charging $ for part 91

[falcondrivr]

is there available, an if so where can i find, the faa guidance that lists specifically what a part 91 passenger can be charged for a flight before it becomes a part 135 flight. (fuel etc.)
thanks.

 

[Mercury]

Not sure where to find specific guidance but I know that we are under alot of scrutiny right now (from the legal and acct depts.) to verify and state a business purpose vs. personal use for each and every passenger on each leg. I dont fully understand the process yet (our flight coordinator handles this) but it has to do with SIFL rates and executive perks, fringe benefits etc. After a fixed dollar amount, it starts to affect the execs total compensation package. (IRS stuff)

Sorry for mediocre explanation... I only know enough to be dangerous.

 

[sydeseet]

Not sure where to find specific guidance but I know that we are under alot of scrutiny right now (from the legal and acct depts.) to verify and state a business purpose vs. personal use for each and every passenger on each leg. I dont fully understand the process yet (our flight coordinator handles this) but it has to do with SIFL rates and executive perks, fringe benefits etc. After a fixed dollar amount, it starts to affect the execs total compensation package. (IRS stuff)

Sorry for mediocre explanation... I only know enough to be dangerous.

We just got the same email from corporate accounting (lovingly known as the company Tax-Man). Our coordinator handles it as well. I wonder how many of our products we sell each year just to cover tax BS like this. Rant complete.:smash:

 

[Hawker800]

Check part 91. Subpart F if I remember correctly. Pretty much sums it up. Be very carefull with this.

 

[7KCAB]

Subpart F, 91.501 (c) states what you can be reimbursed for. Basically it comes down to twice the fuel cost for a trip plus a few other things.

However, it only applies to:

91.501 (a) This subpart prescribes operating rules, in addition to those prescribed in other subparts of this part, governing the operation of large airplanes of U.S. registry, turbojet-powered multiengine civil airplanes of U.S. registry, and fractional ownership program aircraft of U.S. registry that are operating under subpart K of this part in operations not involving common carriage.

If this subpart can apply to you then the following applies as well:

91.501 (c) (1) A time sharing agreement means an arrangement whereby a person leases his airplane with flight crew to another person, and no charge is made for the flights conducted under that arrangement other than those specified in paragraph (d) of this section;

and paragraph (d) says:

(d) The following may be charged, as expenses of a specific flight, for transportation as authorized by paragraphs (b) (3) and (7) and (c)(1) of this section:
(1) Fuel, oil, lubricants, and other additives.
(2) Travel expenses of the crew, including food, lodging, and ground transportation.
(3) Hangar and tie-down costs away from the aircraft's base of operation.
(4) Insurance obtained for the specific flight.
(5) Landing fees, airport taxes, and similar assessments.
(6) Customs, foreign permit, and similar fees directly related to the flight.
(7) In flight food and beverages.
(8) Passenger ground transportation.
(9) Flight planning and weather contract services.
(10) An additional charge equal to 100 percent of the expenses listed in paragraph (d)(1) of this section.

Notice there isn't specific mention of pilot cost - that's (10) is supposed to help with. We fill out a form that lists these items line item by line item every time we do a flight such as this for backup in addition to the regular daily flight log. Also notice that fuel costs being as high as they are these days actually HELPS! This was set up as a way not to be able to charge the full operating cost of an airplane.

Also there was a good article in B&CA a month or two ago along these lines as well.

 

[ackattacker]

large airplanes of U.S. registry, turbojet-powered multiengine civil airplanes of U.S. registry, and fractional ownership program aircraft of U.S. registry that are operating under subpart K of this part in operations not involving common carriage.

Supposedly the NBAA holds an exemption allowing this section to be applied to smaller, non-turbojet powered airplanes and this exemption is extended to members of NBAA.

 

[MikeN]

charging for P91

is there available, an if so where can i find, the faa guidance that lists specifically what a part 91 passenger can be charged for a flight before it becomes a part 135 flight. (fuel etc.)
thanks.

Definitely be very careful about this. There are some very limited options under 91.501. Here's a simple explanation of the common ones. An aviation attorney really should be consulted prior to engaging in any cost reimbursement. It's our tickets on the line if we're conducting illegal 135.

Timeshare agreement, demo flights - cost reimbursement limited to the items in 91.501(d) - actual costs, not estimates. To add to your company's normal tax headaches, these flights are viewed as commercial by the IRS and the costs are subject to Federal Excise Taxes.

If the travel is incidental to and within the scope of the company (e.g., employees of a 100% owned subsidiary of parent corp traveling for business) can enjoy 91.501(b)(5) which allows full cost reimbursement. This option cannot be used for any personal flights (e.g., CEO can't pay company for vacation trip)

Large Aircraft are subject to Truth-in-Leasing requirements (FAR 91.23).

NBAA has tons of resources for Members at nbaa dot org / taxes www.nbaa.org/taxes.

Someone else posted about the NBAA small aircraft exemption, which allows companies operating aircraft less than 12,500 to engage in these options as well. There are some requirements associated with the exemption, so be sure to fully understand before engaging in these compensation activities.

Hope that helps.

Mike

 

[falcondrivr]

thanks for all the info gentlemen. i need something concrete to hand to my parent company, or they might get me in trouble.

 

[SonnyD]

See for yourself

Don't believe what any pilot tells you on this matter, inless they also happen to have at least some legal background.

Look for yourself on the FAA's website by searching for legal interpretations:
http://www.faa.gov/about/office_org.../agc/pol_adjudication/agc200/Interpretations/
I recommend you use the following search term: 135.1 119.1
- as the applicability has so much overlap. It's hard to get busted for one but not the other.

Read especially closely the result for Cascade Medical Services from April 1993. It pretty much defines the line for what is and what is not OK.

Basically you're fine as long as you're not a commercial operator engaged in common carriage. The interpretations support the point of view that if what you offer is either "common" or "carriage", then it counts as common carriage. Common (as you'll read, because you won't be relying on me) refers to the availability of your service. If your client isn't involved in some sort of long-term arrangement with you, it will likely be seen as common.

"Carriage" is defined (again, only in the interpretations, and then only when viewing the individual cases in whole) refers to the action of providing both the airplane and the service of flying the airplane. Anything remotely close to this count as carriage. In other areas, this is referred to as the "single source rule." For example, if you sell a person an airplane, and then five years later sell them your services as an operator of that airplane, you are providing carriage. Not my take, but you'll find this interpretation in response to the inquiry from the start-up fractional in KEUG.

It's in there - I didn't make this stuff up.