topic Re: Why does AMEX charge an Excise fee/tax? in Credit Cards

Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 15:29:36 GMT

AFAIK they are the only ones that do this when you go to transfer your miles.

I just transferred 4,000 miles to Delta and they charged me $2.90.

When I transfer miles from Citi to Jet Blue, no such fee exists. Does Chase charge an Excise fee?

Re: Why does AMEX charge an Excise fee/tax?

bz386 — Sun, 08 Jul 2018 15:49:46 GMT

No, Chase does not charge fees to transfer points to miles, I think Amex is the only one that does. They do not charge fees if you transfer to international airlines, only for domestic. One more reason I don’t use Amex...

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 15:57:52 GMT

@bz386 wrote:
No, Chase does not charge fees to transfer points to miles, I think Amex is the only one that does. They do not charge fees if you transfer to international airlines, only for domestic. One more reason I don’t use Amex...

So in other words, you're saving $99 when using Chase to transfer 200,000 miles to, let's say, Southwest instead of using AMEX to transfer 200,000 points to Delta. I don't know what it is with AMEX and their ridiculous points/cash redemption policies.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 16:31:24 GMT

From IRS Publication 510, revised March 2018:

Percentage tax.

A tax of 7.5% applies to amounts paid for taxable transportation of persons by air. Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service.

Mileage awards.

The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses.

Generally, the percentage tax doesn't apply to amounts paid for mileage awards where the mileage awards can't, under any circumstances, be redeemed for air transportation that is subject to the tax. Until regulations are issued, the following rules apply to mileage awards.

Amounts paid for mileage awards that can't be redeemed for taxable transportation beginning and ending in the United States aren’t subject to the tax. For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Therefore, amounts paid to a foreign air carrier for mileage awards aren’t subject to the tax.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation aren’t subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles won’t be awarded in connection with the purchase of taxable transportation.

Chase (and, I suppose, Citi for Jet Blue) pay this tax, too. Amex is just the only one to pass the fee on to customers.

And Amex doesn't charge customers for the exact fee Amex paid...just a rough approximation of it.

If the excise tax is a problem for someone, then probably another award currency is appropriate. If you can get good value with MRs, especially with transfer bonuses, it's not that big a burden.

Re: Why does AMEX charge an Excise fee/tax?

FinStar — Sun, 08 Jul 2018 16:38:40 GMT

@wasCB14 wrote:
From IRS Publication 510, revised March 2018:

Percentage tax.
A tax of 7.5% applies to amounts paid for taxable transportation of persons by air. Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service.
Mileage awards.
The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses.
Generally, the percentage tax doesn't apply to amounts paid for mileage awards where the mileage awards can't, under any circumstances, be redeemed for air transportation that is subject to the tax. Until regulations are issued, the following rules apply to mileage awards.
Amounts paid for mileage awards that can't be redeemed for taxable transportation beginning and ending in the United States aren’t subject to the tax. For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Therefore, amounts paid to a foreign air carrier for mileage awards aren’t subject to the tax.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation aren’t subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles won’t be awarded in connection with the purchase of taxable transportation.
Chase (and, I suppose, Citi for Jet Blue) pay this tax, too. Amex is just the only one to pass the fee on to customers.

And Amex doesn't charge customers for the exact fee Amex paid...just a rough approximation of it.

If the excise tax is a problem for someone, then probably another award currency is appropriate. If you can get good value with MRs, especially with transfer bonuses, it's not that big a burden.

This exactly.

It may seem "ridiculous" to some, but this is their policy.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 16:55:54 GMT

@wasCB14 wrote:
From IRS Publication 510, revised March 2018:

Percentage tax.
A tax of 7.5% applies to amounts paid for taxable transportation of persons by air. Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service.
Mileage awards.
The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses.
Generally, the percentage tax doesn't apply to amounts paid for mileage awards where the mileage awards can't, under any circumstances, be redeemed for air transportation that is subject to the tax. Until regulations are issued, the following rules apply to mileage awards.
Amounts paid for mileage awards that can't be redeemed for taxable transportation beginning and ending in the United States aren’t subject to the tax. For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Therefore, amounts paid to a foreign air carrier for mileage awards aren’t subject to the tax.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation aren’t subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles won’t be awarded in connection with the purchase of taxable transportation.
Chase (and, I suppose, Citi for Jet Blue) pay this tax, too. Amex is just the only one to pass the fee on to customers.

