taxes on cashback

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nsdp said:   It has been put in the wrapper for the roll. Done after the Patriot Act to stop money laundering.

Let me guess... you read this on a facebook status? Your number one source of information.

Glitch99 said:   nsdp said:   It has been put in the wrapper for the roll. Done after the Patriot Act to stop money laundering. Most crooks are not smart enough to unwrap the roll and reroll in a new wrapper. There were about 5 coin dealers buying rolls back in 2004 and shipping them to Mexico via UPS to coin shops there. Big wads of bills attract attention at the border; coins going by UPS to coin shops don't. RFID allowed ICE to track the coins all the way to the drug dealers in Mexico.
Wait, so maybe you are really saying that there was a sting, and law enforcement sent these 5 deals marked coins so that they could be traced? I could see that, they use marked bills all the time. But it'd be a far cry from what you have been claiming thusfar.


I see you are exercising your usual incomplete thought. The tags go in all rolls. The coin dealers just happens to be the one instance that got a lot of press. You can include Wachovia Bank's Miami operations and several others. It also means they have incontrovertible records on the participants of the $1 coin credit card Cash Back scheme when IRS audits those gamers. It also limits the opportunities of mint employees and those of the Federal Reserve for theft. Most notable case of theft was three 1933 gold double eagles which were supposed to be all melted down by order of the President. One employee took them. they have since surfaced. Where you have continuous monitoring of inventory matched up by a visual hand count it cuts the opportunity for theft. It also has a side benefit of helping cut down a avenue of money laundering.

vipercon said:   nsdp said:   It has been put in the wrapper for the roll. Done after the Patriot Act to stop money laundering.

Let me guess... you read this on a facebook status? Your number one source of information.[/

No viper I am not dumb enough to have a facebook account. You compromise your privacy and security. Nor do I tweet. Equally dumb.

btuttle said:   nsdp said:   I sincerely doubt you have one of the scanners used by the Federal Reserve. Those are not commercially available and you would get nailed for unauthorized possession of government property. Your scanner is about as similar to a Federal Reserve scanner as the BlackBerry you get from AT&T is to the ones use by the President and the Secret Service. Completely different set of frequencies.I call BS on this and everything else you have stated unless you provide a irrefutable second source of this information.

The cell phones used by the President and the Secret Service are not different frequencies. They are encrypted and use the Wireless Priority Service. Your statement is absolutely ridiculus, it would require a parallel wireless infrastructure nationwide for different frequencies.

So if your information so factually wrong on this, I have to call BS on the RFID tags unless you can provide proof.

Also, there are probably 100 million people using CC rebates, provide a single cite of any non-business person being proscecuted for this.


Btuttle the White House blackberrys are on a special set of frequencies set aside for its exclusive use in the Emergency Broadcast Network not in the cellular spectrum. That network has been in place since 1953 and upgraded as needed. It is managed by the 24th Air Force here in San Antonio. There are several other reserved frequencies set aside for classified use that have been around forever(at least my life time and I can remember Harry Truman in the White House)

AS for prosecution, Roger Allen Bishop got 22 months for tax fraud here is the Western District of Texas after he failed to participate in an amnesty program for tax cheats. He had about $80k he didn't report in Cash Back.

Could you please provide a link for roger Allen bishop?
I searched and I could only find a reference to this
http://www.sec.gov/litigation/litreleases/lr15029.txt
What that Robert Alan bishop did was different than what we're talking about here

imbatman said:   Could you please provide a link for roger Allen bishop?
I searched and I could only find a reference to this
http://www.sec.gov/litigation/litreleases/lr15029.txt
What that Robert Alan bishop did was different than what we're talking about here

Lol now we have SEC cracking down cc Cash Back.

nsdp said:   Glitch99 said:   nsdp said:   It has been put in the wrapper for the roll. Done after the Patriot Act to stop money laundering. Most crooks are not smart enough to unwrap the roll and reroll in a new wrapper. There were about 5 coin dealers buying rolls back in 2004 and shipping them to Mexico via UPS to coin shops there. Big wads of bills attract attention at the border; coins going by UPS to coin shops don't. RFID allowed ICE to track the coins all the way to the drug dealers in Mexico.
Wait, so maybe you are really saying that there was a sting, and law enforcement sent these 5 deals marked coins so that they could be traced? I could see that, they use marked bills all the time. But it'd be a far cry from what you have been claiming thusfar.


