Originally Posted by rrgg (Post 14255193)

You can find more about overpaying taxes in other threads. Apparently this is not a "red flag" for the IRS.
http://www.flyertalk.com/forum/other...es-points.html
http://www.flyertalk.com/forum/miles...us-thread.html
http://www.flyertalk.com/forum/miles...x-payment.html
http://www.flyertalk.com/forum/miles...ing-miles.html
http://www.flyertalk.com/forum/ameri...us-offers.html

Originally Posted by Roka (Post 14257831)

Thanks. These were interesting. I flipped through parts of these threads and didn't see any reliable information on what the IRS considers a red flag or not. Or at least, I didnt see any source about overpayments that I would rely on, just ancedotal experiences and conjecture. But this does support the conclusion at least that you probably wont be hit with heavy penalties for overpayment.

Originally Posted by rrgg (Post 14257877)

Sorry. What I should have said is that this question came up before, and someone who is either a tax attorney or IRS or CPA or something (I think) responded in that way. There are more threads, and I don't know where it is. I just posted the first few links that showed up in a search.

Originally Posted by techboyds (Post 14257923)

Fairmark's forums are generally a pretty good source (populated by CPAs and the like). Here's a relevant thread.

The upshot is that there appears to be no penalty, though some suggest that unusual activity could cause the IRS to take a closer look, which I suppose isn't a problem if one is on the up and up, though I'd prefer to avoid the experience regardless. :)

Originally Posted by wanaflyforless (Post 14244436)

I have pursued this idea.

IF you have a merchant account that already has $$$$$$ going through it, you can probably earn yourself millions of miles at ~1 cent each by doing something like the below example:
1) Get 10 trusted friends to open a card like the Asiana Amex from Bank of America that earns two miles per $, not one. Friends would open card for your (temporary) use only.
2) Charge $100K to each of these cards over time. Of course, promptly pay the bills to avoid any CC charges beyond your merchant CC fees.

If you have an Amex rate of 2%, that would be 2 million Asiana miles (Star Alliance, redeem alliance wide) for $20,000 in merchant fees. Be aware this sort of thing is probably against your merchant agreement in some way and you will not get away with it if charging 2 million $ is outside of your normal pattern.

Originally Posted by MilesToGoBeforeISleep (Post 14439584)

I've thought through this (I have a business that accepts credit cards). Problem is that the money coming in is income and is subject to income tax...