Flying Your Aircraft for Business Purpose as an Employee of a Business

ChemGuy said:
Has anyone taken this opinion to a Court?
Just curious as that may be the only way to get this absurdly thought out "opinion" removed without getting the critters in congress to do something about it. :rolleyes2:
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Not that I know of. You can't directly challenge the opinion, because it's just that, an opinion. The only way to "challenge" it would be to get violated and work through the administrative process, then appeal to the federal courts. Better have a mighty war chest for that, though, as you can pretty well bet the FAA will fight. Appeals by right exist all the way to the federal court of appeals. You could buy a pretty nice airplane for what the legal bills would run. Keep in mind that given the deference to the admin agency, the cards favor the house.
 
ChemGuy said:
Has anyone taken this opinion to a Court?
Just curious as that may be the only way to get this absurdly thought out "opinion" removed without getting the critters in congress to do something about it. :rolleyes2:
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Considering alot of congress critters get rides in their "friends" biz jets back and forth to DC several times a year, I, too, am amazed there isn't some carve out of the rules..
 
NoHeat said:
My employer allows and reimburses travel in a private plane and I do it. I must specify the employer as an additional "named insured" on my policy of $1 million or more, and I must provide them documentation of that. I have seen the same requirement with other employers.

When the US govt was my client, they reimbursed me, with no additional insured thing. The US govt will even reimburse for miles on a motorcycle. Search for info on POV "personally owned vehicle" to find more.

It is typical for the reimbursement to be $X per mile or the cost of a commercial air ticket, whichever is less, and the latter had always applied for me.

Don't lie and claim you drove your car as was suggested by someone else in this thread.
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I'm not sure if you meant me or not but if you reread my post I never said lie, I said put in for reimbursement based on the car rate. That is not a lie.
 
My insurance says that flying for my personal benefit even if it is business related is fine (i.e., I could fly myself wherever and even be paid for it). What they didn't cover was anything resembling flying for someone else (holding out, etc..)...
 
jtheune said:
I'm not sure if you meant me or not but if you reread my post I never said lie, I said put in for reimbursement based on the car rate. That is not a lie.
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Specifically: "I would not say anything and simply put in the mileage for a car."

I appreciate the distinction you're making but despite not being technically a "lie", as an owner / officer I would take a pretty dim view of employees adopting that approach ("keep him in the dark because he might not approve") to their dealings with me. Likewise submitting an expense report claiming car mileage when no driving was done.

Maybe I'm the only employer that feels this way, but I think you'd be taking a risk.
 
N801BH said:
Considering alot of congress critters get rides in their "friends" biz jets back and forth to DC several times a year, I, too, am amazed there isn't some carve out of the rules..
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The Magliamele opinion held that a private pilot could always accept no more than pro-rata reimbursement from his passengers, or could be reimbursed by an employer for flying incidental to the business, but not while carrying passengers. The corporate flying you speak of is already done by CPLs. I don't think we'd find any support there, since they are not affected.
 
pj500 said:
You should be able to carry passengers (employees) incidental to the trip? (would you have traveled anyways without them)?
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No, you cannot. See the Mangiamele letter.

Keep in mind the tax rules. Your plane = IRS per-NM rate.
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The IRS has no such rate for personally-owned aircraft. You must use only actual costs backed up by appropriate documentation. If you're going to deduct more than direct costs, you'll need full records of all costs and uses of the aircraft for the full year.

The IRS has a separate rate for planes.
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No, they do not. GSA has a maximum rate for reimbursement of Federal employees and contractors, but that is all it's for -- the IRS neither approves nor accepts it for personal income tax purposes. This has been researched/confirmed by me, AOPA, and two tax professionals with whom I have discussed it.