I see you are exercising your usual incomplete thought. The tags go in all rolls. The coin dealers just happens to be the one instance that got a lot of press. You can include Wachovia Bank's Miami operations and several others. It also means they have incontrovertible records on the participants of the $1 coin credit card Cash Back scheme when IRS audits those gamers. It also limits the opportunities of mint employees and those of the Federal Reserve for theft. Most notable case of theft was three 1933 gold double eagles which were supposed to be all melted down by order of the President. One employee took them. they have since surfaced. Where you have continuous monitoring of inventory matched up by a visual hand count it cuts the opportunity for theft. It also has a side benefit of helping cut down a avenue of money laundering.
not my incomplete thought, I'm merely trying to complete and rationalize your outlandish claims.

1) there is no RFID tags standard in every roll of coins. Despite that fact, I'll go further in reminding you that most banks required the coins be unrolled before being deposited, and even then if accepted in rolls the bank would then break them into bulk bags prior to sending them to the Fed Reserve.

2) even if correct, there was there's nothing gained from it - you clearly bought dollar coins from the mint, and you clearly had a cash deposit of dollar coins in your bank account, that's already fully established. The IRS gains nothing by "proving" those were the same coins; in fact, should I be subjected to an full-rectal audit I want them connected as directly as possible, so there's no question that the coin deposit into my bank account was my own money and not "income". A tracking of the coin's movements via RFID tag would only help me.

You clearly have no clue of the actual issues in play, as the provenance of a given dollar coin roll has zero effect on any of this.

imbatman said:   Could you please provide a link for roger Allen bishop?
I searched and I could only find a reference to this
http://www.sec.gov/litigation/litreleases/lr15029.txt
What that Robert Alan bishop did was different than what we're talking about here


Batman, I know your question is not directed to me, nor do I have the answer you are specifically looking for, but IRS publishes examples of types of fraud per year.

Here are some. You can simply change the year at the end and type the URL. You can search to see if IRS indeed pursues and prosecutes what ndsp claims it does.

General Fraud

www.irs.gov/uac/Examples-of-General-Fraud-Investigations-Fiscal-Year-2012

Employment Tax Fraud

www.irs.gov/uac/Examples-of-Employment-Tax-Fraud-Investigations-Fiscal-Year-2012

Abusive Return Preparer

www.irs.gov/uac/Examples-of-Abusive-Return-Preparer-Investigations-Fiscal-Year-2012

Abusive Tax Schemes

www.irs.gov/uac/Examples-of-Abusive-Tax-Schemes-Fiscal-Year-2012

nsdp said:   glxpass said:   kb2120 said:   xoneinax said:   nsdp said:   Points on on standard regular credit cards are taxable to the extent you earned the points by engaging in a tax deductible transaction ... If Cash Back is from business purposes or a scheme to create income (think the mint sales of coins bought with Cash Back cards) Cash Back is taxableThanks, that is good news. Points earned by mint purchases are not taxable at all, since it would be hard to claim as tax deductible transactions unless you are a coin dealer or whatever.



Where does the IRS discuss what constitutes a Cash Back credit card scheme to create income ?


If you buy 100 dollar coins for $100 get $2 in CashBack and 'sell' the dollar coins to the bank for $100 you generated $2 income above your cost basis of $98. He is saying technically that is reportable income.

It's an opinion, which may or may not be true. IMO, consulting with a trusted tax advisor is far superior to hoping a FWF thread could be definitive in this matter.

ETA: That's probably one reason this thread is garnering so much red. This subject has already been discussed to death with no real conclusion reached, and OP's vague comment adds nothing of value.


Ok glxpass I will provide a explanation that I have found even a 5th grader can understand. I tried it on my greatniece(10 years old) before posting it here and she could understand it.

Rule 1. repeated from posting above that you didn't read or else could not comprehend above. ""Except as otherwise provided in this subtitle, gross income means all income from whatever source derived" 26 USC61 so if the tax code doesn't exclude it, it is taxable. It is like the coin toss: heads IRS wins , tails You Lose.

