if miles have no value, why does excise tax apply when buying?
 

I thought that all the airlines were careful to assign no value to miles so that they couldn't fall into some trap of having them taxed (I don't know the technical terms/reasons, but this is what I recall from some discussion here).

So why, in the recent email to me asking if I still wanted to buy extra miles, is excise tax charged on purchases of miles?

Just because the IRS they have no tax implications, that doesn't mean they don't have value. If you read any airline's SEC filings, they all assign a value for outstanding miles.

Miles most certainly have value. When you win miles in a sweepstakes, those miles are taxed. Miles earned through flying or CC are considered a form of rebate on a paid purchase and are not taxed. The IRS has guidelines about not taxing miles in certain cases, but that doesn't mean they don't have value, as mahasamatman has stated. When you purchase miles outright (rather than receiving them as a rebate on flying or a CC-made purchase), they become a taxable product.

I should also note that excise tax can be assessed on services - take a look at your next cable bill, for example. Services aren't tangible and therefore have no "value," and yet they clearly do have a value... and are taxed accordingly.