The IRS rate generally is enough to cover most 4-seat bug smashers up to around a 182. A 172 makes money.
 
flyingron said:
My insurance says that flying for my personal benefit even if it is business related is fine (i.e., I could fly myself wherever and even be paid for it). What they didn't cover was anything resembling flying for someone else (holding out, etc..)...
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Yep, basic policies are termed Business/Personal, if you don't need a special authorization from the FAA for the operation, you are good to go.
 
DJTorrente said:
The Magliamele opinion held that a private pilot could always accept no more than pro-rata reimbursement from his passengers, or could be reimbursed by an employer for flying incidental to the business, but not while carrying passengers. The corporate flying you speak of is already done by CPLs. I don't think we'd find any support there, since they are not affected.
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You would be amazed at how many private jets are flown by PP, IR, rvsm rated private owners...;)
 
N801BH said:
Considering alot of congress critters get rides in their "friends" biz jets back and forth to DC several times a year, I, too, am amazed there isn't some carve out of the rules..
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There is. Check out 91.321. I have to admit I'm not sure exactly what it means, but it's definitely "some carve out of the rules."

(My best guess of what is going on here is that the FEC says "candidates can't go taking free rides from people, because that might be bribery" and congress people say "but I want my buddy to fly me in his shiny bizjet, and he doesn't have a 135 certificate so I can't charge him" so the FAA says "well, fine, you can get paid, but only enough to not make it look like a 'gift.'" How it actually works has to be somebody else's guess. Also not sure if it absolves you of needing a commercial certificate as well, or just the 135 certificate.)
 
tiger said:
Specifically: "I would not say anything and simply put in the mileage for a car."

I appreciate the distinction you're making but despite not being technically a "lie", as an owner / officer I would take a pretty dim view of employees adopting that approach ("keep him in the dark because he might not approve") to their dealings with me. Likewise submitting an expense report claiming car mileage when no driving was done.

Maybe I'm the only employer that feels this way, but I think you'd be taking a risk.
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Part of not saying anything and just putting in for car mileage is to give a company deniability. If the employee seeks reimbursement for travel at a rate less then they spent why is it a problem for the company? Do you vary your reimbursement based on the operating costs of your employee vehicle? If your employee decided to take his truck that gets 10 MPG vs his Pruis that gets 50 do you want to give him more or less? You are reimbursing him at a set rate for a distance traveled. If he misreports the distance traveled then it's a different story. As for the rules do you have corporate rules for all actions that a employee make take in the performance of their jobs? If you don't want them to do something then make a rule saying so, rather then expecting them to ask permission for everything.
 
mcmanigle said:
There is. Check out 91.321. I have to admit I'm not sure exactly what it means, but it's definitely "some carve out of the rules."

(My best guess of what is going on here is that the FEC says "candidates can't go taking free rides from people, because that might be bribery" and congress people say "but I want my buddy to fly me in his shiny bizjet, and he doesn't have a 135 certificate so I can't charge him" so the FAA says "well, fine, you can get paid, but only enough to not make it look like a 'gift.'"
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That's essentially correct. It was written to allow businesses with corporate aircraft to haul candidates and then comply with Federal election law requiring the candidate to pay for the flight. Note that while it waives Parts 121, 125, and 135, it does not provide relief from any Part 61 rule:
(a) As an aircraft operator, you may receive payment for carrying a candidate, agent of a candidate, or person traveling on behalf of a candidate, running for Federal, State, or local election, without having to comply with the rules in parts 121, 125 or 135 of this chapter
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Because Part 61 is not waived, and passengers are being carried for hire, a commercial or airline transport pilot certificate is still required by 61.133, and PP's are prohibited by 61.113, when conducting operations under this section. However, the usual requirement for a 135 operating certificate to haul people for hire like this is waived.

Since corporate operators pay their pilots, their pilots have a CP/ATP, and it's not a problem. It's only when owner/pilots are involved that it's an issue, as many of those hold only a PP. Those owners can still use their plane for such flights, but they must get a CP/ATP to do the flying.
 
jtheune said:
Part of not saying anything and just putting in for car mileage is to give a company deniability.
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That deniability may or may not hold up in court under the attack of a good plaintiff's attorney, which is why companies may be very unforgiving of such actions. So, "don't ask, don't tell" is not always a viable policy in such situations.
 
