Company supported IFR training dilemma

Scrabo

Scrabo

Pattern Altitude
Joined
Oct 17, 2008
Messages
2,313
Location
PHX
Display Name
Display name:
Scrabo
The son of a co-worker of mine joined an aerospace company recently and discovered they offer a program that will reimbursement a certain percentage of the expenses associated with flight training for the Instrument Rating.
Of course there is some criteria on length of employment etc, but the two points below is where he asked me for help. Personally I am not IFR rated, attempted several times over the years but life (i.e. kids) got in the way, so I would be the wrong person to ask.

The guy (over 350 hrs all VFR ) works in an IT department which to me makes meeting the following criteria difficult….

  1. The alignment of flight training with maintaining or improving the skills necessary for his or her current job (defined business need).

  2. Supports the employee’s career development plan, together with the strategic business objectives of the business unit.
Tough what to tell him, but I also don’t want to kill any opportunity – thoughts ?
 
He should talk to his manager and his HR department.

Those two conditions are pretty standard for reimbursing education and training. Including college tuition and other training. If they have nothing to do with his job, then it is harder for the Company to deduct on expenses with the IRS.

My guess is that training an IT guy to use instruments while flying non-company planes has no business need.
 
JoseCuervo said:
My guess is that training an IT guy to use instruments while flying non-company planes has no business need.
Click to expand...

That's the part I have been trying to get my head around as well.... its open to all departments apparently, even accounting/HR etc .. seems odd to offer something like that, unless they allow use of personal aircraft for business travel - that I don't know.
 
Scrabo said:
That's the part I have been trying to get my head around as well.... its open to all departments apparently, even accounting/HR etc .. seems odd to offer something like that, unless they allow use of personal aircraft for business travel - that I don't know.
Click to expand...

Have him check with his manager and HR, and they will know the process, nothing you can do from outside the company.

Lots of companies "offer to pay for college classes", but, the only ones they can pay for are the ones related to their business need. You can't suddenly want to become a Theater Major and take Acting Classes at the local college when you are in the Accounting Department.
 
having spent time at Boeing, the philosophy is that everyone should understand aviation, regardless of job. atthe time, support was only for the private. don't know what it is now.
 
There's all sorts of pitfalls here...

- Company probably can't deduct the IR under his job role as training for his job. (Company's problem.)
- He can't deduct it unless he can show that flying is part of his job. (And it can't be to qualify for a new job. His problem, but it doesn't sound like he's attempting to deduct the training on his personal taxes anyway...)
- Pro-rata share of the flight costs, since he's a Private pilot. What's the company's "shared purpose" in paying for employee Instrument ratings? (Could create a problem for him and his certificate.)

If I were him, I'd be very cautious of such an offer unless the company is willing to defend both their stance that it's some form of tuition reimbursement and they'll also go to court if someone says he can't take compensation for flying (which includes flight time) as a non-Commercial certificate holder.

Something seems to me like the company WANTS to be nice, but hasn't talked to their lawyers about this. The correct way to do it, would be to simply give him a legal raise (he's then paying for it himself) and/or make the IR a requirement of the job. (They can claim whatever they like in that regard, but they're going to run afoul of other laws...)

Messy. Very messy.
 
"Supports the employee’s career development plan" -- I told him jokingly to say that his ultimate goal is to be a pilot on one of their new G650 :) - fly the chairman about the place !!

Does sound like a legal minefield all the same.
 
I took a community college course for my instrument ground school in the early 90's in Olathe KS. Every other student was a Garmin employee on the companies dime. Made sense to me then since they learned the system where their product was supposed to work. It still makes sense to me. Seems like "improving the skills necessary for his or her current job" would apply if the aerospace company was related to the IFR system somehow/anyhow. JMHO.
 
Um, what does the kid do in IT? That would be very helpful to know....but none the less, he needs to talk to his approving authority (whether it's HR or manager) and let the company figure out if they are going to pay for it.

FrEx: I have a PMP. My company will pay for my annual dues. My boss says "we don't use those skill sets here". He is the approval authority and is on the record as not approving company funds to be expended.
 
jbarrass said:
I took a community college course for my instrument ground school in the early 90's in Olathe KS. Every other student was a Garmin employee on the companies dime. Made sense to me then since they learned the system where their product was supposed to work. It still makes sense to me. Seems like "improving the skills necessary for his or her current job" would apply if the aerospace company was related to the IFR system somehow/anyhow. JMHO.
Click to expand...

