Free Irs Announcement 2002-18 Frequent Flyer Miles Flying Under, Radar: Personal, Of “Business” Frequent Flyer Leaflet - For the report, after i first wrote approximately this in 2012, citibank contacted my editor to speak about the tale. They were not too satisfied about my characterization of what they were doing. They honestly, truely wanted me to emphasise the a part of the irs role that the miles "may be a taxable situation." Emphasis on "can." It became almost as though the financial institution desired the miles to be taxable, a function that i wondered, writing, "i continue to be at a loss for words as to why citibank selected to make this an issue with taxpayers and irs whilst the irs has been very clean for the reason that 2002 be aware that it will now not aggressively pursue those subjects if they do not appear like abusive. When you have additional statement for my story, i'm satisfied to encompass it." In response, citibank did not provide additional facts, simply pointing me to the notice i formerly noted in my piece and then following up with a statement from cch wherein the irs said, "while common flyer miles are furnished as a premium for establishing a economic account, it can be a taxable state of affairs subject to reporting beneath cutting-edge regulation." Emphasis on "can.".
Tax pros also weighed in on the matter, most coming down at the aspect of "not taxable" with many pronouncing that the issue could no longer have even been raised if no longer for the issuance of the shape 1099-misc by citibank. Not reporting the earnings as soon as it is been deemed earnings through citibank should bring about an audit.
While those debates were occurring, the irs remained interestingly quiet. The irs position in view that 2002 (statement downloads as a pdf) has been that frequent flyer miles earned due to commercial enterprise tour aren't taxable. The irs has taken the placement that it "will now not assert that any taxpayer has understated his federal tax liability through cause of the receipt or personal use of common flyer miles or different in-type promotional blessings resulting from the taxpayer’s enterprise or reputable tour." The notice went on to mention that, with admire to promotional benefits, "the irs has not pursued a tax enforcement application with respect to promotional advantages which include frequent flyer miles.".