AMEX sending out 1099s for referral bonuses
 

Apparently, we'll now pay tax on the imputed cash value of AMEX referral bonuses:

"American Express is sending out Form 1099 for referral bonuses earned during the calendar year 2018. Amex values Hilton points at 1.25 cents per point, and all other points at 1 cent per point;that includes things like Membership Rewards, Delta, SPG, and Marriott points. Not sure why they decided to value Hilton at more than 1 cent.

You’ll get a separate Form 1099 for each card you referred from, I believe. Apparently, these are being sent out even for those who did not get $600 total. ($600 is the threshold where they are required to send out the form – assuming this qualifies as a cash value.) They are sending the forms even for un-cash-out points as well, apparently."

https://www.doctorofcredit.com/ameri...ng-else-1-cpp/

See also this discussion from 2017 to understand what's new -and- what is not:

https://www.doctorofcredit.com/banks...erral-bonuses/

Seriously! I'd go all the way to Appeals on this valuation. LOL

I would be happy to sell all my Hilton points back to AMEX at $0.01 a point.

Inasmuch as Hilton sells points for $0.01, currently with a bonus that nets the cost to $0.005, it's difficult to understand how $0.0125 would be assigned.

Doctor of Credit fixed his article and said they value is actually $0.67. I still think that is too high, but it is more reasonable I guess.

Does this include business cards? If so, is the 1099 using the EIN or SSN?

1099 for the 75,000 Delta Airlines bonus miles for meeting the spend requirement
 

I received an IRS form 1099 for $375 for the 75,000 Delta Airlines bonus miles I received for meeting the spend requirement, valuing them at 1/2 cent/mile. I have written a protest letter to Amex at the address on the 1099. Never has Amex or any other credit card issuer issued a 1099 for bonus miles for meeting a spend requirement.

Interestingly, the 1099 for Membership Rewards point for referrals to cards that earn MR points values those points at 1 cent/mile. Yet those points convert to Delta miles at 1,000:1,000. Thus they are saying definitively that the Membership Rewards points have the same value as Delta miles, or ½ cent per point.

I have sent a protest for both of these 1099s to the address on the 1099. I encourage you to do the same.

Are you certain the 1099 is not for referral bonuses earned on Skymiles cards?

The 1099 did say it was for referral bonuses, but I did no referrals to that card. Since the spend bonus was 75K and the charge was $375, exactly 1/2 cent/mile, and since I know of no referral bonuses that add up to 75K or any combination that gets to an even fraction of that, I assumed....

Here is an excellent article from Travel Codex on how to deal with this from someone who says he is a licensed tax professional.

It looks as if you can login here:

https://www.delta.com/acctactvty/man...tactvty.action

...and review all of your Skymiles activity for a Custom Period, such as all of calendar year 2018.

I used that link and searched 01/01/2018 to 12/31/2018. All posted miles were labeled SkyMiles AMEX Cobrand Credit Card Bonus,

Very good, let us know the outcome. I suppose it is possible that American Express has credited referral points to some other Skymiles account, and somehow cross-linked it to your identity.

Chase appears to be sending 1099s for referral bonuses as well based off comments on the interwebz today.

https://www.doctorofcredit.com/chase...%A2-per-point/

I wonder how much money is being wasted by AMEX, Chase, and anyone else to mess with these 1099's?

As minimum spend bonuses are considered a rebate, and not 1099'd, they could save a ton of money by simply changing some language in their referral bonuses. For example, they could change it to something like, "Earn 20k bonus points when you refer a new card member who is approved, and you make a purchase on the card to which they were referred in the same month."

Or something along those lines anyway. So "in theory" that turns a straight bonus into a "rebate" where you need to also make a purchase (any purchase) on your card in the same month in which they apply. I would think something like that would work, as there are cards which don't require a fixed amount for spend, but just that you spend something. Those don't incur a 1099 and should work to circumvent the 1099 for referral bonuses.

It would save them a decent chunk of money most likely, and shouldn't be much of a logic change to their software.

