Legal or not? (Company Reimbursement)

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clawz

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Shawn P
Good afternoon all,

I hope to be taking my first lesson soon (waiting on a call back to schedule a medical and want to get my color vision figured out prior to it) but I have a question pertaining to being reimbursed by my company if I decide to fly to a destination instead of using commercial airlines.

My job - 24/7 on call regional tech with Tucson as my home base but I also cover another area 400 miles away plus get sent on special assignments and what not all over the US. We use our personal vehicles for around town and have the option of taking commercial flights or driving longer distances, as long as the mileage reimbursement to said destination keeps it under the cost of the commercial flight. Emergency calls are deemed critical and our company will approve $1000 short notice flights in a heart beat if required to get equipment back up and running.

More info - As of right now we have one other regional tech that has his PPL and at this time he simply charges our company whatever mileage it takes to get to his destination by car, even though he is flying. This allows him to get around much quicker, which is a nice side benefit of getting my PPL as well.

The question - I was doing some number crunching as there are many scenarios where the mileage reimbursement rate would be lower then that of a commercial flight but since we have the option of doing either, would it be illegal to get reimbursed for up to the cost of the commercial flight from your area? It my case it would still be much faster for me to get around due to airlines using the Fedex/UPS with passengers seeing as how they fly me to Las Vegas, Los Angeles, or San Diego before heading towards my destination, even if it is east of me.

For instance a hypothetical scenario, Tucson to El Paso;

By car - 350 miles, 5 hour drive which I am on the clock for.
By commercial flight - $500 on Southwest round trip more if another carrier is used, plus 8-10 hours pay with layovers, early arrival at the airport, etc.
By 172 - 250 nm, 2.5 hour flight time.

By car I would get reimbursed $395.50 which does not cover the cost of a 172 for the total of 5 hours flight time ($122 an hour out this way) Could I get reimbursed the $500 without a commercial rating as long as my company approves?

Thank you for your time.
 
Whatever your company wants to pay you for the travel is fine, just don't take anyone with you.
 
clawz said:
By car I would get reimbursed $395.50 which does not cover the cost of a 172 for the total of 5 hours flight time ($122 an hour out this way) Could I get reimbursed the $500 without a commercial rating as long as my company approves?
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As far as the IRS is concerned, no problem. And if you are reimbursed less than it actually cost you, you can deduct the shortage on your personal income taxes as an unreimbursed buseinss expense. As far as the FAA is concerned, if you fly yourself and only yourself, you can be reimbursed for your full expenses, "provided the expenses involve only fuel, oil, airport expenditures, or rental fees," per 14 CFR 61.113(c). What you cannot do as a Private Pilot is get reimbursed at all by the company if you are carrying others with you -- see the Mangiamele letter.
http://www.faa.gov/about/office_org...erpretations/data/interps/2009/Mangiamele.pdf

If you take others with you, they can share your expenses on a per-seat pro rata basis (regardless of whether they are reimbursed for their shares by the employer or anyone else), but you would have to pay your own share yourself, and not get reimbursed by your employer for your share.

And welcome aboard!
 
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Ron Levy said:
As far as the IRS is concerned, no problem. And if you are reimbursed less than it actually cost you, you can deduct the shortage on your personal income taxes as an unreimbursed buseinss expense. As far as the FAA is concerned, if you fly yourself and only yourself, you can be reimbursed for your full expenses, "provided the expenses involve only fuel, oil, airport expenditures, or rental fees," per 14 CFR 61.113(c). What you cannot do as a Private Pilot is get reimbursed at all by the company if you are carrying others with you -- see the Mangiamele letter.
http://www.faa.gov/about/office_org...erpretations/data/interps/2009/Mangiamele.pdf

If you take others with you, they can share your expenses on a per-seat pro rata basis (regardless of whether they are reimbursed for their shares by the employer or anyone else), but you would have to pay your own share yourself, and not get reimbursed by your employer for your share.

And welcome aboard!
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Yeah. What he said.
 
