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Class Action Suit Against Citibank over Frequent Flyer Miles

About a month ago I wrote about Citibank issuing 1099-MISCs to some of its customers who opened a bank account and received frequent flyer miles.

Some customers aren’t happy. Last month, a class action lawsuit was filed against Citibank by lead plaintiffs Bertram Hirsch and Igor Romanov. They claim that Citibank did not tell new customers who received 40,000 frequent flyer miles after opening a new account that they would have to report 2 1/2 cents per mile as income to the IRS. They also claim that 2 1/2 cents per mile is a gross overvaluation.

Like many lawsuits, class actions take time to resolve. Often years. It is of no help to taxpayers and accountants who have to decide whether to report the income this tax season.

As far as I know, the IRS hasn’t said much about the issue since the news broke. This story has generated a lot of press, so maybe the government will step up. We’ll see.

(Hat tip: taxgirl)

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