SIFL

SIFL

Every six months the IRS determines the level of costs incurred by flying on a corporate aircraft in relation to the cost of a commercial airline, and imputes those amounts to the employee's income for the year. They are based on the following: 

Calculated per person 
Based on statue miles flown using the calculation chosen in Company Data  1 nautical mile = 1.15 statute miles  
Employee status is a factor  
Support
Control employee vs. non-control employee - Important to know the status of employee in order to add them to the data base to ensure accuracy. 
Controlled employee the rate is intended to be approximately double the amount of a first-class airfare. 
Non-controlled employee the rate is intended to be equal to a stand-by coach fare. Aircraft weight is a factor.  
SIFL amount is imputed to the employee, not the amount paid to a company by passenger and/or host - Since the IRS views personal flights on the company aircraft as a fringe benefit the employee pays payroll tax and income tax on the value of the flight (i.e. W-2 or 1099). 
Below is the calculation: 


NOTE: You will want to ensure there is a MGTOW in the aircraft data (in specs tab) or aircraft type data to ensure SIFL will calculate properly. 
General Information
 

Employees - Employees, partners, directors, independent contractors, and certain former employees or business guests of an employee (even if the employee is not on board/recipient of flight) 
Personal use - This is a flight that is not for company business. This may include flights that are business for the passenger (i.e. charitable board meetings), but not for the company.
NOTE: Children under 2 years of age - Are not included in the valuation; be certain to have the birth date in the child's profile. 
Dependent - This is defined by the IRS as marital status, relationship to the dependent, and the amount of support provided. It is recommended for a client that is unsure if a child who is not a minor is still considered a dependent to inquire with their company whether or not the child is considered a dependent. 
Locating SIFL Rates - You can obtain the current SIFL rates from NBAA or from irs.gov (Google IRS SIFL Rates). 
Deadhead/Landing for Fuel or Tech Stop
 - The distance for SIFL are calculated point-to-point despite what happens in-between the segments. 

You enter the SIFL Rates in the SIFL table within FOS. 

The SIFL table contains the monetary values required to calculate the imputed income. You may need to create the first table or you can just copy an existing table (highlight a table and right-click) and thereby alleviate the need for entering some of the information as a majority of the data does not change from one period to the next.


How to enter rates in FOS 
This is an example of the rates: 

Effective Date- The date entered should be the date the rates are effective, not the current date in which you are entering the rates. 

Note: If entering the new rates after the effective date, open and save each trip that has been created previously beginning with trips created on the effective date. This will recalculate the SIFL values.


Purpose section - This section will be used for all SIFL calculations. By default, "Personal" will be selected. The other options are used when you want to link the SIFL rates with a passenger rate. 
Aircraft Multiples section - If you are copying the table from the previous period, the weight factors for Control and Non-Control Employee and the Security factor will carry over. 
Reason field - This field typically does not have any values set. This field is set if the passenger travelling requires some sort of multiple for a SIFL calculation. 
SIFL Rate section- SIFL rates change on a period to period basis. The correct values are entered as cents per mile (0.2144). In the example below, Rate 1 reads 21.44 cents.
When the rates are published they are expressed in dollars. 
Intervals are set by miles and do not normally change. 
The terminal charge is expressed in dollars. 

How to setup the passenger records for employees 

Personal SIFL rate - If the passenger is a friend, spouse or child changes cost to host. You will want to make sure that all of the boxes the host has checked in the Guests Profile as well. 
DO NOT CHECK IF the passenger primarily travels for business.
Check the box if primary travel is personal.  
Employee/Spouse/Dep
 -If an Employee, Spouse or Dependent will need to check this box. 

Note: If a spouse, dependent, + or companions are traveling on board the company aircraft, they are not on business: 
 - They are an employee of the employer 
 - They are traveling for a bona-fide business purpose (see IRS rules and/or check with company advisors). 