Rule 2. IRS Publication 525 You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule CEZ (Form 1040) if from your selfemployment activity.Example. You sell cars and help arrange car insurance for buyers. Insurance brokers pay back part of their commissions to you for referring customers to them. You must include the kickbacks in your income. If you receive prize points redeemable for merchandise, you must include their fair market value in your income. The prize points are taxable in the year they are paid or made available to you, rather than in the year you redeem them for merchandise. The only exception is when the points are given to you by the merchant and qualify as a reduction in the purchase price paid directly by you to that merchant. CashBack or points for purchases are kickbacks. If the card is a WalMart card and you get back 15 cents/gallon on gasoline purchased at WalMart/Murphy then it is not taxable. If you do it with your Chase card it is taxable because Chase has no affiliation with WalMart. Affinity cards such as Costco/AMEX are muddy but the legal presumption is unless the IRS specifically says it IS NOT income, it is. Airline miles are the only ones we have clear guidance on.

Rule 3 Bartering. If you claim the points are a form of barter then read the following:Is Bartering Taxable?
It sure is. According to Scott Estill, a former senior IRS trial attorney and the author of "Tax This! An Insider's Guide To Standing Up To The IRS," casual exchanges between non-commercial parties for similar services is usually not taxable. Offering to cut a neighbor's grass while they are on vacation in exchange for the same, for example, won't trigger a tax consequence (the key to this that you are both non-business parties, and the value is nearly identical.). Go get his book. He lays it all out for you. If you don't understand remember:

"Barter exchanges, both online and in person, need to be reported on Form 1099-B, unless they occur through a barter exchange with less than 100 transactions during the year, are done with an exempt foreign person (as defined by the IRS), and involve property or services less than $1."

Now if you still don't understand put down in print what part of this law you CANNOT understand: "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived" As far as the IRS is concerned Cash Back whether from fatwallet or your credit card is taxable income. It's a kickback not a rebate from the seller. Points are a form of bartering. If you still don't think so FIND the SECTION OF TITLE 26 that says it isn't taxable. I have proven the positive; you now have to prove the negative. That is how tax law works.

Cite one case where Cash Back from personal credit card purchases has been deemed taxable. Much of what you say above is irrelevant or inapplicable. OTOH, see this private letter ruling:

http://www.irs.gov/pub/irs-wd/1027015.pdf

Here's conclusion 1:

(1) The portion of the credit card purchases that Taxpayers can either receive back in cash or request Company to pay to a charity does not constitute gross income to Taxpayers under 61.

Kind of flies in the face of your continual quoting of that provision to support your argument that credit card Cash Back is taxable:

""Except as otherwise provided in this subtitle, gross income means all income from whatever source derived" 26 USC61 so if the tax code doesn't exclude it, it is taxable.

It also contradicts your statement, at least WRT credi cards and likely FatWallet Cash Back:

As far as the IRS is concerned Cash Back whether from fatwallet or your credit card is taxable income. It's a kickback not a rebate from the seller. Points are a form of bartering.

While not legal precedent, most tax professionals agree that PLR's are an indication of how the IRS will treat similar situations.

I've discussed credit card Cash Back thoroughly with my tax accountant. He says they are rebates and likely not taxable. He also suggested I keep some reserves available just in case the IRS makes a definitive ruling on the issue. I don't expect anyone to take my word for it (or my tax accountant's). If you've any doubts about taxability of credit card Cash Back, consult a competent, trusted tax advisor, which includes neither me nor nsdp.

I think the issue is when does the line cross from personal to "business ". Cc churn can be viewed as ones "business " when taken to the extreme. Many people here now earn more rewards than the "legit" spending on their cc

so even if the cc rebates reduce the basis down to zero on all their personal purchases , the churn still resulted in rewards far in excess. I would recommend putting a large personal purchase on any cc where you are earning large cc rewards . If you earn $2000/month cc rewards for 6 months, due to a 5% promo period, put at least $12000 of consumer spending on that card in the same tax year

If you're a real heavy hitter and earned far more, well you might want to ask your local exotic car dealer if they can put that Lamborghini on your credit card

nsdp said:   Also there was another out of California on Cisco routers rebates3Com

xoneinax said:   nsdp said:   Also there was another out of California on Cisco routers rebates3Com
http://www.fatwallet.com/forums/finance/1190890/

The issue was with fraudulent rebate claims, not churning itself. Yet another piece of misinformation from nsdp.

