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As you may know, there has recently been some uproar (or at least moderate roaring) in the miles and points community about the 1099’s that were recently issued by both Citibank and American Express. The Citibank 1099’s were issued to those who received AAdvantage miles via signing up for a checking or savings account. Citibiank valued the miles at 2.5 cents a piece, which is a bit high to begin with considering many miles get redeemed at a much lower rate. What’s worse is while this info was reported to be in the Terms and Conditions, most people were very surprised when the 1099’s came, so I don’t know whether the info wasn’t clear or whether people just didn’t take the time to read what they were signing up for. Citibank did not send out 1099’s to those who got their miles via credit card sign-ups.
American Express sent out 1099’s to some who via the Gift Chain promotion won prizes that totaled at least $600. Again, the main problems here were the lack of advance warning that this may happen if you participate in this promo, and the way in which the prizes were valued. Specifically, Amex valued ShopRunner Memberships at $79. This was a very common prize to win, but many people (myself included) never even activated their free ShopRunner membership, yet the $79 “value” was included on the 1099 form that was to be filed with the IRS. Thus, you had to pay taxes on the prize that you never even claimed.
However, it seems that there has been a 1099 Back Pedal of sorts by Amex. Today an email was sent out that said:
We are writing to let you know we are reissuing a 1099 form to you for the value of the gifts you received through the American Express Gift Chain promotion. As a courtesy, this new 1099 form will not include the value of any ShopRunner memberships or any Next Purchase statement credits you received if you haven’t redeemed them. You will receive the form within the next two weeks. If you don’t receive the new 1099 form in this timeframe please call the number on the back of your Card.
If you have already used the original 1099 form to file your 2011 tax return please contact a tax professional for assistance.
Thank you for your Cardmembership.
American Express Customer Care
(Thanks @nmorlock42 for forwarding me this email!)
Okay, so it is good news for those who haven’t filed taxes, and didn’t claim their unwanted ShopRunner memberships, but it comes a bit late for those who already filed and/or redeemed or gave away unwanted ShopRunner memberships. At the very least, hopefully this at least helps set the stage for how future Amex promotions will run.
What do you think of the Amex 1099 back pedal?
Oh, and while we are on the topic of taxes, look for a post tomorrow about earning miles and points when you file your taxes. Fun, fun!