IRS Provides Continued Flexibility on SIFL Rates

Oct. 21, 2021

The IRS will continue to allow taxpayers to use alternative Standard Industry Fare Level (SIFL) rates for the second half of 2021, from July 1 to Dec. 31, in recognition of the ongoing impact that the COVID-19 pandemic and government relief have on the data used to calculate the rates. Review the IRS Revenue Procedure.

Typically, when business aircraft are made available to employees for non-business flights, employers must impute the fringe benefit as part of the employee’s taxable income. One of the methods operators can use to calculate the value of such non-business flights are SIFL rates, which are based, in part, on airline capacity and fuel and non-fuel costs.

This calculation is made every six months by the U.S. Department of Transportation (DOT) and published by the IRS. As the calculations of the first half of 2021 approached, NBAA identified that the pandemic’s impact on airline capacity would almost double the traditional SIFL rates.

NBAA immediately launched a campaign to inform the DOT and IRS of this problem and, in June, this resulted in business aircraft operators being offered two alternative SIFL rates for the first half of 2021, in addition to the standard rate. Read more about NBAA’s advocacy on this issue.

Now, with the traditional SIFL rate set to grow more than 91% for the second half of 2021 compared to the same period last year, NBAA again worked directly with DOT and the IRS to seek approval for the two alternative rates adjusted for government relief received by commercial airlines.

These alternatives are more consistent with historic changes to SIFL rates and can be used by any operator for fringe benefit calculations.

“The pandemic and resulting relief packages created a unique situation that continues to present challenges for the SIFL rate calculation,” said Scott O’Brien, NBAA senior director, public policy and advocacy. “NBAA appreciates the work by DOT and the IRS to understand the challenges that drastic changes in SIFL rates can present and for working with industry on an equitable solution.”

Review historic SIFL data and a members-only personal use calculator tool.