RFID chips can be quite small, but they're not invisible. And if they're in the paper rolls of dollar coins, the paper would burn in a particular spot when microwaved. It doesn't. And it's obviously ridiculous to go to that kind of trouble or expense, especially (as Glitch pointed out) when the U. S. Mint itself is shipping the coins. It knows who bought them. Why would it go to the expense of tagging the rolls? Plus no drug dealer in his right mind would use dollar coins as a money laundering scheme. Those UPS parcels of 1000 one dollar coins weighed 16.8 pounds each. You ever watch Breaking Bad? Those hoards of hundred dollar bills would require many, many tons of one dollar coins. Plus what would the drug dealers do with those coins? Many banks refuse to accept them; they can't be turned into regular currency easily. They're a PITA. That's why they never caught on.

The notion that RFIDs are in coins is one for the people wearing aluminum foil hats. It's an absolutely insane notion.

As far as CashBack goes, the IRS cases I see are restricted to business uses saying such things as that a cash rebate on a purchase reduces the cost of the purchase, so that the reduced cost has to be used as the basis for any calculation of gross profit on its sale. There is no way that getting 5% back from Citibank when I buy a computer from Dell represents a reduction in price by Dell to me. Dell isn't paying the 5% CashBack, any more than Comcast is reducing its Internet bill or AT&T its phone bill when I pay those bills using a rewards credit card.

The argument I gave is one that I find compelling--rewards cards have been around for decades. NO ONE has ever paid interest or penalties for failing to report cash rewards as income. The IRS really doesn't care. How many millions of audits--including some random audits where the IRS does a full anal probe--have happened to those with cash rewards? The cash rewards can be in the form of statement credit or checks that are deposited or other very visible options. If the IRS has come up with millions of examples of such rewards and has NEVER said ANY were taxable income, hasn't the issue been decided for all practical purposes/ Isn't that OBVIOUS?

CreditGuy said:   



As far as CashBack goes, the IRS cases I see are restricted to business uses saying such things as that a cash rebate on a purchase reduces the cost of the purchase, so that the reduced cost has to be used as the basis for any calculation of gross profit on its sale. There is no way that getting 5% back from Citibank when I buy a computer from Dell represents a reduction in price by Dell to me. Dell isn't paying the 5% CashBack, any more than Comcast is reducing its Internet bill or AT&T its phone bill when I pay those bills using a rewards credit card.



The link glx posted
http://www.irs.gov/pub/irs-wd/1027015.pdf

Seems to deal with personal purchases and is very clear that the cc rebate is an adjustment to purchase price (top of page 3). So if you resell that Dell, the cost basis is reduced by the cc reward "an adjustment to purchase price" and must be included upon its resale . Even if its a personal computer purchase. Typically people resell personal items at a loss , so there's no tax issue .

But when it comes to churn, an item charged to your cc nets you a profit upon its resale or redemption . so lets say instead of a Dell computer, you bought a $500 gc from a grocery store with a 5% card. (Assuming no transaction fees or cash out fees for simplicity sake) , your cost basis is $475 and if you sell or otherwise redeem the gc for $500 cash, you have $25 taxable profit . If you sell it to plastic jungle for $485 you have $10 taxable profit , etc.

the novel issue hasn't yet been addressed by the Irs but I think the IRS position will be clear if this situation ever presents itself . Moreover , any situation where this does present itself will show the activity was not really "personal " charges but a profit making business endeavor . The number of gcs, how quickly they were flipped for more, etc will all show this was a side business of the taxpayer , subject to self employment tax as well as income tax. It's not like someone bought a couple gcs, decided they weren't going to shop at that retailer and resold them- there will be a churn pattern so vast that it will be clear the only intent and purpose for making the charges was to profit upon resale (when considering the adjustment to purchase price provided by the cc reward)

Yes, people who have earned some cc CashBack before have been audited, but never a hardcore churner. All the other thousands of people who earned cc Cash Back and were audited likely did not profit from their overall cc activity , unlike what fwfers are doing

imbatman said:   Could you please provide a link for roger Allen bishop?
I searched and I could only find a reference to this
http://www.sec.gov/litigation/litreleases/lr15029.txt
What that Robert Alan bishop did was different than what we're talking about here


That was Roger's first conviction. 1996. try 2010. These people tend to be serial offenders. Sort of like the Imvado crew.

