PSA: Don't swipe recklessly for others

[Baruch]

. And don't forget to talk about wealthy people declaring bankruptcy to save their assests. Ask him if that's also against his ethics.

And if he needs an example of a bankruptcy
http://www.worldpropertyjournal.com/us-markets/vacation-leisure-real-estate-1/extended-stay-inc-lightstone-group-llc-blackstone-group-lp-bear-stearns-david-lichtenstein-federal-reserve-wachovia-943.php

[churnbabychurn]

Keep in mind that his credentials to be discussing halacha are that he is wealthy.

He has a well paid staff of producers who seem competent in sourcing and prepping him.

[EJB]

He has a well paid staff of producers who seem competent in sourcing and prepping him.

Ah, so he and they are well paid.

[Denverite]

Well, asking hard questions is a better way to gain clarity than having an echo chamber. See Bava Metzia.

Wow, that's a beautiful and powerful concept.

Maybe not explicitly "you can / should sell your points for cash", but offering "Have a ton of miles to burn? We can also work out a method to pay for the cruise with them!" certainly implied that.

You are right.  This could be problematic although I'm still (perhaps naively or in willful denial) hoping that this advertised "method" didn't include selling points and no 1099. 

Listening now to the Brenner interview for the first time.

A few takeaways so far.

3. AT says disputing can get you in criminal trouble as you affirming under oath that you don't recognize the charge, but an initial chargeback isn't an affirmation under oath. Of course it may come to that, but it should not be hard to at least initiate a chargeback without those repercussions.

I'm not advocating lying. But there are other things you can likely say that aren't lying. I'd suggest hiring a lawyer in these cases.

Guys, no one responded to my question about mileage buyers issuing 1099's.  Can someone please do so?  The answer changes the whole landscape around where this could all end up.  It seems many of you on here have sold points, no one wants to chime in?

If there was multi-millions of tax-fraud, along with all the bank issues for these cardholders, they could have bigger legal consequences to disputing these charges (and if the feds start looking through the books of these points buyers servicing these cardholders involved, all the other little guys that "only" sell points could be facing  consequences too). 

I really don't want thousands of my brethren to have problems with the law or to have to face the tremendous Chillul HaShem in the media.  Seems like if people dispute charges and banks and legal authorities start digging (although they may start digging without the chargebacks) there could be consequences none of us ever dreamed of.  It also seems like people should add this aspect into their personal calculus of deciding if they want to continue to engage in any of these (admittedly profitable) transactions.  If people ARE getting 1099s and paying income taxes on money earned from these swiping arrangements and selling points, disregard all these worries as its a moot point.

Do points buyers issue 1099s?

[rileywiles23]

Do points buyers issue 1099s?

No

[yosefchaim]

Do points buyers issue 1099s?

No need as it's looked like as a 1% off the purchase price. (Heard from CPA's.) When you redeem for Cash back the banks don't either send you a 1099.

[Dan]

1st of all, we didn't coordinate the sale of any miles for a space. But it was a cute gimmick.

We're going off-topic yet again and I'm not sure why these questions keep coming up in this thread, but it's really not simple that tax is owed on the sale of miles. Miles earned from cards are in lieu of cashback, which is a purchase rebate, not income. Nor is a 1099 required for purchasing goods.

Either way, I'm not an advocate of selling miles.

[skyguy918]

1st of all, we didn't coordinate the sale of any miles for a space. But it was a cute gimmick.

We're going off-topic yet again and I'm not sure why these questions keep coming up in this thread, but it's really not simple that tax is owed on the sale of miles. Miles earned from cards are in lieu of cashback, which is a purchase rebate, not income. Nor is a 1099 required for purchasing goods.

Either way, I'm not an advocate of selling miles.

The issue would be sign up bonuses though, no?

[Dan]

The issue would be sign up bonuses though, no?

Those are also a purchase rebate, unless you're talking about checking account signup bonuses which are already 1099d, so I don't see why you would report income again on the same miles if sold.

Really getting off on a tangent here.

[skyguy918]

Not sure if this has been posted...
But looks like someone is suing
but on rejecting a chargeback that was used in a 3rd party
https://lostmessiahdotcom.files.wordpress.com/2019/03/501104_2019_congregation_hakshivah_v_hersh_deutsch_et_al_memorandum_of_law_13-1.pdf

It's linked to in the wiki already - discussed upthread.

[Yard sale]

Those are also a purchase rebate, unless you're talking about checking account signup bonuses which are already 1099d, so I don't see why you would report income again on the same miles if sold.

Really getting off on a tangent here.

https://news.law.fordham.edu/jcfl/2017/09/27/do-rewards-points-classify-as-taxable-income/

The only time you would have an issue is if you use the full purchase amount as your cost basis for your business. That cost basis has to be lowered by the cash back, which is a rebate on the purchase amount. Otherwise you are double dipping.

