Aircraft Terminal Charge, SIFL Mileage Rates Increase for Second Half of 2014

Author: Rena Pirsos, XpertHR Legal Editor

September 8, 2014

The US Department of Transportation has released the terminal charge and standard industry fare level (SIFL) mileage rates for the second half of 2014. These rates are revised semiannually and are used by the Internal Revenue Service to determine the value of noncommercial flights on employer-provided aircraft under the aircraft valuation method for withholding tax purposes. All the rates have been reduced from those in effect during the first half of 2014.

The following rates apply for the period July 1, 2014 through December 31, 2014:

• The terminal charge is $46.25 (was $45.98 for the first half of 2014).
• The SIFL rates are:
• $0.2530 per mile for the first 500 miles (was $0.2515 for the first half of 2014);
• $0.1929 per mile for miles 501 to 1,500 (was $0.1918 for the first half of 2014); and
• $0.1855 per mile for miles over 1,500 (was $0.1844 for the first half of 2014).

Under the Internal Revenue Code, the value of an employee's business use of employer-provided noncommercial aircraft is a tax-free working condition fringe benefit, but the value of any personal use is subject to federal income and employment (Social Security and Medicare) tax withholding and to federal unemployment tax. If an employee combines a business trip with a personal trip, the employer must withhold on the value of the personal portion of the trip.

Depending on the circumstances of the trip, an employer may either use a general valuation method or the special aircraft valuation method, under which the value of a flight is determined using the SIFL formula. Employers multiply the SIFL cents-per-mile rate for the period of the flight by an aircraft multiple and then add the terminal charge. The aircraft multiple is based on an aircraft's maximum certified take-off weight and differs depending on whether the employee is a control employee.