5000 AA miles to open Citibank savings acct. Min $1,000 and 3 months
Jan 23, 2011, 5:48 pm
#136
Join Date: Mar 2007
Location: S Cal
Programs: AA Lifetime Plat, United Silver, Marriott Plat, IHG Plat
Posts: 1,142
It may be unwinding only for a lucky few.
Here's the gist of the reply I got from Citi:
Our records indicate that the amount of $125.00 shown on the 1099-INT Statement represents the retail value ($250.00 for every 10,000 American Airlines miles increment) of award items obtained under Promotion C2XZ. Please note 5,000 miles were awarded to your American Airlines account on August 05, 2010.
If I cannot resolve this soon, I may have to quickly close several Citi accounts before they have a chance to award me miles that were promised. I'm due 10K miles for a Citi checking account, but it's not worth the risk that I'd get hit with a 1099 for $250. And my wife has 5K miles coming for an Ultimate Savings account, but that is also not worth a $125 1099 in 2011.
So it looks like the only thing that may be "unwinding" for me is my banking relationship with Citi.
Here's the gist of the reply I got from Citi:
Our records indicate that the amount of $125.00 shown on the 1099-INT Statement represents the retail value ($250.00 for every 10,000 American Airlines miles increment) of award items obtained under Promotion C2XZ. Please note 5,000 miles were awarded to your American Airlines account on August 05, 2010.
If I cannot resolve this soon, I may have to quickly close several Citi accounts before they have a chance to award me miles that were promised. I'm due 10K miles for a Citi checking account, but it's not worth the risk that I'd get hit with a 1099 for $250. And my wife has 5K miles coming for an Ultimate Savings account, but that is also not worth a $125 1099 in 2011.
So it looks like the only thing that may be "unwinding" for me is my banking relationship with Citi.
Jan 24, 2011, 9:19 am
#137
Join Date: Nov 2008
Posts: 58
I also fell into this deceitful trap by Citi.
Recieved a 1099-INT from CITI for $187.50! This was in regards to an Ultimate Savings Account where I received a whopping 7,500 AA bonus miles. They are coutning these bonus miles as income at what appears to be an outrageous rate of 0.025c/mile.
I never saw that the bonus miles were taxable in the fine print when I opened the account.
The irony is that the interest I earned on the money I stashed in the ultimate savings account was only $40. (which I also received a separate 1099 INT for, which is totally fine with me)
Is this right?
How can we collectively contest this with Citi?
Can we contest this with the IRS? What does the IRS value the taxable value of a mile?
Recieved a 1099-INT from CITI for $187.50! This was in regards to an Ultimate Savings Account where I received a whopping 7,500 AA bonus miles. They are coutning these bonus miles as income at what appears to be an outrageous rate of 0.025c/mile.
I never saw that the bonus miles were taxable in the fine print when I opened the account.
The irony is that the interest I earned on the money I stashed in the ultimate savings account was only $40. (which I also received a separate 1099 INT for, which is totally fine with me)
Is this right?
How can we collectively contest this with Citi?
Can we contest this with the IRS? What does the IRS value the taxable value of a mile?
Jan 24, 2011, 12:23 pm
#138
Join Date: Dec 2009
Posts: 290
I also fell into this deceitful trap by Citi.
Recieved a 1099-INT from CITI for $187.50! This was in regards to an Ultimate Savings Account where I received a whopping 7,500 AA bonus miles. They are coutning these bonus miles as income at what appears to be an outrageous rate of 0.025c/mile.
Can we contest this with the IRS? What does the IRS value the taxable value of a mile?
Recieved a 1099-INT from CITI for $187.50! This was in regards to an Ultimate Savings Account where I received a whopping 7,500 AA bonus miles. They are coutning these bonus miles as income at what appears to be an outrageous rate of 0.025c/mile.
Can we contest this with the IRS? What does the IRS value the taxable value of a mile?
http://www.occ.treas.gov/topics/cons...rotection.html
http://www.helpwithmybank.gov/
OCC is the direct regulator of these N.A. (National Association) banks, seems banks treat them more seriously than BBB, etc. Last time BOA closed my credit card account due to high BT balance (they offered me 0% APR and sent me BT check, then closed my account after I took their promo!), I lost quite some cashback in the account, a OCC complaint quickly resolved the matter and one woman from BOA called me directly regarding solution.
Another time it's with a regional bank, I had to go to Federal Reserve and FDIC (their regulator), but banks will treat inquiry from their regulators with care.
Last edited by chespeak2002; Jan 24, 2011 at 12:31 pm
Jan 24, 2011, 12:28 pm
#139
Join Date: Oct 2009
Location: Chicago
Programs: United Gold, SPG Gold, Hilton Gold, Hyatt Diamond
Posts: 184
I opened a service request today. I was told it will take 24-48 hours for someone to reply to my inquiry.
If this is not resolved, I will then pursue the IRS form route.
If this is not resolved, I will then pursue the IRS form route.
