how far down this rabbit hole is the IRS willing to go?

  5. A. What else are those 87,000 new agents going to do? There’s certainly not enough tax-dodging billionaires to go around.
    B. When I was a B-52 copilot, I was required to maintain qualification in the T-38, and fly regurlarly including aerobatics, instrument procedures, and cross-country flights. On cross country flights, we were free to choose our destination or multiple destinations, usually over 2 or 3 days. A directive came down that NOBODY was to stop at Peterson Field, Colorado Springs on days when there was a home football game at the AF Academy. Because optics.
    So, basically we could go anywhere we wanted, as long as we didn’t actually want to go there.

  6. Be careful what you wish for! After these IRS agents get through with these “audits”, they could just as easily go after those less wealthy just to justify their jobs.

  7. I don’t get it–an audit reveals tax fraud. Are we really now a country that loves tax cheats? If you don’t like the tax law, great, change it. But you don’t get to break the law.

    Every dollar we give the IRS returns $12 from people and companies engaged in tax fraud that the IRS catches. So, why are we so excited about cutting their budget?

LEAVE A REPLY