Where do you s there should be a difference between buying the card and a reload?
However, petitioners’ direct purchases of money
orders and reloads of cash into the debit cards
using the American Express cards presents a different
question from the purchase of Visa gift cards. The
Visa gift cards have product characteristics. They
provide a consumer service embodied in a simple
plastic card for convenience. The Visa gift cards
are not redeemable for cash, but the money orders
purchased with the American Express cards and the
infusion of cash into the reloadable debit cards are
difficult to reconcile with the IRS credit card reward
policy. No product or service is obtained in these
uses of the American Express cards other than cash
transfers. The money orders are not properly treated as
a product subject to a price adjustment because they
were eligible for deposit into petitioners’ bank account
from acquisition. Similarly, the cash infusions to the
reloadable debit cards were not product purchases.
The reloadable debit cards were used for Moneygram
transfers, which are arguably a service. However, the
Reward Dollars in dispute were issued for the cash
infusions, not the transfer fees. Therefore, we uphold
respondent's inclusion in income of the related Reward
[*22] Dollars for the direct purchases of money orders
and the cash infusions to the reloadable debit cards.
We note that the above holdings are not based upon
the application of the cash equivalence doctrine but
rather the incompatibility of the direct money order
purchases and the debit card reloads with the IRS
policy excluding credit card rewards for product and
service purchases from income.