Ron Levy said:
That's essentially correct. It was written to allow businesses with corporate aircraft to haul candidates and then comply with Federal election law requiring the candidate to pay for the flight. Note that while it waives Parts 121, 125, and 135, it does not provide relief from any Part 61 rule:
Because Part 61 is not waived, and passengers are being carried for hire, a commercial or airline transport pilot certificate is still required by 61.133, and PP's are prohibited by 61.113, when conducting operations under this section. However, the usual requirement for a 135 operating certificate to haul people for hire like this is waived.

Since corporate operators pay their pilots, their pilots have a CP/ATP, and it's not a problem. It's only when owner/pilots are involved that it's an issue, as many of those hold only a PP. Those owners can still use their plane for such flights, but they must get a CP/ATP to do the flying.
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I think the key thing is that carve-out was for the benefit of the politicians, not the operators. Without it, the rides for politicians on corporate Part 91 aircraft would have come to a halt.
 
jtheune said:
If the employee seeks reimbursement for travel at a rate less then they spent why is it a problem for the company? Do you vary your reimbursement based on the operating costs of your employee vehicle? If your employee decided to take his truck that gets 10 MPG vs his Pruis that gets 50 do you want to give him more or less? You are reimbursing him at a set rate for a distance traveled. If he misreports the distance traveled then it's a different story. As for the rules do you have corporate rules for all actions that a employee make take in the performance of their jobs? If you don't want them to do something then make a rule saying so, rather then expecting them to ask permission for everything.
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We don't vary the reimbursement, no. I don't really see the relevance; it's an IRS-approved, agreed rate for driving a personal vehicle, which is an unambiguously honest description of what happened with either the truck or the Prius.

We're a (small) services firm of relatively well-paid professionals. We don't have a 1000-page HR manual telling people they can't set off fireworks in the office, but I think we'd still fire someone who did.

I'm just pointing out that in the real world your advice is risky. If busted submitting expenses on the basis of driving a personal car while secretly flying, a defense of "well, you should have made a rule" (right or wrong) may not improve matters. :)
 
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What Ron said. Also, Dr. Mack has beat this horse to death concerning PP hauling passengers or freight for compensation. The FAA in fact carved out allowing the PP to fly himself and get compensated. Never say never but, I don't think the FAA is ever going to allow PP to carry passengers and be compensated. I will go a step farther. As I told Dr. Mack if pushed by a congressional bill (again will never happen) they will simply rescind the carve out and prohibit even the pilot flying himself to be compensated. The FAA has dug their heels in on this. Personally I think it is the correct call, JMO.

Edit: If an employee did me that way he would be picking his stuff up at the gate carried there by another employee.
 
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DJTorrente said:
I think the key thing is that carve-out was for the benefit of the politicians, not the operators. Without it, the rides for politicians on corporate Part 91 aircraft would have come to a halt.
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Hence my comment.....:idea:
 
And....

It will be VERY interesting to see how the jet that crashed last week in Maryland was being flown and how compensation was split......

And you can bet your ass it... WILL .... come out during all the lawsuits too..:yes:
 
N801BH said:
And....

It will be VERY interesting to see how the jet that crashed last week in Maryland was being flown and how compensation was split......

And you can bet your ass it... WILL .... come out during all the lawsuits too..:yes:
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If the pilot was a CPL and the company owned the airplane, could have very well been just fine if the plane was carrying only company employees.
 
ChrisK said:
I think he's talking about the GSA reimbursement rate:

http://www.gsa.gov/portal/content/100715

While the GSA rate for POVs typically matches the reimbursement rate allowed by the IRS, I can't find anything that specifically calls out the aircraft reimbursement rate. There are a lot of IRS manuals though...
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The IRS will generally accept any commercial aircraft rental as being legitimate. It however, will not allow you to use a personally owned aircraft and "rent" it to the company for what you think it is worth. In that case, you must take the mileage rate (It's just over one buck per NM).

