Manufactured Spending With Own Business
Jan 23, 21, 7:19 pm
#1
Original Poster
Join Date: Jan 2021
Posts: 1
Manufactured Spending With Own Business
Hello All,
I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?
Thanks.
I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?
Thanks.
Jan 23, 21, 10:39 pm
#4
Join Date: May 2008
Location: PHL (kinda, no airport is really close)
Programs: AA Exp, but not sure for how long. Enterprise Platinum woo-hoo!
Posts: 4,433
What are you going to be "selling" yourself? If you run the charge and then take the money out yourself, it will look like profit to the taxman.
Also, your bank and/or credit card processor are not going to be amused. You can explain exactly what you're doing, and the only phrase that will come to their mind is "Money Laundering."
Almost all high-volume MSing gets shut down eventually. If all you lose is an account you were only using for MS anyway, it's no loss, but if you lose your business, it's a big deal.
Also, your bank and/or credit card processor are not going to be amused. You can explain exactly what you're doing, and the only phrase that will come to their mind is "Money Laundering."
Almost all high-volume MSing gets shut down eventually. If all you lose is an account you were only using for MS anyway, it's no loss, but if you lose your business, it's a big deal.
Jan 24, 21, 8:09 am
#5
Join Date: Mar 2005
Programs: Continental Onepass, Hilton, Marriott, USAir and now UA
Posts: 5,826
Why don't you pose this question to your business lawyer and accountant.
I am certain that they would be amused by the question, but since you are paying for their services, you should get an official answer.
I am certain that they would be amused by the question, but since you are paying for their services, you should get an official answer.
Jan 24, 21, 9:50 am
#8
Join Date: Dec 2007
Location: YYJ
Programs: AC SE, Bonvoy Tit/LT Plat, HH Gold, National EE, Sixt Plat, Enterprise Gold, UA*S, Accor Gold, Hz 5*
Posts: 2,242
I own or am a shareholder in more than one small business. Once I used my CC to pay for legitimate services between a business I owned and a business I co owned. Square shut down our merchant account with no appeals process.
Jan 24, 21, 9:54 am
#9
Suspended
Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,268
Forget about local taxes, the amounts you charge have to be classified for accounting purposes. If not revenue, what are they? If revenue, then it's taxable income. If there are no costs of doing business, e.g. "expenses" related to that revenue, 100% of what you run through the business becomes taxable income at whatever marginal rate you or your business entity pay.
Aside from being shut down by your payment processor, this almost certainly generates a SAR which may or may not affect all kinds of other personal and business transactions in the future.
Aside from being shut down by your payment processor, this almost certainly generates a SAR which may or may not affect all kinds of other personal and business transactions in the future.
Jan 24, 21, 10:22 am
#10
Join Date: Aug 2012
Posts: 4,936
Generally, I've no qualms with MS per se but this is something where the reward isn't worth the risk. Card issuers really frown on this, in particular Amex, any suspicion you may be circumventing cash advance fees would lead to your accounts being closed. The worst case scenario is that if you were unlucky enough to get caught up in any kind of money laundering investigation. It's not worth it, in my view.
As I'm sure you well know, when running a business it's of vital importance to not only avoid any violation of State or Fed laws, but also to stay clear of even the mere appearance of impropriety.
As I'm sure you well know, when running a business it's of vital importance to not only avoid any violation of State or Fed laws, but also to stay clear of even the mere appearance of impropriety.
Jan 24, 21, 12:35 pm
#11
Join Date: May 2002
Location: Arizona
Posts: 5,453
Just a short list of potential issues
1. Your merchant agreement or the processing agreement has language that prohibits what you describe.
2. Your actions are very similar to that of money laundering and could bring observations and investigations from various government entities
3. The credit card agreement has language that prohibits what you describe.
4. Your merchant account will receive a 1099 Gross Proceeds statement end of year and you will have to account for all of that money reported as income.
5. Fraud alerts may be triggered along with what is known in the industry as "bust outs" alerts may be triggered.
6. A lot more issues I am just lazy
1. Your merchant agreement or the processing agreement has language that prohibits what you describe.
2. Your actions are very similar to that of money laundering and could bring observations and investigations from various government entities
3. The credit card agreement has language that prohibits what you describe.
4. Your merchant account will receive a 1099 Gross Proceeds statement end of year and you will have to account for all of that money reported as income.
5. Fraud alerts may be triggered along with what is known in the industry as "bust outs" alerts may be triggered.
6. A lot more issues I am just lazy
Jan 24, 21, 1:07 pm
#12
Used to be 'Travelergcp'
Join Date: Jul 2003
Location: New Orleans
Programs: AA Plat, Marriott Gold, Hyatt Globalist
Posts: 2,767
Many have tried. Most merchant agreements prohibit self-dealing and will shut you off for anything other than a one-off. Ditto for a lot of anonymous prepaids.
You really need someone else’s business to make this work, preferably a grocer. I believe the Dans Deals Jewish group had some success with this for a while.
You really need someone else’s business to make this work, preferably a grocer. I believe the Dans Deals Jewish group had some success with this for a while.
Jan 24, 21, 2:27 pm
#14
Join Date: Jun 2020
Posts: 167
Originally Posted by m132f
Hello All,
I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?
Thanks.
I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?
Thanks.
So feel free to do this, but when you are caught, you will get flagged and your merchant account shutdown.
Jan 24, 21, 4:01 pm
#15
FlyerTalk Evangelist
Join Date: Aug 2009
Location: ZOA, SFO, HKG
Programs: UA 1K 0.9MM, Marriott Gold, HHonors Gold, Hertz PC, SBux Gold, TSA Pre✓
Posts: 13,811
Originally Posted by m132f
My question is can I use the business to charge my points cards as a way of manufactured spending?
But why would you need to pay for your miles, as credit card processing isn't free?