Appreciate the responses everyone. Will be sharing with my coworker and making use of it in the future.
 
one other regional tech that has his PPL and at this time he simply charges our company whatever mileage it takes to get to his destination by car, even though he is flying.
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Make sure it's okay with your employer, and your employer's insurance. For a lot of employers it's not okay, because of liability exposure.

And don't lie to the employer and tell them you are driving your car when you're actually flying a small plane. I can imagine getting fired if you have a mishap and someone is hurt, if that's what you were doing.

If claiming mileage for a car could be construed as lying about his means of transportation, I think that places the tech in a very risky position.
 
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Of course, our boss is fully aware that the other guy is flying already and takes advantage of that fact on many occasions. He already knows I am planning to start flight school and said I could be looking at another raise due to it as it gives him even greater flexibility in getting situations handled.

On that note, I will still be following up with him when it gets closer to getting my PPL to ensure everything is good to go and all bases are covered. Appreciate the concern :)
 
there is an IRS reimburesment rate for aircraft just like there is on for automobiles. You might want to crunch the numbers both ways.

BTW count yourself lucky, at many (most) large companies travel by personal aircraft is forbidden for company business. I cannot even take a half vacation day to travel for company business in my plane.
 
Going by the IRS aircraft reimbursement rate it would come out to $357, less then the auto rate due to the difference in mileage between air and ground.

If all goes to planned and I receive my PPL then I will consider myself lucky. Right now I am still reeling from the fact that I was lied to at a young age after failing an Ishara test then being told I could never be a pilot. After meeting up and going fly with my co-worker my whole world got turned upside down again, but in a good way.
 
JHW said:
there is an IRS reimburesment rate for aircraft just like there is on for automobiles.
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That is an OWT. No such IRS rate exists. GSA has a reimbursement rate for government employees and contractors using privately owned aircraft on government business, but that is not accepted by the IRS. The only thing the IRS accepts is actual cost documented by receipts -- even from those being reimbursed by the government at the GSA rate.
 
May not be allowed as the company insurance may not have provision for this.. If they reimburse you that can be construed as them allowing you to do this and them being liable for any damages you may incur..

We had a situation where an employe was involved in an auto accident while using their car on company business. Once their insurance knew we were reimbursing them for the mileage and use of the car (car allowance) we too were pulled in to cover the damages... Fortunately our insurance covered these situations...
 
Apologies for my choice of wording, I meant I would be sharing the responses above with my co-worker for his benefit since as I mentioned he is only charging them the mileage by way of driving. I am the only tech in Arizona so no chance of anyone from work riding with me.

That does bring up an interesting question though. What if my wife and daughter want to make one of the emergency runs with me as family passengers. They have done this on occasion when I have made unexpected road trips but does that put me into the "this could get me in trouble" guidelines above?
 
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clawz said:
That does bring up an interesting question though. What if my wife and daughter want to make one of the emergency runs with me as family passengers. They have done this on occasion when I have made unexpected road trips but does that put me into the "this could get me in trouble" guidelines above?
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That's addressed in the Mangiamele letter. If there is anyone else in the plane, you cannot accept any reimbursement from your employer. Please read that letter linked above in both posts #4 and #13.
 
Personally I'd tell Ms MacIdiot to go f--- herself and turn it in anyway. You don't turn in the receipt until the end of the month/quarter anyway. If the company allows it, how is the FAA ever going to find out? Don't put in your logbook why you were going somewhere or for what purpose.

If you get ramp checked at some point on the trip you haven't been reimbursed at that point, so you haven't committed any sort of violation yet. Even if they pull your logbook at some point. Don't write crap in it that can bust you. And if they ask you what the flight was for, just shrug, and say "I didn't write down what it was for, I have more important things to remember." You aren't lying.

I have dozens of flights in my logbook that I have no idea who was with me or why I was on those flights.
 
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I would think that the issue can only come to light if the company turns it in as a business expense and even then it is only turned in to the IRS. There could be some interaction between the IRS and the FAA but it is doubtful that either of these institutions would have that level of cooperation. To be safe I only fly by myself on business after reading the letter form the FAA.