So you can't provide a link? Or better search parameters?
I just searched and couldn't find anything from 2010 in the state of Texas havin to do with Robert bishop other than some bishos from the church being accused of molestation. Not inclined to search anymore.

SUCKISSTAPLES said:   CreditGuy said:   



As far as CashBack goes, the IRS cases I see are restricted to business uses saying such things as that a cash rebate on a purchase reduces the cost of the purchase, so that the reduced cost has to be used as the basis for any calculation of gross profit on its sale. There is no way that getting 5% back from Citibank when I buy a computer from Dell represents a reduction in price by Dell to me. Dell isn't paying the 5% CashBack, any more than Comcast is reducing its Internet bill or AT&T its phone bill when I pay those bills using a rewards credit card.



The link glx posted
http://www.irs.gov/pub/irs-wd/1027015.pdf

Seems to deal with personal purchases and is very clear that the cc rebate is an adjustment to purchase price (top of page 3). So if you resell that Dell, the cost basis is reduced by the cc reward "an adjustment to purchase price" and must be included upon its resale . Even if its a personal computer purchase. Typically people resell personal items at a loss , so there's no tax issue .

But when it comes to churn, an item charged to your cc nets you a profit upon its resale or redemption . so lets say instead of a Dell computer, you bought a $500 gc from a grocery store with a 5% card. (Assuming no transaction fees or cash out fees for simplicity sake) , your cost basis is $475 and if you sell or otherwise redeem the gc for $500 cash, you have $25 taxable profit . If you sell it to plastic jungle for $485 you have $15 taxable profit , etc.

the novel issue hasn't yet been addressed by the Irs but I think the IRS position will be clear if this situation ever presents itself . Moreover , any situation where this does present itself will show the activity was not really "personal " charges but a profit making business endeavor . The number of gcs, how quickly they were flipped for more, etc will all show this was a side business of the taxpayer , subject to self employment tax as well as income tax. It's not like someone bought a couple gcs, decided they weren't going to shop at that retailer and resold them- there will be a churn pattern so vast that it will be clear the only intent was to profit upon resale when considering the adjustment to purchase price provided by the cc reward

Yes, people who have earned some cc CashBack before have been audited, but never a hardcore churner. All the other thousands of people who earned cc Cash Back and were audited likely did not profit from their overall cc activity , unlike what fwfers are doing


Very eloquently put. If you get audited on field audit or a Tax Payer Compliance Audit(where they come to your house and business and inventory everything and go through ever line of your checking and other financial accounts and all of your credit cards) everything you churned had better physically be there. Effectively it means you had better have a gross income of about $10m/year to demonstrate discretionary enough income to make $50K in non taxable Cash Back credible. By the way that is your job to show that you have enough after tax income to support your life style. They get down to a line by line analysis of your credit card purchases and everything else you buy.

For those of you who don't know, it is called the "Al Capone audit". They added up how much he spent and how much income he reported. The difference was the amount of tax fraud. Conviction up held by the Supreme Court. If you have a business(90+% of Al Capone audits are on small business as they have the greatest opportunity to cheat as per TPCA), Cash Back on business purchases is either income or a reduction of expenses and had better show on your return. Either way you lose and at least owe taxes and penalties and interest. You also need to know the difference in time that IRS has to come get you. It is 3 years from the April 15th you return was due by or 3 years after October 15th if you filed an extension. If 25% was omitted it doubles to 6 years. IRS has a very high burden on fraud(falsification of documents) but there is NO time limit on fraud. So if you have Cash Back of $50K from your cards you better have reported and paid taxes on $200,000 of taxable income to avoid a 6 year audit period.

glxpass said:   xoneinax said:   nsdp said:   Also there was another out of California on Cisco routers rebates3Com
http://www.fatwallet.com/forums/finance/1190890/

The issue was with fraudulent rebate claims, not churning itself. Yet another piece of misinformation from nsdp.


