Amex Under IRS Investigation for Shady Sales Pitches
The federal Internal Revenue Service (IRS) is investigating whether American Express sales staff used a questionable tax guidance in efforts to sell potential customers payment card-related services.
The Wall Street Journal cited people familiar with the matter, who say that the civil investigation has been under way for a few months.
The Wall Street Journal reported in November that AmEx salespeople used a shaky interpretation of tax law to pitch costly payment services to business owners. Salespeople said that businesses 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 IRS normally does not count rewards points generated by personal purchases as income. But the law is not as less clear when it comes to rewards earned through business accounts.
WSJ reports that the IRS agency to open an investigation into Amex sales practices. The list also includes the Justice Department, Officer of the Comptroller of the Currency, Treasury Department, Federal Deposit Insurance Corp. and Federal Reserve.
Questionable sales practices have been reported even earlier at Amex, where employees routinely submit corporate card applications without even looking into the companies’ financial information.
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