The U.S. Department of Transportation has revised the Standard Industry Fare Level (SIFL) rates for the six-month period from July 1, 2022 to December 31, 2022. These rates are needed in order to apply the IRS’s aircraft valuation formula to compute the value of non-business transportation aboard employer-provided aircraft and impute the income of the employee as required by the Internal Revenue Service Rules Section 1.61-21(g).
Due to the reduced airline seat miles resulting from the COVID-19 pandemic and government relief to the airlines, standard SIFL rates increased.
To account for this, DOT published alternative rates that take into account government relief received by the airlines. These rates include the (1) unadjusted rates, (2) rates adjusted for PSP grants, and (3) rates adjusted for PSP grants and promissory notes. The IRS has allowed operators to use any of the three published sets of SIFL rates.
The unadjusted SIFL rates for the six-month period from July 1, 2022 to December 31, 2022, are: 0500 miles $0.2417; 501-1,500 miles $0.1843; over 1,500 miles $0.1771; and Terminal Charge of $44.18.
The SIFL rates adjusted for PSP grants for the six-month period from July 1, 2022 to December 31, 2022, are: 0500 miles $0.2460; 501-1,500 miles $0.1875; over 1,500 miles $0.1803; and Terminal Charge of $44.97.
The SIFL rates adjusted for PSP grants and promissory notes for the six-month period from July 1, 2022 to December 31, 2022, are: 0500 miles $0.2562; 501-1,500 miles $0.1953; over 1,500 miles $0.1878; and Terminal Charge of $46.83.
The “aircraft multiples” (listed in Treas. Reg. § 1.61.21(g)(7)), which are determined by (1) whether the income is to be imputed to a control or non-control employee and (2) the maximum certified takeoff weight of the aircraft, have not changed.
If you are an employer and you fly an employee or a non-employee guest or family member on your aircraft, the flight is potentially taxable to the individual receiving the ride. The aircraft valuation formula applies on a per-flight, per-person basis and will be calculated using the distance in statute miles from where the individual boards the aircraft to where the individual deplanes.
Greg has more than two decades of experience working with airlines, charter companies, fixed base operators, airports, repair stations, pilots, mechanics, and other aviation businesses in aircraft purchase and sale transactions, regulatory compliance including hazmat and drug and alcohol testing, contract negotiation, airport grant assurances, airport leasing, aircraft related agreements, wet leasing, dry leasing, FAA certificate and civil penalty actions and general aviation and business law matters.
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