And Amex doesn't charge customers for the exact fee Amex paid...just a rough approximation of it.

If the excise tax is a problem for someone, then probably another award currency is appropriate. If you can get good value with MRs, especially with transfer bonuses, it's not that big a burden.

Right, but why be different than everyone else in a negative way once again? Seems like bad customer service.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 17:07:53 GMT

@Anonymous wrote:
@wasCB14 wrote:
From IRS Publication 510, revised March 2018:

Percentage tax.
A tax of 7.5% applies to amounts paid for taxable transportation of persons by air. Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service.
Mileage awards.
The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses.
Generally, the percentage tax doesn't apply to amounts paid for mileage awards where the mileage awards can't, under any circumstances, be redeemed for air transportation that is subject to the tax. Until regulations are issued, the following rules apply to mileage awards.
Amounts paid for mileage awards that can't be redeemed for taxable transportation beginning and ending in the United States aren’t subject to the tax. For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Therefore, amounts paid to a foreign air carrier for mileage awards aren’t subject to the tax.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation aren’t subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation.
Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles won’t be awarded in connection with the purchase of taxable transportation.
Chase (and, I suppose, Citi for Jet Blue) pay this tax, too. Amex is just the only one to pass the fee on to customers.

And Amex doesn't charge customers for the exact fee Amex paid...just a rough approximation of it.

If the excise tax is a problem for someone, then probably another award currency is appropriate. If you can get good value with MRs, especially with transfer bonuses, it's not that big a burden.
Right, but why be different than everyone else in a negative way once again? Seems like bad customer service.

Chase, as far as I know, doesn't offer transfer bonuses. Citi and Amex do. In that sense, Chase is different than everyone else in a negative way.

Does that mean Chase customer service is bad, or that the whole UR program should be avoided? I certainly don't think so. Different programs just have their pros and cons.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 17:14:01 GMT

@wasCB14 wrote:
@Anonymous
Chase, as far as I know, doesn't offer transfer bonuses. Citi and Amex do. In that sense, Chase is different than everyone else in a negative way.

Does that mean Chase customer service is bad, or that the whole UR program should be avoided? I certainly don't think so. Different programs just have their pros and cons.

Instead they have 1:1 transfers to valuable programs and cards that pool together to earn 5x the UR point per dollar. The other companies need to give out bonuses just to match what Chase allows as a standard procedure.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 17:15:17 GMT

Did you close Costco already? Or are waiting until the card arrives to add it to your signature?

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 17:28:16 GMT

@Anonymous wrote:
@wasCB14 wrote:
Chase, as far as I know, doesn't offer transfer bonuses. Citi and Amex do. In that sense, Chase is different than everyone else in a negative way.

Does that mean Chase customer service is bad, or that the whole UR program should be avoided? I certainly don't think so. Different programs just have their pros and cons.
Instead they have 1:1 transfers to valuable programs and cards that pool together to earn 5x the UR point per dollar. The other companies need to give out bonuses just to match what Chase allows as a standard procedure.

The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 20:05:03 GMT

@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
Chase, as far as I know, doesn't offer transfer bonuses. Citi and Amex do. In that sense, Chase is different than everyone else in a negative way.

Does that mean Chase customer service is bad, or that the whole UR program should be avoided? I certainly don't think so. Different programs just have their pros and cons.
Instead they have 1:1 transfers to valuable programs and cards that pool together to earn 5x the UR point per dollar. The other companies need to give out bonuses just to match what Chase allows as a standard procedure.
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.

I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 20:41:01 GMT

@Anonymous wrote:
@wasCB14 wrote:
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.
I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.

If you won't spend enough on UR cards to justify CSR over CSP, it's probably best to just get the occasional bonus and not worry about 5/24.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 20:50:03 GMT

@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.
I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.
If you won't spend enough on UR cards to justify CSR over CSP, it's probably best to just get the occasional bonus and not worry about 5/24.

I could spend enough to justify $450-$300 (travel credit) = A $150 annual fee. But I'd rather just save $55/year.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 21:07:37 GMT

@wasCB14 wrote:
Did you close Costco already? Or are waiting until the card arrives to add it to your signature?

