April 24, 2002

The Honorable Henry A. Waxman
2204 Rayburn House Office Building
Washington, D.C. 20515

Dear Congressman Waxman:

I am writing to urge your support for HR 4374, the Frequent Flyer Tax-Free Liability Act of 2002 (a.k.a. the Meeks-Foley bill). The bill will put to rest, finally, the uncertainty surrounding the tax status of frequent flyer miles.

For years, the IRS has considered frequent flyer miles earned for business travel and redeemed for leisure travel to be taxable in principle because the miles effectively constituted extra income (like a salary bonus).

In spite of having so ruled, the IRS routinely ignored its own policy, on the grounds that as a practical matter, tracking and valuing the miles was too difficult and burdensome. So there was a disconnect between the IRS's philosophy (the miles are taxable) and their actual practice (taxpayers were not required to pay tax on their miles).

The resulting confusion can be resolved in either of two ways: the IRS could act on its policy and begin collecting taxes for frequent flyer miles; or the IRS could adopt a new policy stating categorically that frequent flyer miles are not taxable.

As a frequent traveler, and a 20-year veteran of the travel industry, I strongly recommend you and your House colleagues come down on the side of the latter approach, for the reasons cited in HR 4374.

Thank you for your time and attention.

Sincerely,

Tim Winship
Editor & Publisher
FrequentFlier.com
"May Your Miles Never Expire"
http://frequentflier.com