Did you read the entire original indictment on Pacer. How about counts 34 and 39? or are you reading the amended indictment tha tomitted the money laudering to Thailand a well as China, immigration violations, and the tax fraud issues?

I wish all the federal agents I dealt with were as bumbling and incomplete in their work as you are.

CreditGuy said:   RFID chips can be quite small, but they're not invisible. And if they're in the paper rolls of dollar coins, the paper would burn in a particular spot when microwaved. It doesn't. And it's obviously ridiculous to go to that kind of trouble or expense, especially (as Glitch pointed out) when the U. S. Mint itself is shipping the coins. It knows who bought them. Why would it go to the expense of tagging the rolls? Plus no drug dealer in his right mind would use dollar coins as a money laundering scheme. Those UPS parcels of 1000 one dollar coins weighed 16.8 pounds each. You ever watch Breaking Bad? Those hoards of hundred dollar bills would require many, many tons of one dollar coins. Plus what would the drug dealers do with those coins? Many banks refuse to accept them; they can't be turned into regular currency easily. They're a PITA. That's why they never caught on.

The notion that RFIDs are in coins is one for the people wearing aluminum foil hats. It's an absolutely insane notion.

As far as CashBack goes, the IRS cases I see are restricted to business uses saying such things as that a cash rebate on a purchase reduces the cost of the purchase, so that the reduced cost has to be used as the basis for any calculation of gross profit on its sale. There is no way that getting 5% back from Citibank when I buy a computer from Dell represents a reduction in price by Dell to me. Dell isn't paying the 5% CashBack, any more than Comcast is reducing its Internet bill or AT&T its phone bill when I pay those bills using a rewards credit card.

The argument I gave is one that I find compelling--rewards cards have been around for decades. NO ONE has ever paid interest or penalties for failing to report cash rewards as income. The IRS really doesn't care. How many millions of audits--including some random audits where the IRS does a full anal probe--have happened to those with cash rewards? The cash rewards can be in the form of statement credit or checks that are deposited or other very visible options. If the IRS has come up with millions of examples of such rewards and has NEVER said ANY were taxable income, hasn't the issue been decided for all practical purposes/ Isn't that OBVIOUS?


The issue has only really come to a head in the Obama administration. Compliance auditing was weak under the Bush Adm and Clinton adm after the Republican Congress cut auditing positions by 3500 as part of the Tax Payer Bill of Rights. IRS estimates that they only recover 20$ of unpaid income taxes. In 2006 IRS estimates that there was another $385 billion in unpaid taxes while they collected about $80 billion in audits. They don't go specifically looking for credit card rebates unless you are like the idiot who was reported doing this in the Wall Street Journal. But if they figure you are cheating else where then they will add credit card Cash Back to the laundry list. That was what happened to Mr. Bishop. It moved him from community supervision to hard time under the sentencing guidelines. So if you are doing anything questionable on your taxes and most small business owners are, credit card Cash Back will push you over the top if is is very substantial. $1k/month or more. IRS got their audit positions back in 2009 and about an extra 1500 to boot. So that will start to be seen in the cases in the next two years.

imbatman said:   So you can't provide a link? Or better search parameters?
I just searched and couldn't find anything from 2010 in the state of Texas havin to do with Robert bishop other than some bishos from the church being accused of molestation. Not inclined to search anymore.


You have a paid subscription to Pacer and privileges for active cases? The US District Clerk doesn't let any questionable computers on their system. You will also need a security token from USCERT.

Why would you 1) tell me to try to find it, and 2) cite it as fact if its still an open case?

Because I like to see who has real search skills and knows the limitations of the web as a search engine. Sort of like people(not you) posting in another thread about searching the Congressional Record for legislative history on line back in the 1950's. The complete Congressional record has been on line for only 24 years. From January 1989 forward. Summaries are there for periods back to 1972. Before that nothing until 1875. The National Archives has put the Annals of Congress, Register of Debates and Congressional Globe on line from periods before 1876. None of the responding parties thought to research to see what was available on line before making remarks. As a general rule criminal matters are only available through Pacer and only after they are finally closed. There are special protocols one must go through for certain documents such as sentencing reports and reports from Pretrial release.

