Where a company aircraft is used
for personal transportation of an employee, the
employee is generally taxed on the value of the
use of the aircraft. Under the general rule, the
employee is taxed on the charter value of the
transportation. As an alternative, the IRS rules
allow the use of the SIFL method.
Under the SIFL method, the value
of the use is computed by reference to the
SIFL (Standard Industry Fare
Level) Rates. These rates are published every
6 months by the IRS. The SIFL value is adjusted
by the Aircraft Multiple,
which varies depending on the maximum certified
gross take-off weight of the aircraft and upon
whether the employee is a "control
employee" or not. The adjusted value is then
increased by a Terminal Charge,
which is also published by the IRS every 6
months. Below is an example of a SIFL computation
for a 750 mile flight by a control employee in a
light business jet:
SIFL Rate Value
First 500 Statute Miles X 18.91¢ = $ 94.55
Next 250 Statute Miles X 14.42¢ = 36.05
Subtotal = $130.60
Aircraft Multiple X 300% = $391.80
Terminal Charge + $34.57 = $426.37
Helpful rules may apply where
over 50% of the seating capacity is filled with
business travelers, where the trip is partly for
business purposes or where a spouse is
accompanying the employee on company business.
Also, the mileage is computed by taking the
shortest distance between the two points, not the
distance actually traveled. These distances can
be computed using a free online service such as
the Great Circle
Mapper. The
SIFL rules are contained in IRS Reg. 1.61-21(g).
The payroll tax rules are discussed in the excerpt from IRS Publication
15-A. |