I would think that ground school courses offered by an accredited college would be fairly easy for a company like Garmin to justify as "industry" training for employees. It'd be when they paid for flight training that it would get weird.

Another way it could be done is if a company pays for ANY degree program, an aviation degree program is as much a degree program as any, and some include requirements for flight time as part of the curriculum -- which sucks that into "need" for student loans, grants, etc... but those will also have to be, or be partnered with, a Part 141 program for those funds.

Company funds could be used to pay expenses on a credit bearing flight course and the flying required even under 91, in that case. Maybe. In other words, they're paying for the degree requirement not the flights directly.

Most of those programs only require passing grades in courses and not completion of the degree, so there's a possibility -- the "student" drops out after the IR...

Still messy. Wouldn't pass the sniff test if audited, probably.

Around here, Jeppesen has a flight club and subsidizes the costs of operating the aircraft/club. Thus, lower than average rental rates for employees. How they carefully account for that, I have no idea. But it seems legitimate.
 
From the IRS website.

cb067d0500228af181cb9f990b3d912a.jpg



Sent from my iPhone using Tapatalk
 
Well, if aviation is classed as a hobby, he's covered if it has a reasonable relationship to the business. For an aviation company, it does. For his position in particular, it depends in what his position and duties are . . .
 
JoseCuervo said:
From the IRS website.

cb067d0500228af181cb9f990b3d912a.jpg



Sent from my iPhone using Tapatalk
Click to expand...

Uh oh my daughter is in for a surprise. Her employer paid for her MBA fully. Not sure how much this year though. But if she's about to be an MBA she probably knows this, right? Right. :)
 
Would not also be true for any T&E an employee would incur on a business trip.
 
mscard88 said:
Uh oh my daughter is in for a surprise. Her employer paid for her MBA fully. Not sure how much this year though. But if she's about to be an MBA she probably knows this, right? Right. :)
Click to expand...

Pretty sure an MBA degree would add value to the company. Easy to justify.

If she got a Master of Fine Arts in Theater, it might be more difficult.

My MBA was paid by a former employer, but I can't speak to what changes in the tax code have happened since that time.
 
And, the obvious question is how old is this kid?

Assuming he is over 22, (certainly over 18), he should likely figure out how to solve these kind of life / work issues on his own, and not need his dad and dad's friends to research answers for him.
 
denverpilot said:
I would think that ground school courses offered by an accredited college would be fairly easy for a company like Garmin to justify as "industry" training for employees. It'd be when they paid for flight training that it would get weird.

Another way it could be done is if a company pays for ANY degree program, an aviation degree program is as much a degree program as any, and some include requirements for flight time as part of the curriculum -- which sucks that into "need" for student loans, grants, etc... but those will also have to be, or be partnered with, a Part 141 program for those funds.

Company funds could be used to pay expenses on a credit bearing flight course and the flying required even under 91, in that case. Maybe. In other words, they're paying for the degree requirement not the flights directly.

Most of those programs only require passing grades in courses and not completion of the degree, so there's a possibility -- the "student" drops out after the IR...

Still messy. Wouldn't pass the sniff test if audited, probably.

Around here, Jeppesen has a flight club and subsidizes the costs of operating the aircraft/club. Thus, lower than average rental rates for employees. How they carefully account for that, I have no idea. But it seems legitimate.
Click to expand...
JEFA is organized as an independent legal entity, I think as a 501(c)7 (I was there when it was getting created and the lawyers were involved). IIRC, and I probably don't it's been so long, that the company helps finance the airplanes but I think the airplanes belong to the club, not Jepp.
 
JoseCuervo said:
If she got a Master of Fine Arts in Theater, it might be more difficult.
Click to expand...

Depends on if she works in the PR department. LOL

"Nothing to see here, move along..." has to be said convincingly to the Press. Haha.
 
murphey said:
JEFA is organized as an independent legal entity, I think as a 501(c)7 (I was there when it was getting created and the lawyers were involved). IIRC, and I probably don't it's been so long, that the company helps finance the airplanes but I think the airplanes belong to the club, not Jepp.
Click to expand...