Bumping this back to the first page, so far only ONE person is saying they received a 1099 for a sign up bonus.............I would think this thread would be 30 pages deep if everyone was getting a 1099 for a SU bonus

We received 3 Hilton NAF to Ascend upgrade bonuses and 4 new DL Gold AMEX via targeted offers in 2018.......... so far no 1099's

I got two 1099's for sign up bonuses as well, one being for $505. Haven't figured out yet whether it was for Hilton cards or Delta cards, I will call them to find out. But it's definitely not for referrals as I didn't have any. Haven't decided yet what I'm going to do about it.

Did you receive any other type of bonus, such as Upgrade or Retention?

So researching this, it appears i did have Hilton card referrals in the beginning of last year that I completely forgot about (doh !), I'm sorry for misinformation, but that's only part of it. What pushed me over $600 limit by less than $5 (limit established by law according to the AMEX rep) is the gesture of good will of $100 that they gave me in lieu of 150k sign-up bonus that they refused to give (had Surpass card before). I requested to speak to a sup basically saying the "gesture of good will" turned out to be a penalty instead, since i'll have to pay almost twice as much in taxes, and I don't appreciate such gesture, take it back. They "escalated" the issue, whatever that means, but I'm not expecting to have much luck. I'm not going to lose sleep over it though, better things to worry about : )

AMEX chat rep just mentioned those not in receipt of a 1099 by 1/31/19 should not expect a 1099.

I could only wish people would get tired of AMEX's rewards shenanigans and just drop them.

It's already bad enough that:

1) Rewards are delayed an additional statement.
2) Citi and Chase now have JetBlue as a 1:1 transfer partner while AMEX sits at 250:200.
3) AMEX makes you pay the federal excise tax when transferring miles (nobody else does this).
4) AMEX has been hit or miss on dining bonus categories.
5) AMEX's bonus exceptions when applying for a card "because you've had too many opened AMEX cards recently," and sometimes denying bonuses when the box doesn't pop up for whatever reason.
6) And now taxing referral bonuses.

You honestly think this was a voluntary thing? Go take a peek in the Chase forum or on DoC or reddit. Chase is 1099ing people too, and including petty things like retention bonus statement credits.

American Express does not tax anything. Receipt of a 1099 does not create a tax liability if none exists. Absence of a 1099 does not mean there is no tax liability. A referral bonus is compensation for helping the card issuer obtain a new customer. The valuation of the points is an open question.

If memory serves, this long running thread has links to legal material on this topic:

https://www.flyertalk.com/forum/mile...all-banks.html

The difference is Chase doesn't have the other five problems on top of it.

I snipped my reply because the other "five problems" weren't relevant to this thread, but sure lets do this.

1) YMMV of an issue. I'm never on the edge of a redemption and haven't less than 250k in my MR balance in I don't know how long. So would it be nice if it were instant? Sure. But it would have no impact on my usage. Also I have read that if you have paid off the statement they can accelerate the points.
2) Ok, I've never flown Jetblue, but good to know I guess.
3) Only for US airlines, and if you're burning MR points on Delta, Jetblue, or Hawaiian... As one of my friends on reddit has said, this fee is Amex's way of telling you you should be transferring MR elsewhere!
4) Fair complaint. Not one that's really impacted me, but a fair complaint.
5) Amex has made it pretty clear they're tired with churners/unprofitable or likely to be unprofitable customers. Can't say I blame them. Would you engage in a business relationship that would more than likely wind up being a loss to you?

I have been waiting for 1099s from Amex for the ~5 referrals I had last year, but have not yet received them. Anyone else still waiting?

Out of interest, how many people are accepting the valuation Amex has placed on these referrals and are paying tax on them and how many are changing the valuation to 0 and not paying tax? Based on the legal advice in the link posted a few posts up, it seems like a pretty easy case can be made for changing the valuation to 0 and thus having no tax liability.

It wasn't so much as advice, as a description of a position some people are taking. Amex have it in their terms that all membership rewards points in your account technically belong to Amex, so the line some people are taking is that since they legally do not own the points awarded through a referral, they do not need to pay tax on them.

Source: https://www.travelcodex.com/amex-ref...ractical-tips/

What did people end up doing on this? Did anyone go for a zero valuation based on the points not being their property? Did anyone go for a lower valuation than what Amex used?

Moderator action
 

Discussion continues here for 2020: https://www.flyertalk.com/forum/amer...c-who-got.html