You can of course rent it from an FBO and take the full rental rate, even if it's over the buck per mile.

It's just like if I rent a car it's business reimbursable even if it's over 54 cents per mile, but I can't rent my own car to the company for more than 54 cents per mile.

I'm not saying there aren't ways around it, but they typically won't apply to an employee using his/her own aircraft for an employer.
 
pj500 said:
The IRS will generally accept any commercial aircraft rental as being legitimate. It however, will not allow you to use a personally owned aircraft and "rent" it to the company for what you think it is worth. In that case, you must take the mileage rate (It's just over one buck per NM).



You can of course rent it from an FBO and take the full rental rate, even if it's over the buck per mile.



It's just like if I rent a car it's business reimbursable even if it's over 54 cents per mile, but I can't rent my own car to the company for more than 54 cents per mile.



I'm not saying there aren't ways around it, but they typically won't apply to an employee using his/her own aircraft for an employer.
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No disrespect but to add credence to your reply - what are your relevant credentials or experience? I would like this to be true.
 
Ron Levy said:
No, you cannot. See the Mangiamele letter.

The IRS has no such rate for personally-owned aircraft. You must use only actual costs backed up by appropriate documentation. If you're going to deduct more than direct costs, you'll need full records of all costs and uses of the aircraft for the full year.

No, they do not. GSA has a maximum rate for reimbursement of Federal employees and contractors, but that is all it's for -- the IRS neither approves nor accepts it for personal income tax purposes. This has been researched/confirmed by me, AOPA, and two tax professionals with whom I have discussed it.

The IRS rate generally is enough to cover most 4-seat bug smashers up to around a 182. A 172 makes money.
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Technically, this is correct. However, the IRS seems to accept the GSA rates for reimbursement without complicated and separate justification/accounting for the actual expenses involved. Consistent with this, from what I've seen employers who chose to do so (including .gov), will reimburse up to this rate without withholding taxes or treating the reimbursed amount as income on your W-2. Maybe the employer should have asked me to prove me expenses at least met this GSA rate to post as non-taxable... but they never did. I certainly never had this income reported as taxable on a W-2.

A individual tax return audit will certainly never find it, I suppose corporate one might ask questions? I don't know. As a non-owner in the company I never cared much.
 
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tiger said:
We don't vary the reimbursement, no. I don't really see the relevance; it's an IRS-approved, agreed rate for driving a personal vehicle, which is an unambiguously honest description of what happened with either the truck or the Prius.

We're a (small) services firm of relatively well-paid professionals. We don't have a 1000-page HR manual telling people they can't set off fireworks in the office, but I think we'd still fire someone who did.

I'm just pointing out that in the real world your advice is risky. If busted submitting expenses on the basis of driving a personal car while secretly flying, a defense of "well, you should have made a rule" (right or wrong) may not improve matters. :)
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I guess I did not articulate my point well enough. You're reimbursing someone for traveling a certain distance to perform some work for your company. The cost and method of how they traveled that distance should not matter. It's the distance/reimbursement that matters.
 
jtheune said:
I guess I did not articulate my point well enough. You're reimbursing someone for traveling a certain distance to perform some work for your company. The cost and method of how they traveled that distance should not matter. It's the distance/reimbursement that matters.
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There is really two separate issues.

They have to have a valid basis to reimburse you, and quite frankly they have to fall under one of those to be able to provide that reimbursement to you tax-free. It's reimbursement for operating a vehicle, if you take the bus you can't profit by taking the mileage rate becuase they weren't allow to pay you that -- tax free anyways. That'd be like two people riding in the same car claiming mileage. If the corporate policy permitted such, the IRS could care less, but would expect that income to be treated as wages and taxable.