The part I always remember is the definition of commercial flight in the definitions section of the FAR/AIM which reads:

Commercial operator means a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier or foreign air carrier or under the authority of Part 375 of this title. Where it is doubtful that an operation is for “compensation or hire”, the test applied is whether the carriage by air is merely incidental to the person's other business or is, in itself, a major enterprise for profit.

I remember the incidental work as being the key. If I work in construction and have a meeting for one of my projects and fly myself to a job site I am not flying commercially because I am not being paid to fly I am being paid to work. Since the definition mentions persons or property being transported I don't understand the interpretation in the letter.

Now on the other hand if my boss asks me to fly him to a meeting of which I am not a part of, and I agree, I have by definition made myself a commercial pilot.

It sounds simple but after reading the letter I won't take anyone on a trip with me.

What is MS MacPherson seeing that I am not.

I know 91.501 also comes into play I am still reading.

I will abide by not taking a PAX till this is resolved or I get my Commercial.
 
I completely fail to follow her reasoning as well.

Fly by yourself, get reimbursed $400 from the company because you had to be there anyway - not compensation, no violation.

Fly with the boss, get reimbursed $400 from the company because you had to be there anyway - compensation, violation.

She must have been dropped on her head repeatedly as a baby, and bullied while in school.
 
EdFred said:
Personally I'd tell Ms MacIdiot to go f--- herself and turn it in anyway. You don't turn in the receipt until the end of the month/quarter anyway. If the company allows it, how is the FAA ever going to find out? Don't put in your logbook why you were going somewhere or for what purpose.

If you get ramp checked at some point on the trip you haven't been reimbursed at that point, so you haven't committed any sort of violation yet. Even if they pull your logbook at some point. Don't write crap in it that can bust you. And if they ask you what the flight was for, just shrug, and say "I didn't write down what it was for, I have more important things to remember." You aren't lying.

I have dozens of flights in my logbook that I have no idea who was with me or why I was on those flights.
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If the question is whether it's legal or not, that question was answered by the FAA Chief Counsel's office in the Mangiamele letter. Short of going to the US Court of Appeals for a declaratory judgement that the interpretation is "arbitrary, capricious, or otherwise not according to law," we're stuck with it.

If the question is "can I get away with it," the answer is "probably yes, as long as nothing happens to bring it to the FAA's attention." They're not going to go looking for this sort of violation, but if it appears on their radar, they will shoot it down. Just ask the guy involved in the Bobertz memo case -- can't say how the Honolulu FSDO heard about it, but once they did, they barbecued the pilot. Same for the Murray case -- once the FAA got wind of what was happening, the pilot was toast.

So, Ed is certainly free to do what he pleases, but he does so knowing that if he's caught, they will take his ticket, and that calling Ms. MacPherson names will be unavailing in that process. Anyone choosing to follow his lead in that regard should realize that if caught, there will be punishment, so choose wisely.
 
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tmyers said:
I would think that the issue can only come to light if the company turns it in as a business expense and even then it is only turned in to the IRS.
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There are any number of ways one can get caught, and being reported by the IRS isn't likely to be one of them. Most of the likely situations involve accidents or violations which get the FSDO investigating.

To be safe I only fly by myself on business after reading the letter form the FAA.
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A wise choice. Keep in mind, however, that this goes away if you have a CP or ATP certificate. So, if the company rents the plane and pays the bill and you just fly it (even if you make the rental arrangements), you are from the FAA's perspective just acting as company pilot (whether that's in your job description or not), and it's completely legal to haul coworkers and have the company foot the bill in that manner.

What is MS MacPherson seeing that I am not.
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That's a very good question which even AOPA's legal staff has been unable to answer. This letter remains the subject of ongoing discussions between AOPA's legal and governmental staffs and the people in the office which issued it.

I know 91.501 also comes into play I am still reading.
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No, it doesn't, as that is part of Subpart F, which applies only to "Large and Turbine-Powered Multiengine Airplanes and Fractional Ownership Program Aircraft".

