Entrepreneur magazine, January 2000
Uncle Sam wants your miles: A federal excise tax on frequent-flier points may soon take a nibble out of your hard-earned travel bonus--if it hasn't already.
The tax on miles, passed in 1997, had been absorbed by many travel suppliers for its card members. Effective last fall, however, Sprint changed that policy. "This was a business decision," explains Sprint's corporate communications manager Elaina Boudreau. "We had to pass this cost we were incurring along to our customers."
Now MCI and many car rental companies have done the same thing. According to Sprint, its long-distance customers are charges $1 for every 1,000 frequent-flier miles they earn; the charge is based on the total number of miles awarded each month. For example, a customer who earns 250 miles in a month will acquire a Frequent Flyer Excise Charge of 25 cents.
Christopher Elliott is a writer in Annapolis, Maryland. Contact him at http://www.elliott.org.