Ahh, financing...that makes sense. Many ways to skin the "who's paying for it?" cat.

I just don't think the OP's friend's kid's company is doing it in a way that will work.
 
For the IRS, the training must be in line with your current OR FUTURE position.

In theory, if the company has a flight department the IT kid could train up for transfer to that department.

OTOH, he should not be able to train because he enjoys it. Would be like charging in guitar or drum lessons.

But -- wellness programs can pay for music lessons, gym memberships, heck - I worked for a company that allowed my lawn mowers and maids as wellness.

Never hurts to ask, and as others have said it boils down to getting the right signature on the bottom of the form.
 
>> In theory, if the company has a flight department the IT kid could train up for transfer to that department.

Actually they do, both corporate aircraft like Falcons, Gulfstreams and King Airs, plus a few flying test beds like 757's
 
Scrabo said:
>> In theory, if the company has a flight department the IT kid could train up for transfer to that department.

Actually they do, both corporate aircraft like Falcons, Gulfstreams and King Airs, plus a few flying test beds like 757's
Click to expand...
sounds like Raytheon, but the big office is in Tucson, not PHX.
 
rolivi said:
For the IRS, the training must be in line with your current OR FUTURE position.
Click to expand...

Careful. For the COMPANY taxes this is true.

For personal taxes, training for a job you don't have yet is NOT deductible. You'd have to get it in writing that to keep your current position you must train or you won't meet standards and will be released.

Just a small but important detail for JUST the IRS piece.

Still doesn't cover the Private vs Commercial certificate problem of who's paying for the flights.

There's (at least) three pieces to this as I listed before:

1. Company wants to pay for it - company can deduct training for current or future job training or just "better employees", or they can choose to just pay for whatever they want and not deduct anything at all. Their call, their problem. Should consult their lawyers.

2. Personal taxes. @JoseCuervo posted the screenshot from IRS for that one. Limits on not training for new job you don't have and if reimbursement exceeds a set amount, becomes taxable to the individual. Should consult your own accountant.

3. Private pilot pro-rata share of flight time. Not sure who you'd consult but it's a hot button for FAA after Flytenow. Wouldn't go poking the bear much on this one. If it's not your job to fly for the company -- better be careful about the paper trail that pays for any flight time in your logbook.
 
murphey said:
having spent time at Boeing, the philosophy is that everyone should understand aviation, regardless of job. atthe time, support was only for the private. don't know what it is now.
Click to expand...
You'd think that would be a requirement of FAA employees and managers.
 
I'm surprised about the personal income tax portion. Is that new?

My entire University education was paid for by an employer. I was well aware of the three rules. In fact - my Music Appreciation course required concert attendance and I was able to charge in the tickets because it was 'required for the degree program.'

My degree had nothing to with my job. I worked in the QA Lab doing simple chemistry while I studied Economics. My new job after graduating was IT Manager. So relevant I know. At that time at that company a degree was required for any management positions other than the plant floor.

This was in the late 80's but I don't recall having any reported income as a result of the tuition program.
 
rolivi said:
I'm surprised about the personal income tax portion. Is that new?
Click to expand...

I think it's been there a while, but it used to be a lot cheaper to go to school, so nobody noticed it.

I wouldn't bet any money on that, but I think I recall seeing it before.
 
denverpilot said:
There's all sorts of pitfalls here...

- Company probably can't deduct the IR under his job role as training for his job. (Company's problem.)
- He can't deduct it unless he can show that flying is part of his job. (And it can't be to qualify for a new job. His problem, but it doesn't sound like he's attempting to deduct the training on his personal taxes anyway...)
- Pro-rata share of the flight costs, since he's a Private pilot. What's the company's "shared purpose" in paying for employee Instrument ratings? (Could create a problem for him and his certificate.)

If I were him, I'd be very cautious of such an offer unless the company is willing to defend both their stance that it's some form of tuition reimbursement and they'll also go to court if someone says he can't take compensation for flying (which includes flight time) as a non-Commercial certificate holder.

