The IRS recently released guidance (Revenue Ruling 2023 –19) updating the standard industry fare level (SIFL) rates for calculating the imputed income to service providers using employer-provided aircraft from July through December 2023.
An employer is generally required to impute income to a service provider such as an employee, independent contractor, partner, or board member (hereinafter collectively referred to as an “employee”), who uses an employer-provided aircraft for personal purposes. No imputed income is required for an employer-provided flight for the employer’s business purposes. These flights generally are excludable from the employee’s income as a working condition fringe benefit.
The amount includable in an employee’s income for personal use of an employer-provided aircraft is based on either (a) the fair market value of the transportation at fair market charter rates, or (b) the Standard Industry Fare Level (SIFL) rates. Note that most personal flights are valued using the SIFL rates, which are generally significantly lower than charter rates.
The SIFL rate method generally includes the following three steps:
- Multiply the number of miles for the flight by the applicable “SIFL rates” prescribed by the IRS semi-annually for the period in which the flight occurred.
- Multiply the amount determined in Step (1) by the applicable “aircraft multiple” prescribed in the IRS regulations, based on the maximum certified takeoff weight of the aircraft and the employee’s control or non-control status.
- Add the applicable terminal charge prescribed by the IRS semi-annually for the period in which the flight occurred to the amount determined in Step (2).
The Department of Transportation (DOT) published multiple versions of SIFL rates to account for COVID-19-related government relief received by the airlines. However, the DOT ceased releasing the COVID-19 SIFL rates in the first half of 2023.
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