The federal Internal Revenue Service is investigating whether American Express sales staff gave faulty tax guidance to potential customers in an effort to sell them payment card-related services, the Wall Street Journal reported.
The pitch, according to the Journal, which reported its use in November, was that businesses operators could deduct card-processing fees from business income for tax purposes, then transfer rewards triggered by those fees to AmEx cards they controlled for personal use without paying taxes on the rewards.
The civil investigation has been underway for months, the Journal reported.
The Journal quoted an AmEx spokesman as having said this week: “We have already taken a number of actions to change products, policies and personnel and are continuing to cooperate with our regulators and government agencies.” The Journal reported that AmEx previously had stated it had halted the practice. The Journal also reported that AmEx had stopped providing a payments service related to the practice for some McDonald’s franchisees.
The Journal reported that an IRS spokesman said the agency was legally banned from discussing matters involving individual taxpayers.
The Journal reported that the government generally does not count rewards points generated by personal purchases as income, but that the law is less clear when it comes to rewards earned through business accounts.
A whistleblower filed a complaint describing the practice with the IRS in summer 2021, the Journal reported. Whistleblowers often get a cut of taxes the government collects as a result of complaints they filed.
The IRS is the latest of several entities that have opened investigations into AmEx sales practices, the Journal reported. According to the paper, the list includes the Justice Department, Officer of the Comptroller of the Currency, Treasury Department, Federal Deposit Insurance Corp. and Federal Reserve.
This news is republished from another source. You can check the original article here
Be the first to comment