This was demonstrated 100 years after Clemens died when an employee of a museum dedicated to him was found guilty of fraud. She was forced to repay taxes on the money she had stolen.

This week the US Internal Revenue Service (IRS) announced plans to start audits on dozens (its figure) of business aircraft involving personal use. It says these will be focused on aircraft used by large corporations, large partnerships and high-income taxpayers.

The agency is focusing on business deductions for aircraft expenses. These are allowed if an aircraft is used for business purposes. However, if the aircraft is also used for non-work reasons it can affect the company’s right to deduct some costs. The IRS says that record-keeping can be challenging.

“Personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin,” said Danny Werfel, IRS commissioner, in a press release focused on corporate jets. “With expanded resources, IRS work in this area will take off. These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities.”

It is not just the IRS. The Federal Aviation Association is also strongly opposed to business jets flying under radar.

The IRS says it can invest more resources into investigations thanks to funds from the Inflation Reduction Act. It says it could hire extra tax inspectors to focus on aircraft if it finds companies have been over-claiming.

“We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law,” said Werfel.

While no one suggests that business jet owners should avoid paying the correct amount of tax they owe, the National Business Aviation Association (NBAA) and others have questioned the tone of this campaign.

“Today’s announcement by the IRS amounts to nothing more than an audit in search of a problem”

“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 US companies of all sizes that rely on business aircraft to effectively compete in a global marketplace,” said Ed Bolen, president and CEO, NBAA. “It is difficult to understand why the agency is suggesting that these companies – some of the most respected, well-managed businesses in the world – are not in compliance with applicable tax laws.”

The NBAA points out that directors at publicly traded companies routinely approve how staff use aircraft. Some businesses also require key employees to fly on business aircraft for safety and security reasons.

“One cannot say with any certainty that flygskam [flight shame] and heightened IRS scrutiny of corporate jet usage are directly connected – Aerlex has represented clients in IRS audits of their business jet ownership that occurred long before Greta Thunberg came on the scene – but I cannot help but feel that the IRS is responding, in part, to all the attention that has been given to high-profile private jet owners in recent years,” says Stephen Hofer, president, Aerlex Law Group.

As anyone who has walked through the cloud of mint watermelon fumes left by a vaper knows, there can be smoke without fire.

As anyone who has walked through the cloud of mint watermelon fumes left by a vaper knows, there can be smoke without fire.In 2017 reporting following the so-called Paradise Papers leaks was very critical about aircraft imported into the Isle of Man (it also looked at other offshore transactions in less humid islands like Antigua, Barbados and others).

The Isle of Man Government proactively invited the UK Treasury to review the processes used by its Customs and Excise regarding VAT treatment of aircraft and yachts. Two years later, the UK Treasury said it had found no specific cases of wrongdoing but did make some recommendations about monitoring deals which have been accepted and incorporated.

“Business aircraft owners should consider auditing their previous deductions for compliance with the applicable tax laws, analysing the after-tax value of deductions against the potentially high cost and invasiveness of an IRS audit, and seeking advice from professionals involved specifically in business aviation taxes to avoid errors in deducting expenses for personal use of, and aircraft depreciation deductions pertaining to, their aircraft,” says David Mayer, partner, Shackelford, Bowen, McKinley & Norton.

“Put your IRS auditor’s hat on before the IRS auditor arrives at your door.”

Aerlex’s Hofer agrees. “Business jet owners would be well advised to take this as both an advance warning and a wake-up call. Now would be a very good time to re-examine your business jet ownership and usage, both at the corporate accounting and flight department levels. Consider taking a careful look at your record-keeping and accounting for your airplane, both retrospectively and prospectively,” he says. “Put your IRS auditor’s hat on before the IRS auditor arrives at your door. Do an internal audit of the deductions you’ve taken and are taking, the expenses you are booking, and make certain you are comfortable that what you’ve recorded would pass muster if the folks from the IRS actually do show up.”

There is a definite advantage in getting ready before the IRS knock on your hangar. To update another of Clemens’ famous tax sayings: There is never a convenient time for tax audits, colonoscopies or root canals.

*He changed his name to Mark Twain for tax reasons.

The post When the IRS comes knocking for business jets appeared first on Corporate Jet Investor.

Monkarsh spent a decade with International Lease Finance Corporation (ILFC) – one of the world’s leading aircraft leasing companies. From 2005 to 2009, he was the lead attorney in all of the company’s equipment acquisitions, including purchase contracts for more than 120 new Boeing and Airbus aircraft. He was also lead attorney in more than 100 equipment leases and in multiple litigation matters, including customer bankruptcies, collections, and equipment repossessions.

Monkarsh began his career as an associate attorney at Gibson, Dunn & Crutcher in Los Angeles. Subsequent positions took him to Europe, where he first became involved in the aviation industry, serving initially as senior counsel at aircraft manufacturer Avions de Transport Régional (ATR). He later served as vice president, Legal, at Aercap Holdings, today the world’s largest independent aircraft leasing company.

“I am very pleased to be making this significant announcement about the expansion of Aerlex Law Group’s legal team. Brian’s impressive experience representing commercial aircraft manufacturers and leasing companies on an international level adds another dimension to Aerlex Law Group’s aviation practice.”

Stephen Hofer, president of Aerlex said: “I am very pleased to be making this significant announcement about the expansion of Aerlex Law Group’s legal team. Brian’s impressive experience representing commercial aircraft manufacturers and leasing companies on an international level adds another dimension to Aerlex Law Group’s aviation practice. His unique understanding of that segment of the industry gives us the capability to serve commercial aviation clients and also brings added benefits to the owners and operators of business aircraft who have traditionally constituted our core clientele.”

Aerlex Law Group, a law firm specialising in aircraft acquisition and ownership, has successfully managed more than $4 billion in aircraft transactions and represents clients worldwide in all aspects of business aviation law.

The post Brian Monkarsh joins Aerlex Law Group appeared first on Corporate Jet Investor.

Richard Pearson.

Richard Pearson has joined Aerlex Law Group, a specialist aviation law firm based in Los Angeles as international counsel.

Pearson has been an aviation lawyer for almost 25 years acting for most owners and banks. He has worked in both the UK and France – where he founded the Paris office of Stephenson Harwood. As well as aviation he has also been involved in ship and superyacht finance.

Founded at Santa Monica Airport in 2005 by Stephen Hofer, Aerlex’s client list includes prominent actors, actresses, producers, directors and studio executives, muscians, professional athletes, as well as companies, airliners and charter companies.

“I am tremendously excited to join one of the world’s leading law firms in the aviation sector,” said Pearson. “Recent significant investments in the general aviation industry appear to confirm the signs of renewed confidence in the sector and I look forward to working with Aerlex’s existing clients, as well as continuing other long-established relationships in the industry.”

Hofer, president of Aerlex added: “Over the years, Aerlex has handled aircraft transactions involving clients on every continent except Antarctica. We’ve represented sellers and buyers from more than 30 countries. Given the worldwide nature of our practice and the growing reach of business aviation, it makes good sense to welcome a lawyer with years of experience and expertise in the international arena, particularly in Europe and the Middle East. We believe Richard Pearson will enable Aerlex to further broaden its global client base in both the private and commercial aircraft and ship practice areas and we welcome his arrival.”

The post Richard Pearson joins Aerlex Law Group appeared first on Corporate Jet Investor.