Something seems to me like the company WANTS to be nice, but hasn't talked to their lawyers about this. The correct way to do it, would be to simply give him a legal raise (he's then paying for it himself) and/or make the IR a requirement of the job. (They can claim whatever they like in that regard, but they're going to run afoul of other laws...)

Messy. Very messy.
Click to expand...
There is no way a pro rata share issue exists in this scenario.
 
Tarheelpilot said:
There is no way a pro rata share issue exists in this scenario.
Click to expand...

Explain why. If a company pays directly for flight time, and has no common interest other than someone is an employee who does not fly airplanes for them... they're compensating a Private certificate holder for flying, and that's a no-no, per all legal interpretations given in the last couple of decades.

I'm not saying I agree with it, I'm just reporting what the letters say.

Magiamele, FlyteNow, the list is getting longer, not shorter, of schemes to allow Private certificate holders to lower their share of the operating expenses, which FAA has made it pretty clear they don't like.

That said, I can't imagine they'll go hunting for companies that do it, or ever know this person did it, unless something else drew their attention first. They have bigger fish to fry.

But in the purest legal sense, I can't think of a way your attorney could make payment for flight time be anything other than payment for flight time, and Private certificate holders may not be compensated for flying in any way, other than some clearly defined carve-outs. "Company paying for flight training not for my job role", isn't one of them.
 
Someone getting free flight training from their employer as a benefit of being an employee is not a fish at all. I have worked at several companies that had programs just like what's described. Our POI knew all about it in every case. They thought it was a great idea. All those damn letters from the chief counsel are just that.... letters. It is a letter showing how the FAA lawyers interpret the regulation and how they intend to enforce it in the future. Someone receiving free flight training as a gift from an individual or employee benefit program is not what the FAA is after. Just because it fits the "letter" of the letter of interpretation doesn't mean it's any real liability.
 
Tarheelpilot said:
Someone getting free flight training from their employer as a benefit of being an employee is not a fish at all. I have worked at several companies that had programs just like what's described. Our POI knew all about it in every case. They thought it was a great idea. All those damn letters from the chief counsel are just that.... letters. It is a letter showing how the FAA lawyers interpret the regulation and how they intend to enforce it in the future. Someone receiving free flight training as a gift from an individual or employee benefit program is not what the FAA is after. Just because it fits the "letter" of the letter of interpretation doesn't mean it's any real liability.
Click to expand...

Doesn't mean it isn't, either. Not until someone ****y at a FSDO decides to make an issue of it. And like I said, I suspect they have other fish to fry.

But tick someone off in some other way, it'll be found, and it'll be in the laundry list of things brought along as ammunition against the pilot before the ALJ.

"Your POI" may have loved it, someone else's POI may not, it's a dice roll.

Compensation is compensation and that one is hard to get around, since there's definitely a paper trail showing the money went directly from the company account, to flight time.

The legal way to do it, is the company should just give the person a raise. It's their paper trail tying it to flight time, that's the real legal problem for the Private certificate holder.

Further up the thread I offered up multiple ways to break that paper trail attaching the two, and there's hundreds more, and a subset of those which even make sense and would hold up under questioning. Like paying for a degree program, even one that requires flight time. Or make the instrument rating a requirement for the position or the next job title or continued employment in the job.

Lots of ways to tackle the legal problem and do it within the rules. A company directly paying for a rating for a private certificate holder, is problematic, in terms of a private certificate holder accepting the offer.

That said, I can't imagine anyone here wouldn't jump on the offer, keep their mouth shut, and hope nothing else happened to bring attention to themselves and how they're paying for flying.

No different than a hooker buying groceries... Haha.
Drug dealers buy gas for their cars, too... LOL.
Nobody notices or looks into where the money came from, unless they get caught.
 
Yeah but even if some arsehole at the fsdo made an issue I would be willing to fight their ass in court. I think I would win too. By the FAA counsel interpretation any thing less than pro rata is compensation. It's total ********. That means every kid at erau on a full ride scholarship is being illegally compensated.

It really comes down to how we view our relationship with the government. personally I'm in the go **** yourself I'll see you in court camp.
 
Tarheelpilot said:
Yeah but even if some arsehole at the fsdo made an issue I would be willing to fight their ass in court. I think I would win too. By the FAA counsel interpretation any thing less than pro rata is compensation. It's total ********. That means every kid at erau on a full ride scholarship is being illegally compensated.

