Originally Posted by
Happy
Instead of digging up the IRS reg on this as it does not help anyone in practicality. the article dated Jan 23 on this blog may help you to understand the issue which is not new at all. It also provides some tips on how to dispute it.
http://boardingarea.com/blogs/viewfromthewing/page/2/
How to Dispute the Value of Miles or Prizes Reported as Taxable to the IRS
I'm quite familiar with the issue. I was just subtly pointing out that contrary to your statement there is no official rule on the matter. If there was, Fidelity, TD Ameritrade, Chase, BankDirect, etc. would be doing the same thing as Citibank. Are you suggesting that all of those companies' accountants and legal counsel don't know how to comply with the tax code?
I feel sorry for the people who are getting sucked into this mess. I've dealt with many of these companies in the past and have never received a 1099 for bonus miles.