I will abide by not taking a PAX till this is resolved or I get my Commercial.
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Good idea. But rent in the company's name, not your own, for those trips, and make sure the company pays the bill directly rather than using your credit card and being reimbursed.
 
tmyers said:
I would think that the issue can only come to light if the company turns it in as a business expense and even then it is only turned in to the IRS. There could be some interaction between the IRS and the FAA but it is doubtful that either of these institutions would have that level of cooperation. To be safe I only fly by myself on business after reading the letter form the FAA.

The part I always remember is the definition of commercial flight in the definitions section of the FAR/AIM which reads:

Commercial operator means a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier or foreign air carrier or under the authority of Part 375 of this title. Where it is doubtful that an operation is for “compensation or hire”, the test applied is whether the carriage by air is merely incidental to the person's other business or is, in itself, a major enterprise for profit.

I remember the incidental work as being the key. If I work in construction and have a meeting for one of my projects and fly myself to a job site I am not flying commercially because I am not being paid to fly I am being paid to work. Since the definition mentions persons or property being transported I don't understand the interpretation in the letter.

Now on the other hand if my boss asks me to fly him to a meeting of which I am not a part of, and I agree, I have by definition made myself a commercial pilot.

It sounds simple but after reading the letter I won't take anyone on a trip with me.

What is MS MacPherson seeing that I am not.

I know 91.501 also comes into play I am still reading.

I will abide by not taking a PAX till this is resolved or I get my Commercial.
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Your reasoning is sound and was the way the FAA interpreted things until the Mangiamele letter. I don't know ANYONE who's expressed the opinion that MacPherson made any sense in this letter.
 
Ron Levy said:
That's a very good question which even AOPA's legal staff has been unable to answer. This letter remains the subject of ongoing discussions between AOPA's legal and governmental staffs and the people in the office which issued it.
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Getting a Counsel to reverse an opinion is a very difficult thing. There have been some beauts over the years at various agencies, and in the rare cases of reversal, it's usually with a change in personnel.
 
Ron Levy said:
So, Ed is certainly free to do what he pleases, but he does so knowing that if he's caught, they will take his ticket, and that calling Ms. MacPherson names will be unavailing in that process. Anyone choosing to follow his lead in that regard should realize that if caught, there will be punishment, so choose wisely.
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No they won't. I'm not a private pilot. 61.113 doesn't apply. ;)
 
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Ron Levy said:
Neither am I, but I still counsel caution to PP's rather than railing against the author of that interpretation.
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I'm tempted to call her and get an explanation of reasoning since she did put her phone number in that letter.
 
Ron Levy said:
Good idea. But rent in the company's name, not your own, for those trips, and make sure the company pays the bill directly rather than using your credit card and being reimbursed.
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Unless the renter's agreement, like some I've seen, don't allow run-of-the-mill renters to use the plane for commercial ops. We are always at the mercy of insurance policies.
 
EdFred said:
I'm tempted to call her and get an explanation of reasoning since she did put her phone number in that letter.
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Good luck. Please take notes, as I'd like to understand her reasoning. I did speak with the junior attorney in her office who actually prepared the letter shortly after the letter was issued, and all I feel comfortable saying is she seemed very new to aviation, and I did not at all understand her logic. Not saying I disagreed with it, but rather that I could not comprehend her explanation enough to either agree or disagree.
 
Ron Levy said:
A wise choice. Keep in mind, however, that this goes away if you have a CP or ATP certificate. So, if the company rents the plane and pays the bill and you just fly it (even if you make the rental arrangements), you are from the FAA's perspective just acting as company pilot (whether that's in your job description or not), and it's completely legal to haul coworkers and have the company foot the bill in that manner.
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I thought with the Commercial Ticket that once you start hauling carbon based human formed cargo for more the 25 miles from the home airport you are no longer operating under 91 and now need an Air Carrier Certificate to be legit.

