Just in
time for your summer vacation, the IRS is getting ready to toughen
the tax treatment on frequent flyer miles and hotel loyalty reward
programs. The IRS announced in 2002 that it wouldn’t try to go
after individuals for income taxes on frequent flyer miles or hotel
loyalty points earned on company-paid business trips. Yet the
temptation to wring some tax revenue out of the vast non-dollar
economy of Starwood Preferred Guest Starpoints, Marriott Rewards
points, American Airlines AAdvantage miles, Delta Skymiles, and so
on is apparently so great that that the government just cannot
resist.
As Ira Stoll points out, when the government is spending so much
more than it takes in, the pressure rises for Washington to dream
up new items to tax, or to raise taxes on.
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