1099 Nightmare: Taxes to be Collected on Bonus Miles/Points for Credit Cards

Discussion in 'General Discussion | Miles/Points' started by TheTravelAbstract, Apr 1, 2012.  |  Print Topic

  1. TheTravelAbstract

    TheTravelAbstract Silver Member

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  2. LarryInNYC

    LarryInNYC Gold Member

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    The worst part? Announcing this a mere 14 days before the April 15th filing deadline.
     
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  3. jwsky
    Original Member

    jwsky Silver Member

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    I think the filing date is April 17, no foolin.
     
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  4. NYBanker
    Original Member

    NYBanker Gold Member

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  5. NYBanker
    Original Member

    NYBanker Gold Member

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  6. gleff
    Original Member

    gleff Co-founder

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    Well if everyone believes this April fools I suppose the banks will just have to give all those miles to me..
     
  7. NYCUA1K

    NYCUA1K Gold Member

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    The story was not sourced and the tone sounded tongue-in-cheek.... I was sure that it was a joke, and then I saw that it was posted on April 1, and I had no doubt: it is for April Fools!
     
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  8. TheTravelAbstract

    TheTravelAbstract Silver Member

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    Never been about April Fools but I wanted a cheap laugh. Sorry. I knew MP would be a lot more welcoming than that other site.

    Thanks for holding back the hate!
     
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  9. wombat18
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    wombat18 Silver Member

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    Yep, he who giveth cannot taketh away!
     
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  10. LETTERBOY
    Original Member

    LETTERBOY Gold Member

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    I thought it was a joke, too, but knowing the IRS..... :eek::p:)
     
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  11. NYCUA1K

    NYCUA1K Gold Member

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    Yup, knowing the IRS, it is only a matter of time before this becomes yet another real April chore...;):D
     
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  12. lucky1

    lucky1 Silver Member

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  13. DTWBOB

    DTWBOB Silver Member

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    Clink the link, look at the header on the page, then ask your self who is the fool that fell for this one.

    No 1099 -- no taxable income !

    As others have stated, 4/17 is the correct date for filing this year -- at the Federal level at least.

    <lol>

    DTWBOB
     
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  14. NYCUA1K

    NYCUA1K Gold Member

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    With the benefit of hindsight one can see that it was a joke, but off the bat, anyone not suspecting it to be a joke would have taken it seriously, and I suspect that many did. I did until I looked for a "source" or link to one and I could not find it, then I became suspicious, at which point it became obvious that it was farce...
     
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  15. cvsara
    Original Member

    cvsara Gold Member

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    Farce today, en-force Tomorrow?
     
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  16. NYCUA1K

    NYCUA1K Gold Member

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    ...which is why I think that many took it seriously at first blush...when it comes to the IRS the rule of thumb is take it seriously until you know otherwise...;)
     
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  17. cvsara
    Original Member

    cvsara Gold Member

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    Trust me on this one, DON'T sign that tax return in RED Ink. Just not the thing to do.
     
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  18. Photonerd71

    Photonerd71 Silver Member

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    Your right about that other place......NO sense if humor at all.
     
  19. katstarr

    katstarr Gold Member

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    I love the way people here refer to that other site as that "OTHER SITE." Its so..... Harry Potter.
     
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  20. USAF_Pride
    Original Member

    USAF_Pride Gold Member

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    Unfortunately, this is no joke!
     
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  21. NYCUA1K

    NYCUA1K Gold Member

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    No it ain't. The IRS is already in the game...Fortunately, only the sign up bonuses and not the points/miles earned from purchases are taxable...at least not yet.
     
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  22. LarryInNYC

    LarryInNYC Gold Member

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    The linked article clearly states only sign up bonuses for bank accounts are considered taxable. Miles associated with spending, including bonus miles for minimum spend amounts after credit card sign up, are acknowledged to be non-taxable according to the article.

    Not sure where bonus-after-first-spend offers fall but since it appears only bank accounts are being considered, so I expect such credit card offers fall into the non-taxable category. If they don't, it will be easy for the issuers to change the terms on the cards to bonus after $100 spend, or whatever (and if that makes them inclined to attach the new terms to new products, for the sake of clarity, so much the better).
     
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  23. Photonerd71

    Photonerd71 Silver Member

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    Make a post that somebody doesn't like and it magically disappears over there.
     
  24. USAF_Pride
    Original Member

    USAF_Pride Gold Member

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    It is all a slippery slope with the IRS. The Gov't is short on funds, so they are attempting to get it from wherever they can. I believe Citibank is the one who brought it to the IRS attention by asking if they were required to issue 1099's. Typically, without Congressional intervention, the IRS takes the mole hill and calls it a mountain.

    This is actually a two-sided sword as I brought up the question to the accountants that I know, that if the miles are valued by the credit card companies at one value must have the same value on the airlines books. Citibank was valuing the miles @ 2.5CPM and we know the airlines are not carrying them at that rate!!
     
  25. FlyingBear
    Original Member

    FlyingBear Silver Member

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    Source? Citi did not bring anything to IRS attention, they simply interpreted one of the new instructions in a way that got them to send out 1099s.

    There are many discussions and articles on this, one of the better ones: http://articles.latimes.com/2012/jan/24/business/la-fi-lazarus-20120124

    Relevant IRS quote:

    In 2002, the IRS issued a policy brief noting that because there are "numerous technical and administrative issues" relating to miles, such as how they're valued and used, the agency "has not pursued a tax enforcement program with respect to promotional benefits such as frequent-flier miles."
    "Consistent with prior practice," it said, "the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent-flier miles or other in-kind promotional benefits attributable to the taxpayer's business or official travel."
     

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