61.113 question

azure

azure

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azure
This is a <cough> hypothetical question.

Someone who happens to be a private pilot and airplane owner is invited to an out-of-state location for a job interview. The company offers to reimburse the applicant for travel expenses. The applicant decides to fly in their own airplane. Company isn't sure how to work the reimbursement but offers the standard federal mileage rate based on distance. Since this is $0.56/statute mile, it clearly works out to considerably less than the actual operating expense, even considering fuel alone. Is the pilot legal to accept reimbursement on these terms? Would pilot be legal to accept full reimbursement for operating expenses?

The question seems to hinge on what constitutes "acting as PIC for compensation or for hire". Clearly company is not hiring pilot to fly and pilot has an interest in attending the interview, so I'm not sure this is flying FOR compensation either. Obviously it doesn't fall under any of the specifically allowed provisions either, however, so if the FAA thinks differently on that point (and since they're the FAA, they very well might) it's verboten.

It seems like gray area to me. Anyone know for sure?
 
If it was me, I'd consider the flight covered under 61.113(b). A job interview is, IMHO, connected with employment within the meaning of term used in that paragraph. And the flight is incidental to the employment.
 
Jim Logajan said:
If it was me, I'd consider the flight covered under 61.113(b). A job interview is, IMHO, connected with employment within the meaning of term used in that paragraph. And the flight is incidental to the employment.
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Doh! I think you're right and I totally misparsed 61.113(b)(2) to read the exact opposite of what it actually says.
 
azure said:
This is a <cough> hypothetical question.

Someone who happens to be a private pilot and airplane owner is invited to an out-of-state location for a job interview. The company offers to reimburse the applicant for travel expenses. The applicant decides to fly in their own airplane. Company isn't sure how to work the reimbursement but offers the standard federal mileage rate based on distance. Since this is $0.56/statute mile, it clearly works out to considerably less than the actual operating expense, even considering fuel alone. Is the pilot legal to accept reimbursement on these terms? Would pilot be legal to accept full reimbursement for operating expenses?

The question seems to hinge on what constitutes "acting as PIC for compensation or for hire". Clearly company is not hiring pilot to fly and pilot has an interest in attending the interview, so I'm not sure this is flying FOR compensation either. Obviously it doesn't fall under any of the specifically allowed provisions either, however, so if the FAA thinks differently on that point (and since they're the FAA, they very well might) it's verboten.

It seems like gray area to me. Anyone know for sure?
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14 cfr 61.113(b) applies, so you may be reimbursed for operating expenses provided the plane trip was incidental (you were going either way, whether you flew or not) and that no other passengers were carried. As long as you can provide that you were not compensated more than the actual operating costs (I.e fuel and oil), you're good.
 
Brad Z said:
As long as you can provide that you were not compensated more than the actual operating costs (I.e fuel and oil), you're good.
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I can see nothing in 61.113(b) that limits compensation to operating costs. I think you're mixing in the limitation of 61.113(c) which only applies when passengers are involved. A lone pilot is never a passenger. If a pilot were considered a passenger, then 61.113(b) could never be applied to any flight. It would be void of applicability.
 
Jim Logajan said:
I can see nothing in 61.113(b) that limits compensation to operating costs. I think you're mixing in the limitation of 61.113(c) which only applies when passengers are involved. A lone pilot is never a passenger. If a pilot were considered a passenger, then 61.113(b) could never be applied to any flight. It would be void of applicability.
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I agree. In fact the GSA airplane mileage rate would come close to covering the full operating cost for many light singles (mine included).

On the other hand, the (hypothetical) company might have problems with reimbursing at that rate, in which case the (hypothetical) pilot would be well advised to try to work out a compromise. ;)
 
Simple FAA Formula:

1. If it's fun
2. If it's free
3. If anyone else is onboard

then it's not allowed;)
 
Interesting that your operating costs would be more than driving mileage reimbursement...

I have several trips that I make by plane where the rest of the folks drive.
It usually costs less for them to reimburse my mileage to the airport and back, av gas, fees, and rental car for the weekend than to reimburse my mileage had I driven.

(This is both with the pokey Grumman and the efficient RV)
 
JoeSelch said:
Interesting that your operating costs would be more than driving mileage reimbursement...
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Maybe I misspoke, I meant *total* operating costs which include mx and engine reserve. Basically, what I would be paying at typical equity club rates for the same or a similar airplane.

