Randy Petersen is editor and publisher of Inside Flyer, which is
considered the leading publication in the world about frequent traveler programs. At CreditCards.com, he writes
Cashing In, a weekly feature in which he answers readers' questions about credit cards rewards programs.
Dear Cashing In,
If a person has a corporate American Express credit card that allows the employee to sign up for the "points" that accrue on the card, what is the industry standard for who actually owns the points? In other words, if the corporate credit card is used for business use only, can the employee use the points for personal use? -- Sam
Dear Sam,
I'm assuming in this case that you are referring to the option to enroll in the AmEx Membership Rewards program, which allows card members to earn points and redeem them for any number of reward opportunities, including conversion to frequent flier and guest program accounts.
There are two ways this scenario can play out, and it all depends on who pays the actual $40 American Express fee to participate in its rewards program.
The first scenario is when the company pays the rewards program participation fee. As someone who encourages businesses to manage their credit cards and frequent flier accounts to establish ownership of these points, I think it is to a company's advantage to apply rewards to future travel savings. However, many companies do not attempt to manage or own these potential assets and merely see the credit card, even though it is a corporate card, as an expense instrument.
The second scenario is the generally accepted practice where the employee pays the fee and thus becomes eligible to receive any benefits that come from that card use, as long as normal control and reporting responsibilities of the card remain with the company. There is a deep fear among a number of companies that when allowing employees to enjoy the benefits of a rewards program -- even though the employee has paid for that benefit -- the employee will find reason to use the card more often than required just to earn more points. That's a difficult point to defend.
However, companies that willingly afford their employees the ability to enroll in rewards programs at their own cost generally cede full benefit of the program to the employee, even though the card is for business use only.
And just in case you're curious about the tax liability of frequent flier miles, here's where it stands: They are not considered to be taxable income. In several ruling over the years, the IRS has noted that it currently does not consider such business-derived benefits as taxable income.
The Wall Street Journal refers to Randy as "... the
most influential frequent flyer in America," while The New York Times tagged him "the world's leading expert on
airline frequent flier programs." Randy is editor and publisher of Inside Flyer magazine -- considered the leading publication in the world about frequent traveler programs. He is a regular speaker at
business travel seminars and conferences around the world; and is often called upon by the industry itself for
his comments and suggestions about the future of frequent traveler programs.
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