The Texas Bar only in the last 18 months snapped to the fact that people were able to go back in old divorce decrees and get parents and children's social security numbers out of open court files. The State of Texas and the Texas AG were enabling identity theft. That is why pending matters are not subject to general web search. They want to know who you are and what business you have being there. If you read above you there are several people who jumped to conclusions because they found somethings online like press releases but did not include the complete original indictment. When parties plead guilty usually a number of counts are dropped and the indictment amended to reflect the actual charges in the plea agreement. I am appointed right now to represent a cooperating witness and the only items in the court file I can see are those that apply to this individual.

There are many and varied reasons why not everything makes its way to the web for the general public to see. Even those who have escalated privileges can't see everything. I cannot log in to the computers at Sandia National Laboratory even though my security privileges are high enough and I co own patents being modeled there now.

Deleted. I'll let the arrogance in nsdp's last post speak for itself.

glxpass said:   Deleted. I'll let the arrogance in nsdp's last post speak for itself.

ditto

I'm fondly reminded of Cliff Clavin

nsdp said:   I am appointed right now to represent a cooperating witnessIn what capacity ?

http://blog.citigroup.com/2012/02/are-rewards-taxable-it-all-dep...
is written by Amy Miller, Director of The Tax Institute at H&R Block, dated February 2012.

Most consumers are used to getting what many retailers and credit card companies refer to as a "reward" when you fulfill certain spending requirements. For example, lots of us accrue air miles or Cash Back rewards when we make purchases on our credit cards. In this instance, these "rewards" are not taxable. These types of account "rewards" are actually considered rebates on spending and therefore don't qualify as income. Text Or check this link also from February 2012:
http://www.bankrate.com/financing/credit-cards/taxes-credit-card...
That got people worrying about other rewards miles or points, specifically those tied to credit cards. Are those taxable as well? Probably not, says Mark Steber, chief tax officer at Jackson Hewitt Tax Service. Traditional rewards you earn by spending money on your credit card are considered nontaxable because it required a financial activity to receive them, Steber says.

I could go on with more such quotes. You'd think H&R Block and the Jackson Hewitt Tax Service agreeing that cash rewards are NOT income would be enough, though, wouldn't you?

As for the argument that the IRS simply hasn't audited heavy hitters with thousands of dollars in cash rebates, well, the coin deal got huge publicity a few years back with some heavy hitters named. And the IRS audits over 1.5 million tax returns each year. Do you really think that the issue hasn't come up in the tens of millions of returns audited in the last twenty years? Really?

Plus if a credit card cash reward IS income, a reward of any amount is income. $20 or $20,000--it must be reported and taxes paid. Has ANY tax preparation firm ever even ASKED on its forms how much a person received in cash rewards? TurboTax doesn't. H&R Block and its software doesn't. The Jackson Hewitt Tax Service doesn't. Has anyone heard of any accountant insisting that cash rewards must be declared as income? I haven't.

As I keep saying, the reality is that the IRS avoids the issue. It has no audit potential. It's nothing to worry about. If the authorities on taxes AND the banks paying the CashBack don't think it's taxable income, why in the world would you think so? Don't they know more about the tax laws than you do?

CreditGuy said:   http://blog.citigroup.com/2012/02/are-rewards-taxable-it-all-dep...
is written by Amy Miller, Director of The Tax Institute at H&R Block, dated February 2012.

Most consumers are used to getting what many retailers and credit card companies refer to as a "reward" when you fulfill certain spending requirements. For example, lots of us accrue air miles or Cash Back rewards when we make purchases on our credit cards. In this instance, these "rewards" are not taxable. These types of account "rewards" are actually considered rebates on spending and therefore don't qualify as income. Text Or check this link also from February 2012:
http://www.bankrate.com/financing/credit-cards/taxes-credit-card...
That got people worrying about other rewards miles or points, specifically those tied to credit cards. Are those taxable as well? Probably not, says Mark Steber, chief tax officer at Jackson Hewitt Tax Service. Traditional rewards you earn by spending money on your credit card are considered nontaxable because it required a financial activity to receive them, Steber says.

