Are frequent flier miles taxable or no? Brown says no way
The Columbus Dispatch - January 30, 2012 16:01 PM
Calling the practice “gratuitous,” Sen. Sherrod Brown has written a letter to the CEO of Citibank after hearing reports that the bank is sending 1099 tax forms to customers who received frequent-flier miles as a reward for opening a checking or savings account.
Brown, an Ohio Democrat who serves chairman of a Senate Banking Committee subcommittee focused on banks and consumer protection, wrote a letter to Citibank CEO Vikram Pandit today urging him to end the practice, saying the Internal Revenue Service has clearly stated that frequent-flier miles are not subject to income tax.
“The last thing Citibank should be doing is creating baseless fear in middle class families, or placing a nonexistent tax burden on the backs of families who are already struggling to make ends meet,” he writes.
According to the Associated Press, Citibank has interpreted the rewards – given for opening a checking or savings account – as interest income, which is taxable.
But Brown said a 2002 ruling from the IRS clearly ruled that frequent-flier miles are not taxable.
In his letter, he said reporting frequent-flier miles as taxable income “is inconvenient to consumers, raises their anxiety unnecessarily, and is not required by law.”
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