[Denverite]

1st of all, we didn't coordinate the sale of any miles for a space. But it was a cute gimmick.

We're going off-topic yet again and I'm not sure why these questions keep coming up in this thread, but it's really not simple that tax is owed on the sale of miles. Miles earned from cards are in lieu of cashback, which is a purchase rebate, not income. Nor is a 1099 required for purchasing goods.

Either way, I'm not an advocate of selling miles.

Why is it off topic?  Are you sure, not all goods sellers don't need to do 1099's because many issue a 1099k for more than 20k in sales.

I know points are considered a rebate legally but y'all have said that they can be valued and sold as a good.  Even if the IRS doesn't generally get involved, the scale of this swiping scandal is SO huge that no one knows what the unforeseen effects will be down the road.

Is it so simple? Maybe it is and hopefully there isn't a tax scandal mixed with this swiping scandal.

I've said my peace on this to try to get people thinking about what they are doing when swiping for others and selling points so I'll try not to go down a rabbit hole.

Thank you for the explicit statement saying you don't advocate selling points!

[Dan]

Why is it off topic?  Are you sure, not all goods sellers don't need to do 1099's because many issue a 1099k for more than 20k in sales.

I know points are considered a rebate legally but y'all have said that they can be valued and sold as a good.  Even if the IRS doesn't generally get involved, the scale of this swiping scandal is SO huge that no one knows what the unforeseen effects will be down the road.

Is it so simple? Maybe it is and hopefully there isn't a tax scandal mixed with this swiping scandal.

I've said my peace on this to try to get people thinking about what they are doing when swiping for others and selling points so I'll try not to go down a rabbit hole.

Thank you for the explicit statement saying you don't advocate selling points!

Never heard of a 1099 for goods purchased.

[skyguy918]

https://news.law.fordham.edu/jcfl/2017/09/27/do-rewards-points-classify-as-taxable-income/

The only time you would have an issue is if you use the full purchase amount as your cost basis for your business. That cost basis has to be lowered by the cash back, which is a rebate on the purchase amount. Otherwise you are double dipping.

Actually, now that you mention it, isn't that essentially what's happening in the case of swipe farms? You can't really call any of it (sign-up or regular points/miles) purchase rebates. The cardholder is not purchasing anything, but they're receiving the miles. And even if you want to say it's a purchase rebate because the swiper ostensibly purchased something, that only makes sense if the swiper gets the points. If the swiper then turns around and gives the points to the cardholder, isn't that income?

[12HRS]

Is Umm the new Boo?

[Dan]

Actually, now that you mention it, isn't that essentially what's happening in the case of swipe farms? You can't really call any of it (sign-up or regular points/miles) purchase rebates. The cardholder is not purchasing anything, but they're receiving the miles. And even if you want to say it's a purchase rebate because the swiper ostensibly purchased something, that only makes sense if the swiper gets the points. If the swiper then turns around and gives the points to the cardholder, isn't that income?

You can say the same for any form of MS, no? Do you owe tax when you buy a fee-free $200 Visa?

[skyguy918]

You can say the same for any form of MS, no? Do you owe tax when you buy a fee-free $200 Visa?

Let's assume they're the same. What's the explanation for why you wouldn't owe tax?

[Dan]

Let's assume they're the same. What's the explanation for why you wouldn't owe tax?

Personally I'm earning miles and I use them, but if you're selling them then you should ask your accountant. Scale also matters.

[PSA]

The question is if there is a downside to disputing and trying that method before going the bankruptcy/settlement route. What's the worst case scenario? If you lose the dispute, does that make you ineligible to settle?

1) While there might be ways to phrase the dispute that wont be a straight out lie, at the end of the day the reality is all cc holder's lent money to someone on his own credit card, and the swiper did not pay back. While you are not under oath, you are in a way trying to defraud the bank Whatever you are going to tell the bank is misconstruing the truth, and essentially a lie which is a problem halachichally as well, since you are attempting to steal money from the bank.
2) If you lose the dispute, that would mean the bank did their investigation, and decided you are in the wrong. It just might make things much harder when trying to settle with the bank afterwards
3) Disputing brings much more attention to your account and connecting you to the story, wherein defaulting/settling you are one of many people that that go through that process

[Yard sale]

Actually, now that you mention it, isn't that essentially what's happening in the case of swipe farms? You can't really call any of it (sign-up or regular points/miles) purchase rebates. The cardholder is not purchasing anything, but they're receiving the miles. And even if you want to say it's a purchase rebate because the swiper ostensibly purchased something, that only makes sense if the swiper gets the points. If the swiper then turns around and gives the points to the cardholder, isn't that income?

You are absolutely correct. If my 2% card is being swiped by some toner company for 200k, and the company then pays me back 200k, the 200k purchase price was rebated  by the $4,000 cash back, so my cost basis was actually $196,000 for a 4K profit that is unquestionably taxable. That is quite clear. Doesn’t everyone swiping report this amount as taxable income?