Jan 24, 2011, 3:50 pm
#140
Join Date: Nov 2008
Posts: 58
I also opened a service request. I want Citi to expressly show me documentation where it lists the value of an AAdvantage air-mile. 2.5c per mile?? Someone needs to put an end to their song and dance game - I think they crossed the line when they issued the 1099INT. Are they really paying someone 2.5c to issue an airmile or are they just "creating wealth"?
Why aren't the lawyers filing the class action lawsuits against them??
Why aren't the lawyers filing the class action lawsuits against them??
Jan 24, 2011, 6:21 pm
#141
Join Date: Apr 2010
Posts: 437
I got the dreaded $125.00 1099-INT in the mail today for 5000 AAdvantage miles I received in early 2010. The worst part is that my wife and I have earned 40000 AAdvantage miles on a similar promo in the first weeks of 2011.
I'm currently on hold for a supervisor, after which time I'll post any new information I can glean (although I suspect that it's unlikely that I'll be able to do so.)
Those of you who are working on a solution for this problem, please continue to post feedback for those of us who are a couple of steps behind in the dispute process.
Cheers!
I'm currently on hold for a supervisor, after which time I'll post any new information I can glean (although I suspect that it's unlikely that I'll be able to do so.)
Those of you who are working on a solution for this problem, please continue to post feedback for those of us who are a couple of steps behind in the dispute process.
Cheers!
Jan 24, 2011, 6:50 pm
#142
Join Date: Apr 2010
Posts: 437
An update:
After 40 minutes on hold while the agent spoke with a supervisor, I was told there is apparently no resolution to this problem.
The real question I'd like answered is: If an item is bought at a discounted rate and given as a gift, does the IRS charge taxes on the discounted rate or the retail rate?
After 40 minutes on hold while the agent spoke with a supervisor, I was told there is apparently no resolution to this problem.
The real question I'd like answered is: If an item is bought at a discounted rate and given as a gift, does the IRS charge taxes on the discounted rate or the retail rate?
Jan 24, 2011, 7:33 pm
#143
Join Date: Sep 2010
Location: Cypress Hills Research Center
Posts: 5,295
Didn't get any chk/svg related miles from Citi in 2010 but did do the Fidelity promo for 50,000 miles. Just got Fid's combined 1099 and there is no reporting of income on the miles, only the normal interest paid.
Did do the 40K citi promo in 2011 (no miles awarded yet) so I guess I'll have to wait until 2012 to see what happens. Or maybe I'll contact them pro-actively to see if some sort of notation can be made to prevent a 1099-MISC from being issued.
If Citi insists on issuing a 1099-MISC, I see three possible courses of action:
1) Dispute the issuance of the 1099 or, at least, the
reported value of the miles to the IRS.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
2) If the IRS sides with Citi, then donate the miles
to charity in 2012 and use the IRS' own statements
to value them at the same rate that I was charged.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
3) Keep the miles and pay the taxes. Note that the
actual cost of the miles is not what was reported on
the 1099 but how much additional taxes (state and
fed) you will have to pay on the reported value.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
And just to offer my $0.02, Chase is a MUCH better bank. Unfortunately, they deal in SkyPesos (should probably change that to SkyZimbabweAgroChecks).
Did do the 40K citi promo in 2011 (no miles awarded yet) so I guess I'll have to wait until 2012 to see what happens. Or maybe I'll contact them pro-actively to see if some sort of notation can be made to prevent a 1099-MISC from being issued.
If Citi insists on issuing a 1099-MISC, I see three possible courses of action:
1) Dispute the issuance of the 1099 or, at least, the
reported value of the miles to the IRS.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
2) If the IRS sides with Citi, then donate the miles
to charity in 2012 and use the IRS' own statements
to value them at the same rate that I was charged.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
3) Keep the miles and pay the taxes. Note that the
actual cost of the miles is not what was reported on
the 1099 but how much additional taxes (state and
fed) you will have to pay on the reported value.
And close down my relationship with Citi or, at least,
be super aggressive in taking full advantage of
their services at every opportunity possible.
And just to offer my $0.02, Chase is a MUCH better bank. Unfortunately, they deal in SkyPesos (should probably change that to SkyZimbabweAgroChecks).
Jan 25, 2011, 8:58 am
#147
Join Date: Jul 2010
Programs: UA, AA, SPG, HH
Posts: 672
Has anyone tried going the 'email the CEO/CFO/COO' route in order to resolve these ridiculous 1099's that are being issued?
It seems that this is a systemic issue that will only be resolved when someone fairly senior gets involved.
And No, I don't think that the CEO will actually handle this himself but a lot of times they have well trained intelligent people whose specific job is to handle aggressive customer escalations.
In fact I work for a major corporation with billions of dollars in revenue and we have someone that works in the same office as me whose title is "Customer Escalations Analyst"
Going about this in a piecemeal fashion doesn't seem to be working as some people get the desired response while others are being told that Citi stands by its decision to issue a 1099.