Uhhhh...skip that I just read this
[FONT=Arial,Helvetica]If your customer approaches you, with his own airplane (either he rented it himself, or he owns it). In this case you may fly for hire, because you are not offering your services as a package or "holding out" as a commercial operator -- air taxi or charter. .[/FONT]
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DANG! Looks like it is time to get that Commercial ticket... my boss and I have done some flying around Southern and Central California for the sake of saving time by not sitting in traffic...on my dime :yikes:


 
So this isn't as cut and dry as I thought it seems lol.

I noticed one of the comments above mention making sure a company card is used instead of a personal one and getting reimbursed. This is in the realm of possibility as we are issued company cards to use for commercial airfare, meals etc. Automobile gas can also be purchased this way instead of getting reimbursed the mileage but then your losing out on a lot of money to compensate for wear and tear on your personal vehicle. Does this change the outcome of it being perfectly legal as long as me myself and I are the only warm body in the plane?

Feel like I need to be a law student with some of this stuff lol.
 
Ron Levy said:
That is an OWT. No such IRS rate exists. GSA has a reimbursement rate for government employees and contractors using privately owned aircraft on government business, but that is not accepted by the IRS. The only thing the IRS accepts is actual cost documented by receipts -- even from those being reimbursed by the government at the GSA rate.
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interesting, I guess the companies with their HR departments publishing such a number must be using the rate for government contractors, either out of ignorance or convenience. It sounded convincing, I bought it.
 
clawz said:
Good afternoon all,

I hope to be taking my first lesson soon (waiting on a call back to schedule a medical and want to get my color vision figured out prior to it) but I have a question pertaining to being reimbursed by my company if I decide to fly to a destination instead of using commercial airlines.

My job - 24/7 on call regional tech with Tucson as my home base but I also cover another area 400 miles away plus get sent on special assignments and what not all over the US. We use our personal vehicles for around town and have the option of taking commercial flights or driving longer distances, as long as the mileage reimbursement to said destination keeps it under the cost of the commercial flight. Emergency calls are deemed critical and our company will approve $1000 short notice flights in a heart beat if required to get equipment back up and running.

More info - As of right now we have one other regional tech that has his PPL and at this time he simply charges our company whatever mileage it takes to get to his destination by car, even though he is flying. This allows him to get around much quicker, which is a nice side benefit of getting my PPL as well.

The question - I was doing some number crunching as there are many scenarios where the mileage reimbursement rate would be lower then that of a commercial flight but since we have the option of doing either, would it be illegal to get reimbursed for up to the cost of the commercial flight from your area? It my case it would still be much faster for me to get around due to airlines using the Fedex/UPS with passengers seeing as how they fly me to Las Vegas, Los Angeles, or San Diego before heading towards my destination, even if it is east of me.

For instance a hypothetical scenario, Tucson to El Paso;

By car - 350 miles, 5 hour drive which I am on the clock for.
By commercial flight - $500 on Southwest round trip more if another carrier is used, plus 8-10 hours pay with layovers, early arrival at the airport, etc.
By 172 - 250 nm, 2.5 hour flight time.

By car I would get reimbursed $395.50 which does not cover the cost of a 172 for the total of 5 hours flight time ($122 an hour out this way) Could I get reimbursed the $500 without a commercial rating as long as my company approves?

Thank you for your time.
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Hi Shawn,

I to IT work and I was contracted with by Cardinal Health to keep their hospital Pixys machines running and most of their contracts were million dollar contracts with 2, 4, 6,8 hr response times so they were very happy to pay me.

They didn't have an ability to push through airplane reimbursement but what they did was they allowed me to bill them block time as if I drove. So if Expedia said 210 miles each way 420 round trip my average response on all calls worked out to something like 47 miles per hour so divided the 420/47 to get hours of block travel time, then they also paid my on site time and reimbursed my mileage as if I drove. So the total package worked out to 11 hrs at $57.50 per hr or so plus 420x.57. So i was more than happy to do this job for about $820 which is the same I would make if I drove my car. however It worked so well they had to give me a 2nd tech number as I was able to start another call before my recovery on the first call. I didn't make more money flying, as I would have netted more cash in my pocket to just buy gas and drive my 40 mpg car but I was able to fly which was pretty cool and flying was more expensive but something I wanted to do. I did make more money if you figured in the number of times that I was able to take 4-5 calls 24 hrs period that I was on call (full time employee's days off, training days, in service day, at the corp office day or sunday).

