Duke's Lawrence Zelenak has written a comprehensive summary of taxation of frequent flier programs, from the state of the law and enforcement through possible options to start taxing the benefits. It's 46 highly readable pages, and it answers every question you might have. He even cites Lucky.
UP IN THE AIR OVER TAXING FREQUENT FLYER BENEFITS: THE AMERICAN, CANADIAN, AND AUSTRALIAN EXPERIENCES
The most novel point he mentions is that employers could actually benefit from a policy that prohibits employees from earning FF miles on company travel: See footnote 94 on page 39.
There is so much more in the paper that we could discuss here. I urge you to download the paper and take the time to read it. You will become an instant expert in taxation of FF miles.