IRS Wants to Tax Loyalty Programs
The Internal Revenue Service is proposing a new tax on loyalty rewards programs for hotels, airlines, rental cars and other services that has several travel groups concerned. According to the Washington Post, Airlines for America, the American Hotel & Lodging Association, the U.S. Travel Association and the American Resort Development Association sent a letter to Treasury Secretary Jacob Lew asking him to remove the proposed tax from the department's 2014-2015 business plan, which would go into effect on July 1. "Any change in accounting rules could result in billions of dollars in lost revenue to state and localities, as well as significant harm to small-business franchise owners," the group wrote. The law, if passed, would have significant negative implications for both leisure and business travelers, because rewards points are used as an incentive to encourage individual and group bookings and to promote repeat business.