Control Employees -Generally Top People in the Company i.e. CEO/CFO Etc. Generally, determined by a specific position/title or owning more than 5% of the corporation. Guests of a control employee would also have this box checked. 
Security- If for personal reasons there is some type of risk for them to fly commercially they are billed at a different rate than a Control Employee - This is not someone acting as security on the flight. If spouse or dependent is included in the "Bona Fide Business-Orientated Security Concerns", you will need to check this box for them as well or if they are traveling with the employee with the "Bona Fide Business-Orientated Security Concerns", but if they are not traveling with the employee an additional study will need to be completed to include them at this rate. 

PAX Setting Examples 

What is a Host in FOS? 
...it is the employee that has a guest on a flight and that will receive the W-2 or 1099 for the flight. The host does not have to be on the flight with their guest to host them.
If the host is always the same for a particular passenger (i.e. spouse) you can indicate this in their passenger profile; however, if it changes you can and the host at the trip and/or leg levels as well. 


How to indicate a personal leg(s) for a passenger within a trip 
If you do not see an explanation for an item in this box, please see the section on passenger records (above) for the definition.


50% Seating Capacity Rule- If more than 50% of the seating capacity is filled with employees traveling on business when the employee or family member boards and deplanes for personal use there would be no SIFL rate applied for the personal use of non-controlled employees and guests. It will charge at the lower non-employee rate for a Control Employee Guest who is not a Spouse or Dependent.
Note the box will not be marked automatically - the user will need to manually check the box if the 50% rule is applicable. 
Note: Seating capacity is the Max number of seats installed on the aircraft at any time or prior to the date of the flight within 24 months; seats that are not legal for takeoff are not counted in this number. FOS does not know the seating capacity within the 24 months of the aircraft; therefore it must be a manual selection 

Recommendation - Do not use this box until the flight log is complete with the confirmed passenger manifest to ensure the 50% rule applies to the trip. 


Direct - This is the default. Direct is from Point to Point by Segments NOT legs. Segments are where you get on and off the plane regardless of where you stop in the middle. 
Each Leg - The calculation is based on each leg the passenger is flying.
Incremental- The Incremental option is used if the employee is flying on business to a specific location but takes a detour for personal reasons. FOS will calculate the difference between the mileage of all the legs and the business legs then use the result to determine the SIFL amount. 

Over 50% Scenario 
You have an aircraft that has the seating capacity of 6. There are 4 passengers traveling on business from San Diego to New York. One of those passengers that are a control employee is taking their spouse on board as a personal guest. The personal guest information would look like: 


You have an aircraft that has the seating capacity of 6. There are 4 passengers traveling on business from San Diego to New York. One of those passengers that are a control employee is taking their friend on board as a person guest. The personal guest information would look like: 


Direct Scenario 
There is a business trip from San Diego to New York and returning the next day. One of the passengers from San Diego would like to take their daughter that is a dependent. On the way to New York, the aircraft will need to stop and pick up another business traveler. This is not a stop in which the personal traveler needs to make. It would look like:


It will then calculate legs 1-2 as though the flight was from KSAN to KTEB; then in leg 3 it will have the KTEB to KSAN calculation as well: 


The total for this passenger for the entire trip would be $3,714.84. The system is charging point-to point by segments NOT legs. 

Each Leg Scenario 
Assigning the passenger to each leg will result in the same calculation 

Incremental Scenario 
An executive flies on the corporate aircraft from San Diego to New York for business. After concluding business, they fly to Toronto, Canada to play golf and returns to San Diego from Toronto. The primary purpose of the trip was business. 
The total mileage for the trip is 4,887.1 miles. If there would have been no personal stop on the trip the mileage would have been 4,861 miles. The passenger is only charged the difference in mileage for the stop in Toronto which is 21.1 miles. 
By clicking the incremental buttons FOS will calculate the difference in mileage for the stop between New Your and San Diego and charge SIFL accordingly. 

Where is the report for SIFL? 
The report is located in the Flight Log group. The description is "Imputed Inc Persnl Trips" and the report file name is perspax.rpt. 
For More Information: 
NBAA aviation taxes website at www.nbaa.org/admin/taxes 
NBAA Ops Service Group at info@nbaa.org or 202-783-9250 

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