I could go on with more such quotes. You'd think H&R Block and the Jackson Hewitt Tax Service agreeing that cash rewards are NOT income would be enough, though, wouldn't you?

As for the argument that the IRS simply hasn't audited heavy hitters with thousands of dollars in cash rebates, well, the coin deal got huge publicity a few years back with some heavy hitters named. And the IRS audits over 1.5 million tax returns each year. Do you really think that the issue hasn't come up in the tens of millions of returns audited in the last twenty years? Really?

Plus if a credit card cash reward IS income, a reward of any amount is income. $20 or $20,000--it must be reported and taxes paid. Has ANY tax preparation firm ever even ASKED on its forms how much a person received in cash rewards? TurboTax doesn't. H&R Block and its software doesn't. The Jackson Hewitt Tax Service doesn't. Has anyone heard of any accountant insisting that cash rewards must be declared as income? I haven't.

As I keep saying, the reality is that the IRS avoids the issue. It has no audit potential. It's nothing to worry about. If the authorities on taxes AND the banks paying the CashBack don't think it's taxable income, why in the world would you think so? Don't they know more about the tax laws than you do?


If you have talked to a certified tax account, you have found someone who will tell you reward income MAY be taxable. If you are buying items that are deducted from your taxes the reward must be treated as either income or a reduction in price which increases your profit that is taxable. Another place that people don't realize is a problem are expense accounts. If you get reimbursed for a $100 hotle bill by your emplyeer and get $5 back ont eh credit card, you have $5 in side income to report.

As to Jackson and Hewitt and H&R Block, that is not where any one with more than minimal intelligence goes for tax advice. After a GAO audit found major errors by both firms including failure to report side income (such as rewards payments), they now operate under consent orders. It is statistically improbable to get Cash Back rewards of more than 1.5% of AGI and not be breaking the law somewhere either on regular tax calculations or Alternative Minimum taxes. For someone with AGI of $100k $1500 is the limit. More than that means there is unreported income and is considered to be a badge of fraud by professionals. Hidden income comes up often in child support cases and the Association of Certified Fraud Examiners has identified it as a badge of fraud. Go to ACFE.com for information on training and educational materials. I will be glad to audit your taxes for the last six years and see how much you underpaid. I will give you a Miranda warning before I start.

xoneinax said:   nsdp said:   I am appointed right now to represent a cooperating witnessIn what capacity ?

There are only two ways(excluding prisoner civil rights cases) to get counsel appointed through the Federal Public Defenders Office. 1.st you have been issued a target letter or arrested. 2nd You have been given transactional immunity by the DOJ in exchange for testimony. If you have absolute immunity then you do not need counsel.

nsdp,

You are correct that hidden taxable income is fraudulent but what the IRS has found is that the biggest problem with business tax returns in fraudulent deductions. Such as owning an business aircraft that is really for the personal use of the business owner or travel that is really a thinly disguised vacation. I live in Scottsdale and it is amazing how many conventions are held in this area in the winter with people presenting papers that have zero value just so they can write off the cost of their trip and then hit the strip clubs afterwards. The worst ones are the conventions that target whatever the latest Hot Topic is, right now it seems to be alternative energy, those conventions must be at least 99% snake-oil salesmen. But back on topic, since you seem to know a lot about taxes and Cash Back, do you think I should file an amended return for 2009 because I got Cash Back of over $4000 on an AGI of $90,000? Does Cash Back become taxable over 1.5% of AGI or have you just not figured out how to pay 90% of your expenses with a 5% Cash Back credit card, including expenses that are deducted from gross income to generate an AGI?

I'll have to check my records but it may be that I actually paid 99% of my expenses with a 5% credit card that year. It would have been 100% but I think I spent $900 on hookers and blow that year and she didn't take credit cards.

nsdp said:   xoneinax said:   nsdp said:   I am appointed right now to represent a cooperating witnessIn what capacity ?

There are only two ways(excluding prisoner civil rights cases) to get counsel appointed through the Federal Public Defenders Office. 1.st you have been issued a target letter or arrested. 2nd You have been given transactional immunity by the DOJ in exchange for testimony. If you have absolute immunity then you do not need counsel.

That's not what he asked....



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