Tax on Miles
 

I wasn't really paying attention to this, but has anyone noticed that some car rental companies slip in a tax on mileage? I just looked at my itemized invoice from National when I was doing expenses for my last trip, and I saw this item labeled FFTXRSU.

The explanation of this item was "FFTXRSU is a recoupment of tax on Frequent Flier miles earned."

Okay, so it's only $0.26 and I'm not paying for it anyway, my company is. But sheesh, talk about nickel and diming you. Or, in this case, quartering you.

This has been going on for a while. I know Avis taxes FF miles and MCI taxes the miles earned from long distance calls.

These are taxes that they are passing on to you becuase they are now required to pay taxes (as a third party) on any miles bought from the airlines.

If you think this is a rip-off, you should look at the $1-$3 car license fee they charge renters!!!

This is just a cost of providing the points and should be part of the quoted daily charge but, as we've seen so many times in the USA (can you say "energy surcharge"?), companies love quoting a low rate and then adding anything they can think of on to the bill later.

I've noticed that this particular tax doesn't seem to apply to overseas FF schemes, which is nice. (Gee, do I want to earn 250 miles on a U.S. airline and pay tax on it, or 700 miles on Qantas with no tax? I wonder!)

It's on my sprint bill also, it says Frequent Flier excise fee or something like that and its usually around $1. Kinda pricey for the few miles I get from them.

Sprint (and most companies) charge a excise tax of about $1 per 1,000 miles awarded. So if you get only 1K in miles, it's $1, but if you are like us and get 5K in some months that's over $5 in taxes.

Tax on Miles

Bad, bad, bad, bad words. http://www.flyertalk.com/forum/frown.gif

If this is a tax charged on the amount the airline charges the partner can we take this and calculate backwards what the partners pay the airlines for the miles?

For example if Hertz charges me $0.70 cents for this transaction can we assume that this is 8% sales tax on something purchased from United and therefore Hetz paid $8.75 to United? Or something similar to that.

From that we could then work out that the 700 miles I get with United for this transaction values the miles to the airlines at $0.0125?

Ok, so some of the numbers are random here, I don't have my recipt here for that rental and I can't remember the actual charge for the mile tax, but is the theory valid?

I stopped renting from National after a couple times I believed they were charging taxes inappropriately on free rentals.

Is such a sad commentary on how the travel experience has changed. Remember when we once got 500 miles, minimum, for even a one day rental, without any tax? Two weekends ago my bill with AVIS for a three day rental at AUS ($51 for the actual three day weekend rental) tacked on almost 50% for taxes and surcharges. Is anyone else about ready to write their Congressman about this?

Well, writing to your Congressman won't do any good because if you look at the breakdown, they're all pretty much state and local taxes.

And if you're renting a car in a place where you don't live, you're SOL. No local rep is going to pass up the chance to balance his budget on the backs of people who don't live there!

Alamo zapped me on this recently, on a triple miles CO rental coupon deal - those points I did not really need or want, but I paid for em! http://www.flyertalk.com/forum/frown.gif

That depends on your purpose. I assume Congress could make it mandatory for rental companies to quote the full daily rate in all advertising and all quotes. That would make it much easier to compare rates and stop the misleading practice of adding on all manner of taxes and charges later.

Indeed, a decent blanket consumer protection law that prevented misleading advertising in any industry and prevented charging any amount that wasn't fully disclosed in advance would do it.

One trick previously mentioned to avoid the FF mile excise tax is to not give ANY FF miles at rental time, but instead to submit the receipts after the trip for FF mileage credit, as at that time there is no way to charge you for the miles.
The downside to this is the extra time and expense (fax call, etc) for submission.

Jeff

That FF tax actually came in very handy one time. Hertz tried to tell me that my bonus miles for a rental didn't show up because the particular rental location in question did not participate in giving miles. I politely pointed out that they had charged a tax on the miles on my receipt, and asked them to either refund the tax or give me the miles. The miles then "miraculously" showed up. http://www.flyertalk.com/forum/smile.gif

Regarding figuring out how much the miles are worth from the tax-

I did this for a Hertz rental at SFO about a month or so ago. I did the math on the amount of the tax and calculated that they are valuing the awarded miles at 1.5 cents each.

Whether or not that means Hertz is paying 1.5 cents for the miles, I don't know. But since the "how much are miles worth?" topic is a very much discussed topic on Flyertalk, I thought it interesting that Hertz values them at 1.5 cents each.

I've read in a lot of financial magazines that they are wort around two cents a mile. If you think about it, that makes sense. A round trip coach fare in the continental US won't cost you more than $500, and it normally takes 25,000 miles for a free trip.

Would it be fair to single out the rental car industry? For example, few retail stores that I'm aware of posts their prices inclusive of state and local sales tax. The only exceptions I can think of are alcohol served in a bar or restaurant (in many states) and gasoline. Well, I suppose airline tickets are quoted with the federal taxes included, but not the local PFC's or federal or foreign fees for international travel.

I agree that certain fees that rental car agencies add on to the bill should be included in the quoted price (such as the car registration fee - this should be a cost of doing business that's included the price), but most of the fees are government taxes on the customer directly related to the price charged.

For things such as state sales tax, airport tax, stadium fee, etc., I think it's important that these be broken down on the bill, so that consumers know how much the governments are hosing them.

Can we stop calling these taxes? The rental companies want to make it sound as if they do not have a choice to collect them from us. They are not taxes on us, but rather taxes on the companies. To us, they are fees, fines, surcharges, or whatever, but not taxes. This is a cost of doing business which they are passing directly onto us, as a separate fee. Why should they stop here? Why not collect the "taxes" they have to pay on the puchase of the vehicle as an additional add on fee?

I have no idea why this thread made me think of this, but there is a local pizza shop which has "free delivery". However, if you pick it up yourself, they give you a dollar off. When you point out that delivery therefore is not free, but costs a dollar, they sort of glaze over. It is similar to discussing the miles fee issue with a rental company. "It is a tax, Sir" No it's not. They are just charging for free delivery.

I would love Congress to bring us in line with the Europeans and require all quoted prices to be net of all taxes, fees and surcharges.

Back when this started a few years ago, I believe the reason they did this was at the request of their large corporate clients, this way the rental car companies would not build that tax into the price everyone pays and companies could avoid having to pay it to Hertz by not allowing their employees to tax FF miles or not reimbursing their employees for that tax.

National already does that. When you make your reservation, they quote you the price with all taxes and fees included.

I don't really care -- like I said, it's not my money, and it's such a small amount, but it's kind of like, geez, guys, can't you spot me $0.26?