On the other hand, you have the honesty/communications issue IRS could care less by that

Of course, cars are different than airplanes.
 
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ChrisK said:
No disrespect but to add credence to your reply - what are your relevant credentials or experience? I would like this to be true.
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I'm no expert, so take internet advice for what it's worth.

I've been googling and can't find it, but it was an article by a CPA. Bottom line was if the trip was otherwise justified -- the finding was "an arms length" FBO rental rate for an aircraft met the general requirement for proving the expenses were fair and reasonable. A tougher question to prove by providing my own AC and trying to document it? Never tried.
 
pj500 said:
I'm no expert, so take internet advice for what it's worth.



I've been googling and can't find it, but it was an article by a CPA. Bottom line was if the trip was otherwise justified -- the finding was "an arms length" FBO rental rate for an aircraft met the general requirement for proving the expenses were fair and reasonable. A tougher question to prove by providing my own AC and trying to document it? Never tried.
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Thanks for the answer. If you find the info please post it!
 
pj500 said:
The IRS will generally accept any commercial aircraft rental as being legitimate. It however, will not allow you to use a personally owned aircraft and "rent" it to the company for what you think it is worth. In that case, you must take the mileage rate (It's just over one buck per NM).
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One more time -- there is no IRS-approved/accepted mileage rate for privately-owned aircraft; they allow only documented actual cost.
 
pj500 said:
Technically, this is correct. However, the IRS seems to accept the GSA rates for reimbursement without complicated and separate justification/accounting for the actual expenses involved.
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Two tax professionals I consulted and AOPA's legal and governmental affairs people disagree. I strongly suggest getting professional tax advice before you try what PJ500 suggests as opposed to using actual documented cost of the flight (which is what the IRS will tell you to do if you ask them -- as I did).
 
pj500 said:
I'm no expert, so take internet advice for what it's worth.

I've been googling and can't find it, but it was an article by a CPA. Bottom line was if the trip was otherwise justified -- the finding was "an arms length" FBO rental rate for an aircraft met the general requirement for proving the expenses were fair and reasonable. A tougher question to prove by providing my own AC and trying to document it? Never tried.
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Again, PJ500's advice here is contrary to that of the IRS when asked directly and two tax pros and AOPA when I asked them. Choose wisely.
 
I'm less concerned about reimbursement than just the liability issues and how to resolve those. The reimbursement question seems unclear at best.

I'd be willing to fly without reimbursement in many cases just for the personal time savings. The massive time saved by doing so might eventually get noticed and raise interest in either a full corporate aviation plan (hire a KA or Citation as many oil companies here do) but none of it would ever happen unless the "liability" canard were addressed.

So I am interested in various reimbursement scenarios because they may arise later, but I'm more interested in how you all managed to knock your companies off the "nope... Liability" position. Obviously many companies just absolutely will not budge yet others shrug and essentially say add us to your policy. What a gulf between those positions!

Thanks for a great thread so far.
 
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petrolero said:
I'm less concerned about reimbursement than just the liability issues and how to resolve those. The reimbursement question seems unclear at best.



I'd be willing to fly without reimbursement in many cases just for the personal time savings. The massive time saved by doing so might eventually get noticed and raise interest in either a full corporate aviation plan (hire a KA or Citation as many oil companies here do) but none of it would ever happen unless the "liability" canard were addressed.



So I am interested in various reimbursement scenarios because they may arise later, but I'm more interested in how you all managed to knock your companies off the "nope... Liability" position. Obviously many companies just absolutely will not budge yet others shrug and essentially say add us to your policy. What a gulf between those positions!



Thanks for a great thread so far.
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It should be relatively easily addressed with insurance. Problem is getting someone dedicated enough to make the necessary calls and dig deep enough to sort it out. Basically, someone who can get past the initial "LIABILITY!!!" reaction. In a larger company, much easier said than done.
 