Once or twice, as a low time VFR pilot I got stuck in a place that was hard to rent a car and drive home and then go back and retreive the car which all those costs are on me....So I would have to say it is possible but not necissarily always more profitable to fly....my route was 200 mile radios but some of those routes were 3-4 hrs ea way because of lack of interstate access...talk about sticks in the woods.
 
Ventucky Red said:
What is worse...he use to work for me.. Ah why am I complaining, I got him the job..

You fly out of Driggs?
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The plane it hangared at Jackson Hole. I do get to Driggs for good food often though..... Summertime has me down at my ranch with my private airport... 2WY3... 38DME from Jackson..

http://www.airnav.com/airport/2WY3
 
JHW said:
interesting, I guess the companies with their HR departments publishing such a number must be using the rate for government contractors, either out of ignorance or convenience. It sounded convincing, I bought it.
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The company can use it for what they reimburse their employees, as the IRS doesn't care how the company got the rate, just that it's what they actually paid the employee. The problem arises for the employee, not the company, when the IRS demands justification from the employee for what the employee claimed from and was paid by the employer. If that amount is more than the flight actually cost the employee, then the employee owes personal income tax on the excess reimbursement.

OTOH, if the company reimbursement is less than what the employee actually paid, then the employee gets to deduct the difference as an unreimbursed business expense.
 
I have a related question about reimbursements for people with a commercial license. I don't have one, but when I get the hours I don't see that much reason not to. I think it was Ron that mentioned "company pilot." How does that work relative to part 119 operations? You can receive compensation for carrying passengers without being a 119 operation?
 
hpux735 said:
I have a related question about reimbursements for people with a commercial license. I don't have one, but when I get the hours I don't see that much reason not to. I think it was Ron that mentioned "company pilot." How does that work relative to part 119 operations? You can receive compensation for carrying passengers without being a 119 operation?
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Sure can -- every corporate pilot in the country does it. Just because the pilot is being paid doesn't make it a commercial operation. The thing that brings Part 119 (and in turn, 121, 135, etc, as applicable) is when the passengers are paying for their transportation (and it doesn't matter whether they're paying the pilot, the aircraft owner/operator, or a third party). If the company owns the plane and pays the pilot to fly it, and the passengers don't pay a thing to anyone for the flight, the only reason the pilot needs a CP or ATP is that the pilot is receiving compensation for piloting the plane.
 
If you become a commercial pilot, and the company provides the airplane (by buying/renting/leasing it), then they can hire you and pay you to fly their airplane on company business and as long as the only passengers/cargo carried is related to the business*, it's all just fine.

When I worked for a smaller company, my job description was "Engineer/Pilot", so when we had company personnel who needed to get somewhere best served by GA, I would rent the airplane using a company account (not personal) and make the flight, and the company would pay the bill for the plane and pay me my regular salary. In this case the company was the OPERATOR in the legal sense. Now that I work for a larger company their internal policies (written by chicken****e lawyers) prohibit GA travel on company business unless it's a charter flight.

* - the company business cannot be air transport of people or cargo.
 
TMetzinger said:
If you become a commercial pilot, and the company provides the airplane (by buying/renting/leasing it), then they can hire you and pay you to fly their airplane on company business and as long as the only passengers/cargo carried is related to the business*, it's all just fine.


* - the company business cannot be air transport of people or cargo.
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Actually, it still can be OK, as long as nobody besides the company itself is paying to carry those folks or freight. So, American Airlines' corporate jets (as opposed to their operational aircraft) used for carrying only company employees and guests, or even spare parts owned by the company, need not operate under Part 121. IOW, the issue is not what the company's business is, but rather whether someone is paying for the passengers or cargo to be transported.
 
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