Fuel alone comes to less than the driving mileage rate, that's true for my plane too. (It would be even more so if I could operate smoothly LOP, but that's another thread.)

Adding fees (?) plus rental car, not sure. It would be close.
 
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JoeSelch said:
Interesting that your operating costs would be more than driving mileage reimbursement...

I have several trips that I make by plane where the rest of the folks drive.
It usually costs less for them to reimburse my mileage to the airport and back, av gas, fees, and rental car for the weekend than to reimburse my mileage had I driven.

(This is both with the pokey Grumman and the efficient RV)
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That using the govt rate or a corporate one?

I've done the govt reimbursement rate for a trip from San Diego to Corpus Christi with a very reasonably priced Cardinal RG rental, and while it helped, it didn't come close to covering operating costs and the rental car reimbursement was separate.
 
Fearless Tower said:
That using the govt rate or a corporate one?

I've done the govt reimbursement rate for a trip from San Diego to Corpus Christi with a very reasonably priced Cardinal RG rental, and while it helped, it didn't come close to covering operating costs and the rental car reimbursement was separate.
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Rental rate > fuel and oil. Even my Comanche fuel is half price or better of any local rentals.
 
I vote the flight is illegal. The OP is not an employee of company X and the flight is not an extension of his employment. Nor is the flight for the OP's business.
 
Clip4 said:
The OP is not an employee of company X and the flight is not an extension of his employment. Nor is the flight for the OP's business.
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How so? Isn't the OP in the business of securing employment?

I don't see why the OP can't carry a passenger, say, an agent. Or the prospective employer's agent, too, on the flip-flop to iron out the details with the OP's agent after the OP returns home for an important meeting. Nothing in 61.113(b) against that I can see.

dtuuri

dtuuri
 
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Clip4 said:
I vote the flight is illegal. The OP is not an employee of company X and the flight is not an extension of his employment. Nor is the flight for the OP's business.
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The OP need not be an employee of the entity doing the compensation. They can be self employed salesperson. The criteria is that the flight is in connection with any sort of business or employment. A job interview is a business meeting, and the (shudder) chief counsel has opined about such meetings:
"...in this scenario, where you are only transporting yourself to the business meeting, you may be compensated for the expense of the flight. See 14 C.F.R. § 61.113(b)."

dtuuri said:
How so? Isn't the OP in the business of securing employment?
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Agreed. But...

I don't see why the OP can't carry a passenger, say, an agent. Or the prospective employer's agent, too, on the flip-flop to iron out the details with the agent after the OP returns home for an important meeting. Nothing in 61.113(b) against that I can see.
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I think the part highlighted in red rules out using the exception in paragraph (b), though the pro-rata option would presumably be available since there is a common purpose involved:

(b) A private pilot may, for compensation or hire, act as pilot in command of an aircraft in connection with any business or employment if:

(1) The flight is only incidental to that business or employment; and

(2) The aircraft does not carry passengers or property for compensation or hire.​
 
Jim Logajan said:
I think the part highlighted in red rules out using the exception in paragraph (b), though the pro-rata option would presumably be available since there is a common purpose involved:

(b) A private pilot may, for compensation or hire, act as pilot in command of an aircraft in connection with any business or employment if:

(1) The flight is only incidental to that business or employment; and

(2) The aircraft does not carry passengers or property for compensation or hire.​
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Is the Op's agent a "passenger for compensation or hire" or a paid employee. If the pilot doesn't accept compensation from the passenger, but the passenger does from the pilot, is it within the scope of the rule? Could a private pilot pay someone to be their passenger or not? I say they can, YMMV.

dtuuri
 
azure said:
Someone who happens to be a private pilot and airplane owner is invited to an out-of-state location for a job interview. The company offers to reimburse the applicant for travel expenses. The applicant decides to fly in their own airplane. Company isn't sure how to work the reimbursement but offers the standard federal mileage rate based on distance. Since this is $0.56/statute mile, it clearly works out to considerably less than the actual operating expense, even considering fuel alone. Is the pilot legal to accept reimbursement on these terms? Would pilot be legal to accept full reimbursement for operating expenses?
Click to expand...
From an FAA perspective, this is perfectly fine as long as the amount paid does not exceed the cost of the flight.