If you have a good relationship with your boss, you may get a "do what you want, but just don't tell me" sort of response...

What you do next depends on how you weigh the risk/reward.
 
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petrolero said:
............ but I'm more interested in how you all managed to knock your companies off the "nope... Liability" position. Obviously many companies just absolutely will not budge yet others shrug and essentially say add us to your policy. What a gulf between those positions!

Thanks for a great thread so far.
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The same issue arises in the parts side of aviation things too.....It is a ingrained corporation liability culture that has festered over the decades and grew legs of its own until everyone in those businesses are trained to say NO.

For instance... You can walk into any of the thousands of NAPA ( National Aviation Parts Assoc) ;) stores around the world and try and buy a GE 4509 light bulb... You say it is for a farm tractor and they will sell it to ya.. but tell them it is for a plane and they will promptly kick you out of the store while screaming NO...

Or.. Take my experimental that is powered by a Ford racing engine.. When it was on display at Oshkosh at the EAA's Airventure ( which Ford is the major sponsor of)... My plane sat just a few hundred feet from the Ford display building while the Ford tri motor flew overhead all week...

Probably tens of thousands of people had viewed it so far that week and this was just Wed of a 7 day show. Also, people dress very casually and when a couple of "suits" walked up and started asking questions I became curious... Now, keep in mind I had already had a few well dressed guys and gals show up a day or so earlier but they turned out to be CNN and NBC producers and they asked if the plane could be in their backdrop / fade in- fade out shot for their live feeds...

So, fast forward a couple of hours and these "suits" come back demanding I remove my plane from the EAA grounds... Seems they were from the Ford legal dept and they absolutely did NOT want Ford associated with any kind of aviation reference.... :mad2::mad2::mad2:

So, here is a company that sponsors the event, had built 10's of thousands of bombers for WW2 and now they have their panties in a wad over one guy with a Ford motor in an experimental plane... Long story short,, I told them to *uck off and I not only had the top cowl off to display the motor, I removed the bottom one too to give all the people a better look at the Ford motor..... They did walk past several more times during the show but never had the balls to confront me...:D

Another example... The big speed shop retailers like Summit racing and Jegs will sell you parts for 300MPH dragsters every day of the week.. Those will kill you faster then a experimental plane ... But , just call up and try to order a trick part and tell them its for a plane and they will hang up the phone in 1.2 seconds.... Go Figure...:confused:

Take away message is .... Remove the perceived liability stigma and the world will be a better place.. IMHO..
 
Every time a company builds a product they carry the risk that the product might fail and they will somehow be held responsible. This risk is a constant worry and frequently cannot be "insured" away. Companies have gone bankrupt from these risks.

Its easy to argue that the ability to sue should be reduced or eliminated but caution flags come up. The fact that that a company CAN be held liable for its product failing MAKES that company more careful!

These inescapable facts make product liability part of a capitalist system. A system that, in spite of not being perfect, is still the best anyone can come up with.
 
petrolero said:
I'm less concerned about reimbursement than just the liability issues and how to resolve those.
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As I mentioned, to fly my plane for business travel, my employer requires that I include them as an additional Named Insured on my liability policy of $1 million. I know another employer with a similar requirement.

I am also required to provide copies of my pilot cert, medical cert, and aircraft cert of airworthiness so that my employer can verify that I am at least complying with those FARs. I am also not allowed to fly an experimental aircraft, which is unfortunate but understandable.

Maybe you could propose similar requirements for yourself to your employer's risk management person.

Sometimes, but not always, listing a Named Insured is also accompanied by an indemnity agreement. I have none with my employer, for travel, afaik.

I have several other additional named insureds on my policy, including the city that rents me a hangar and the type club that provides me recurrent training. I'm required to list them as named insured on my policy and provide them documentation of that; otherwise they would refuse to sell me their service.

The US govt does not require its employees or consultants to list uncle sam as a named insured afaik. In that way, they are different from my employer.
 
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