It really comes down to how we view our relationship with the government. personally I'm in the go **** yourself I'll see you in court camp.
Click to expand...

Works if you have lots of money to pay the lawyers.

And before an ALJ on an FAA case? I think the last I heard, your chances of prevailing against whatever FAA says they interpret their own rules to mean, is about 20%.

You get whatever justice you can afford in the US these days. He who dies with the most lawyers on retainer, wins.

Guess how many they have? Heh. You're paying the interest on the loans that pay their paychecks even. LOL.

Helps a little if you're a Senator, or millionaire, from just casual observation of pilots I've seen break the law and have no real consequences from it.

Technically your ERAU example is incorrect. The scholarship pays for an accredited degree. That the degree requires flight time, is immaterial to what the scholarship pays for.

That's how easy it is to break that legal chain.

Any good lawyer can argue either side of that one. Only one will prevail.

If the ALJ reads the words in the regs at face value, they'll likely come to the logical conclusion that compensation is compensation, and a private certificate holder can't accept it.
 
So if he is accepted and starts training, he is meant to claim reimbursement of covered expenses quarterly, so what I am getting from all this discussion is that the IRS would consider any reimbursement as income, but what I am not understanding is how is it any different from being reimbursed for say, an MBA that would be in the $40 to $60K range, or any further education an employee decides to take
 
Scrabo said:
So if he is accepted and starts training, he is meant to claim reimbursement of covered expenses quarterly, so what I am getting from all this discussion is that the IRS would consider any reimbursement as income, but what I am not understanding is how is it any different from being reimbursed for say, an MBA that would be in the $40 to $60K range, or any further education an employee decides to take
Click to expand...

The same rules apply. If your company says that having an MBA improves your job function, then the tuition reimbursement is not taxable to you. Getting an instrument rating when you aren't employed as a pilot isn't necessary for maintaining or improving your current job. It's up to your employer if they want to pay for it, but if they do, it's going to be taxable to you.

You may wish to read IRS pub 970.
 
flyingron said:
The same rules apply. If your company says that having an MBA improves your job function, then the tuition reimbursement is not taxable to you. Getting an instrument rating when you aren't employed as a pilot isn't necessary for maintaining or improving your current job. It's up to your employer if they want to pay for it, but if they do, it's going to be taxable to you.

You may wish to read IRS pub 970.
Click to expand...

He has a meeting with his HR rep on Tuesday , I have passed on the info re the tax situation, so hopefully he can get some official guidance from them.

How much are we talking here for an IFR ticket, $10k ???
 
Well, if an instrument rating makes it more likely that I make it home on Sunday night so I can be in the chair Monday, that's an essential job function.


Sent from my iPhone using Tapatalk
 
Tampico Trauma said:
Well, if an instrument rating makes it more likely that I make it home on Sunday night so I can be in the chair Monday, that's an essential job function.
Click to expand...
You'd have a hard time selling that to the IRS in an audit. That's not the way the tax code is written.

I paid $5000 to PIC for the instructor and course materials. I paid another $300 or so to put the instructor up in the hotel for three days. Figure a couple hundredfor Irwin Gleim and the LaserGrade for the written. Some charts and such probably didn't run it over $6000.
I flew in my own airplane for the insturction, just under 25 hours dual (including the checkride).
 
Again, to the OP, it does not matter what all the experts on the Internet say.

The kid needs to go talk to his boss and his HR manager.

They will give him the company guidance. The company has accountants and attorneys that know how to deal with this stuff.

This kid is not unique, or special.

It is not a major deal.

If his boss and the HR department are good with it, then good for the kid.


Sent from my iPhone using Tapatalk
 
Scrabo said:
He has a meeting with his HR rep on Tuesday , I have passed on the info re the tax situation, so hopefully he can get some official guidance from them.

How much are we talking here for an IFR ticket, $10k ???
Click to expand...

HR departments protect the company, not the employee.

JoseCuervo said:
They will give him the company guidance. The company has accountants and attorneys that know how to deal with this stuff.
Click to expand...

Again, "company guidance" is useless. He should be asking his own professional advisors, financial and legal. The company won't be defending him before an ALJ.
 
You must log in or register to reply here.
Back
Top