From an IRS perspective, any reimbursement above the actual cost of the flight is considered excess reimbursement and is taxable income. Note that the IRS does not recognize any standard mileage rate (not even the GSA rate) for personal aircraft, so whatever you tell them was the cost is subject to IRS review and may require proving that it's what it actually cost. Anyone who doesn't believe me can ask the IRS (which is what I did after two tax professionals told me the same thing).

Note that if you rent a plane, the rental cost is acceptable to the FAA and the IRS as the cost of the flight. OTOH, if you own the plane yourself, and try to deduct anything beyond the direct cost of the flight (fuel/oil/airport fees), you may have to produce for the IRS documentation of every penny you spent on the plane all year, and use that to justify your claimed hourly or per-mile cost.
 
azure said:
I agree. In fact the GSA airplane mileage rate would come close to covering the full operating cost for many light singles (mine included).

On the other hand, the (hypothetical) company might have problems with reimbursing at that rate, in which case the (hypothetical) pilot would be well advised to try to work out a compromise. ;)
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Did this (hypothetical) company expect to pay more than car mileage costs? If they expected you to drive but instead you took a more expensive option for your own reasons, you probably should not expect them to pay more than the drive would have cost them. If nothing else, if they think about that they may decide not to hire you, questioning your judgement. Hypothetically speaking of course... there are unknown variables that could change that.
 
dtuuri said:
Is the Op's agent a "passenger for compensation or hire" or a paid employee. If the pilot doesn't accept compensation from the passenger, but the passenger does from the pilot, is it within the scope of the rule? Could a private pilot pay someone to be their passenger or not? I say they can, YMMV.

dtuuri
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While I agree with you when reading the regulation as written, the FAA has been clear (http://www.faa.gov/about/office_org.../mangiamele - (2009) legal interpretation.pdf) that they consider 61.113(b) to not apply if you have ANY passenger on-board. I think that interpretation is in error, but nobody's going to ask my opinion!
 
JeffDG said:
While I agree with you when reading the regulation as written, the FAA has been clear (http://www.faa.gov/about/office_org.../mangiamele - (2009) legal interpretation.pdf) that they consider 61.113(b) to not apply if you have ANY passenger on-board. I think that interpretation is in error, but nobody's going to ask my opinion!
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The paragraph you and I don't agree with begins like this:
"In regard to whether you may seek reimbursement from your employer for transporting your colleagues,"​
Then it goes on to misconstrue the reasons why it would be illegal, which it is. Reimbursement "for" transporting colleagues ought to be against the law, not carrying passengers incidental to the employment or business, IMO. On the other hand, those passengers ought to know that private pilots aren't up to the standards of their airline pilot brethren.

dtuuri
 
dtuuri said:
The paragraph you and I don't agree with begins like this:
"In regard to whether you may seek reimbursement from your employer for transporting your colleagues,"​
Then it goes on to misconstrue the reasons why it would be illegal, which it is. Reimbursement "for" transporting colleagues ought to be against the law, not carrying passengers incidental to the employment or business, IMO. On the other hand, those passengers ought to know that private pilots aren't up to the standards of their airline pilot brethren.

dtuuri
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The reading the Chief Counsel proposed completely eliminated the "for compensation or hire" from (b). It said you could get compensation if the transportation was incidental to employment, and there was no passengers or property carried.

Again, I think we are in full agreeance that this is an improper interpretation of the regulations. However, people should be aware that there is a heavy burden on the pilot in the event of a violation to prove that the interpretation was "arbitrary or capricious" in order to set aside a Chief Counsel's interpretation.
 
JeffDG said:
However, people should be aware that there is a heavy burden on the pilot in the event of a violation to prove that the interpretation was "arbitrary or capricious" in order to set aside a Chief Counsel's interpretation.
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ar·bi·trar·y


/ˈärbiˌtrerē/


• based on random choice or personal whim, rather than any reason or system.

"his mealtimes were entirely arbitrary"




• (of power or a ruling body) unrestrained and autocratic in the use of authority.

"arbitrary rule by King and bishops has been made impossible"




synonyms:

autocratic, dictatorial, autarchic, undemocratic, despotic, tyrannical, authoritarian, high-handed...
 
dtuuri said:
ar·bi·trar·y


/ˈärbiˌtrerē/


• based on random choice or personal whim, rather than any reason or system.