I didn't earn any miles from Citi banking products in 2010 so I'm not going to spearhead the charge on this one but I believe the prudent way to move forward would be to band together and try to get senior management involved rather than going the 'every man for himself' route and everyone dreading seeing a 1099 in the mail and then having to call in and spend hours arguing with Indian CSR's, escalating to supervisors, writing messages to Citi's email customer service.
It seems that this is a systemic issue that will only be resolved when someone fairly senior gets involved.
And No, I don't think that the CEO will actually handle this himself but a lot of times they have well trained intelligent people whose specific job is to handle aggressive customer escalations.
In fact I work for a major corporation with billions of dollars in revenue and we have someone that works in the same office as me whose title is "Customer Escalations Analyst"
Going about this in a piecemeal fashion doesn't seem to be working as some people get the desired response while others are being told that Citi stands by its decision to issue a 1099.
I didn't earn any miles from Citi banking products in 2010 so I'm not going to spearhead the charge on this one but I believe the prudent way to move forward would be to band together and try to get senior management involved rather than going the 'every man for himself' route and everyone dreading seeing a 1099 in the mail and then having to call in and spend hours arguing with Indian CSR's, escalating to supervisors, writing messages to Citi's email customer service.
Jan 25, 2011, 10:24 am
#148
Join Date: Nov 2008
Posts: 58
COO/CFO/CEO route - I agree.
There must be a well connected person who's a Flyertalker member who could gladly take this up with a Citi exectuive over dinner in his First Class Suite at 35,000 feet.
Or at least alert the maintsream media to Citi's tactics...
What irks me is that these airmiles can be zeroed from your AAdvantage account after 18 months of no activity. Its not like real dollars in a bank account that would stay untouched...so why the hell do you have to pay taxes on them, especially if you have not redeemed them for a reward??
I'll gladly return the 7,500 AAdvantage miles Citi issued in return for $187.50 cash.
There must be a well connected person who's a Flyertalker member who could gladly take this up with a Citi exectuive over dinner in his First Class Suite at 35,000 feet.
Or at least alert the maintsream media to Citi's tactics...
What irks me is that these airmiles can be zeroed from your AAdvantage account after 18 months of no activity. Its not like real dollars in a bank account that would stay untouched...so why the hell do you have to pay taxes on them, especially if you have not redeemed them for a reward??
I'll gladly return the 7,500 AAdvantage miles Citi issued in return for $187.50 cash.
Jan 25, 2011, 3:12 pm
#149
Join Date: Oct 2009
Location: Chicago
Programs: United Gold, SPG Gold, Hilton Gold, Hyatt Diamond
Posts: 184
I got the following response on my investigation. 
==========
The amount of $250.00 amount shown on the FORM 1099-INT represents the value of the 10,000 AAdvantage miles that you received from Promotion CE8W. Please note that Citibank is required by federal tax law to issue information return for payments of interest to an account holder of $10.00 or greater. Citibank deems the payment made to you as interest as it was paid in exchange for your placement and maintenance of a deposit with us.
==========
Anyone has any ideas.
==========
The amount of $250.00 amount shown on the FORM 1099-INT represents the value of the 10,000 AAdvantage miles that you received from Promotion CE8W. Please note that Citibank is required by federal tax law to issue information return for payments of interest to an account holder of $10.00 or greater. Citibank deems the payment made to you as interest as it was paid in exchange for your placement and maintenance of a deposit with us.
==========
Anyone has any ideas.
Jan 25, 2011, 4:06 pm
#150
Join Date: May 2010
Location: DFW
Programs: AA GLD 1MM, Marriott Gold, HHonors, Hyatt, SPG, Avis First
Posts: 17
I too have been visited by a $125 1099-INT form. I did the 5,000 miles for the savings account thing last year. At least this isn't happening for credit card offers as well, or things would be really ugly. So it seems Citi is standing on the principle that payments of any type made to depositors should be treated as interest. And then they go on to value the miles using AA BuyAAmiles rates as the fair market value. Certainly wasn't expecting this given the fine print of offer in question. Had I known, I never would have done this offer considering these bonus miles come packaged with a tax penalty.
Seems strange that the IRS doesn't have a way to value miles, but Citibank can site one "fair market" price as some gold standard. Seems like this all is in a gray area of the tax law given that other banking institutions don't do this same thing.
I would like to go back in time and tell Citi no, I don't want your stinking tax penalty miles. But since I can't, the next best thing might be to follow the suggestion of donating the miles to charity and taking a $125 deduction. Then its like I never did the offer, the 1099 turns into a wash, I do lose the interest I would have earned on that money - but at today's rates that's trivial, and hey, a good cause gets some miles.
Seems strange that the IRS doesn't have a way to value miles, but Citibank can site one "fair market" price as some gold standard. Seems like this all is in a gray area of the tax law given that other banking institutions don't do this same thing.
I would like to go back in time and tell Citi no, I don't want your stinking tax penalty miles. But since I can't, the next best thing might be to follow the suggestion of donating the miles to charity and taking a $125 deduction. Then its like I never did the offer, the 1099 turns into a wash, I do lose the interest I would have earned on that money - but at today's rates that's trivial, and hey, a good cause gets some miles.