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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsClass of New Customers Is Furious at Citibank Gimmick
Class of New Customers Is Furious at Citibank Gimmick
MANHATTAN (CN) - Irate customers claim in a federal class action that Citibank lured them in by offering 40,000 frequent-flier miles to open an account - but didn't tell them they had to report 2½ cents per mile as income to the IRS.
Lead plaintiffs Bertram Hirsch and Igor Romanov say that Citibank grossly overvalued the miles, which have no actual value to customers and should not be taxable.
"Citibank regularly offers promotional American Airlines miles to induce customers to open up checking or savings accounts at Citibank, usually with a minimum deposit of $25,000," the complaint states.
"What Citibank does not disclose to customers who take advantage of the American Airlines miles promotions is that Citibank will file with the Internal Revenue Service ('IRS') a 1099-MISC reporting that they received miscellaneous income, in the amount of 2.5 cents per mile, for the American Airlines miles provided to such customers.
"It is widely understood in the marketplace that airline miles are not reported to the IRS as being taxable for income tax purposes. Indeed, Citibank expressly informed plaintiff Hirsch that the American Airlines miles that he would receive for opening up Citibank checking and savings accounts were not taxable.
http://www.courthousenews.com/2012/02/16/43957.htm
xchrom
(108,903 posts)Liberal Veteran
(22,239 posts)I swear one company has been offering me the same "limited time" offer for 15 years with their mailings.
I almost think it would be easier to put a shredder in place of my mailbox.
ArcticFox
(1,249 posts)Wouldn't it be grand if the IRS took interest in this? Citibank is basically booking an expense of $1000 for each 40,000 miles, in order to pay less taxes?