AMEX rewards transfer excise tax
 

I just transferred 100,000 AMEX rewards into my Delta account and was told I will be charged $40 to do so. Why? because it seems I'm being charged yet another excise tax implemented in March. How can I be taxed on a transfer? Not usage mind you but a mere transfer?? I'm furious....who's excise tax is this?? The feds or the airlines?

bogger, you are supposed to pay tax on FF awards.

Something about claiming them to the IRS.

Did you ever consider it might be your state?

BTW, I don't think it would be the airlines if as you've stated it is called an Excise Tax. An airline might charge a fee. But, unless they've changed the US Constitution, I doubt they can charge a tax.

Ryan, you might have something there, I live in Taxachusetts.

FYI,
Here's a link to the IRS publication.

http://www.irs.gov/publications/p510/ar02.html#d0e1160

Note the section on Transportation of Persons by Air.

Seems the IRS found a way to pay for part of those highly publicized "tax cuts." Tax mileage rewards for credit cards linked to air miles.

Thanks for the link Ryan, I'm not sure I "got it" but it appears they can apply this tax for rewards that can be used for flight. (not merchandise) I'm not sure about the exemptions but this is an enormous amount of money in the coffers. The days of using your ff miles with ease and without cost has ended. More often than not, I have to use the skychoice rather than skylimited when booking a ff flight with Delta. That cost of ff miles is double. They often times offer an outgoing flight with the 25,000 mi but you're forced to use 50,000 for a return booking. I only bend when necessary and I have no other choice,holidays, etc. Thanks for your input

This was implemented by Amex Membership Rewards just this year. The rate is $0.0004 per mile with a maximum cap of $40 per transfer. I was just charged $0.80 for transferring 2000 miles to top off my Delta account. While I don't really like the idea, I believe this is a federal excise tax and it doesn't matter where you live.

This is not the same as the airport fees/departure taxes that you pay when you go to redeem your tickets. Those are dependent upon the origin and destination.