"his mealtimes were entirely arbitrary"




• (of power or a ruling body) unrestrained and autocratic in the use of authority.

"arbitrary rule by King and bishops has been made impossible"




synonyms:

autocratic, dictatorial, autarchic, undemocratic, despotic, tyrannical, authoritarian, high-handed...
Click to expand...

I know...I don't have the funds to fight it myself, though!

Chevron deference makes it an uphill fight.
 
C182P said:
Did this (hypothetical) company expect to pay more than car mileage costs? If they expected you to drive but instead you took a more expensive option for your own reasons, you probably should not expect them to pay more than the drive would have cost them. If nothing else, if they think about that they may decide not to hire you, questioning your judgement. Hypothetically speaking of course... there are unknown variables that could change that.
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Yeah, that's kind of what I was getting at...
 
I used to work for the federal government and several times I received authorization to rent a plane rather than renting a car for a business trip. The overall cost was lower than renting the car, and it let me do needed work at several job sites that were just over 100 miles apart all on the same day. My rental costs were covered in full.
 
Ron Levy said:
From an FAA perspective, this is perfectly fine as long as the amount paid does not exceed the cost of the flight.
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This part is incorrect. It would also be perfectly fine with the FAA if the amount exceeded the cost of the flight. You've added a qualifier to paragraph (b) that doesn't exist in either the regulation or any interpretation or ruling that I'm aware of.

For example, consider a different scenario also covered by paragraph (b): A self-employed consultant who is a private pilot negotiates some amount $X to go to a client to render a service. The consultant flies to the client site by private aircraft, performs the service and is eventually paid $X. Your absurd interpretation would not allow X to be larger than the cost of the flight. Where and how you came up with such a limit is unclear to me. I can't even see how it comes into play in any part of 61.113.
 
Jim Logajan said:
I can only assume that I must be on JeffDG's ignore list for my past posts on Chevron deference to have missed his attention:

http://www.pilotsofamerica.com/forum/showthread.php?p=1411235&post1411235
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Nah...not on ignore...a Traffic Pattern thread never got my attention in the first place.

That's a very thought-provoking post, I will have to read it more deeply before I decide to either (a) refute it, or (b) adjust my own thinking. At first glance, (b) seems to more likely at the moment.
 
Fearless Tower said:
That using the govt rate or a corporate one?

I've done the govt reimbursement rate for a trip from San Diego to Corpus Christi with a very reasonably priced Cardinal RG rental, and while it helped, it didn't come close to covering operating costs and the rental car reimbursement was separate.
Click to expand...

Huh? Govt rate or corporate?
The only "rate" I'm talking about is the standard IRS mileage rate for driving that Azure mentioned in her earlier post.

And the scenario isn't one of reimbursing direct operating costs for a RENTAL aircraft.

:what: :confused:

By "operating costs" I meant the ones I described in my example (which would be similar to Azure's), not whatever operating costs you choose to dream up.
 
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JoeSelch said:
Huh? Govt rate or corporate?
The only "rate" I'm talking about is the standard IRS mileage rate for driving that Azure mentioned in her earlier post.
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That vehicle mileage rate is irrelevant to any tax issues involving airplanes, and there is no IRS-approved mileage rate for private aircraft -- not even the one GSA sets for reimbursing those flying private aircraft on government business. So, if you claim reimbursement at the GSA aircraft rate, the IRS can still demand for your business or personal tax returns that you account for the cost of the flight based on your actual costs, not the GSA reimbursement rate.
 
Which is why I keep to the penny everything involved with the aircraft for the year. One credit card that is used only for airplane usage, and a handful of checks. It's not that hard to keep track of it.
 
Ron Levy said:
That vehicle mileage rate is irrelevant to any tax issues involving airplanes, and there is no IRS-approved mileage rate for private aircraft -- not even the one GSA sets for reimbursing those flying private aircraft on government business. So, if you claim reimbursement at the GSA aircraft rate, the IRS can still demand for your business or personal tax returns that you account for the cost of the flight based on your actual costs, not the GSA reimbursement rate.
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Good info to have.

And the mileage rate etc. was only brought up in the context of Azure's earlier post comparing costs v reimbursement potential ... Does not imply that its mention was apropos of any tax or FAA legality issue.
 
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