Closed it. I only have one Citi card left and it's hanging by a thread since I have alternatives.

I'm so tired of their garbage customer service, and tired of talking to outsourced customer service reps. I even asked to speak to a supervisor about something the other day and that person was outsourced too.

I've finally gotten rid of my impulse problem I think LOL. I've also closed two AMEX's last week (two are left because they have balances, both business cards), and then I think my BoA card will be scrapped once I reach the $25+10% threshold.

Re: Why does AMEX charge an Excise fee/tax?

TheBoondocks — Sun, 08 Jul 2018 21:39:11 GMT

I heard that you can also transfer indirectly, so I know with Virgin Atlantic, you could transfer to IHG at 1:1, if you do it directly than the fees will be charged. I don't know why they do it but everybody have to make money lol.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 22:19:47 GMT

@TheBoondocks wrote:
I heard that you can also transfer indirectly, so I know with Virgin Atlantic, you could transfer to IHG at 1:1, if you do it directly than the fees will be charged. I don't know why they do it but everybody have to make money lol.

A couple things here...

MRs do not transfer to IHG. URs do but it's a poor value.

IHG points do transfer to Virgin Atlantic, but 10k IHG gives only 2k Virgin Atlantic.

I don't know if Virgin Atlantic transfers to IHG, but if it's 1:1 it seems wasteful.

URs and MRs both transfer to Virgin Atlantic directly. Since it's a British airline, neither Amex nor Chase pays an excise tax, so there's no tax for Amex to pass on to customers.

And there's no tax for transfers to hotels. And even if IHG was an airline, it's British and not domestic, so there would be no tax.

Re: Why does AMEX charge an Excise fee/tax?

wasCB14 — Sun, 08 Jul 2018 23:19:57 GMT

@Anonymous wrote:
@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.
I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.
If you won't spend enough on UR cards to justify CSR over CSP, it's probably best to just get the occasional bonus and not worry about 5/24.
I could spend enough to justify $450-$300 (travel credit) = A $150 annual fee. But I'd rather just save $55/year.

CSR doesn't give rewards on the $300 anymore, so it's more like $75 more...but by the time you've even met minimum spend the difference is small.

And if you don't put much travel/dining spend on it, there's not much reason to cool off the bonus chasing to get either Sapphire card.

Re: Why does AMEX charge an Excise fee/tax?

Anonymous — Sun, 08 Jul 2018 23:26:26 GMT

@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.
I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.
If you won't spend enough on UR cards to justify CSR over CSP, it's probably best to just get the occasional bonus and not worry about 5/24.
I could spend enough to justify $450-$300 (travel credit) = A $150 annual fee. But I'd rather just save $55/year.
CSR doesn't give rewards on the $300 anymore, so it's more like $75 more...but by the time you've even met minimum spend the difference is small.

And if you don't put much travel/dining spend on it, there's not much reason to cool off the bonus chasing to get either Sapphire card.

I spend a ton on dining every year (talking at least $3,000)... Way too much to be honest. Travel spending would be moderate but not as much as frequent travelers. I'd use miles and hotel points, but they may not cover the cost of an entire trip. I think I'd get a UR mostly for Hyatt points... I love their hotels and the earning rate would be better than the actual Hyatt cards themselves, and then the free nights aren't exactly a ton of points either for what you earn on Chase cards.

Re: Why does AMEX charge an Excise fee/tax?

redpat — Mon, 09 Jul 2018 01:04:12 GMT

@Anonymous wrote:
@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
@Anonymous wrote:
@wasCB14 wrote:
The UR program does have its strengths. There's no base 2x like with MR, but the 1.5x is uncapped. 5x is capped but is still 5x. 3x opportunities are plentiful.

But I believe you are well over 5/24, so it's probably not an available option. Unless you're going to garden for a year, I'm not sure it's a relevant comparison to TY and MR programs.
I'd have to wait about 1.5 years to be under 5/24. It is a long term goal of mine to get a pair of the Chase UR, one being the Sapphire Preferred and the other being either the FU or the Freedom. I guess if I had to pick at this moment, I'd take the 5x UR card because 1.5x doesn't appeal to me when I can just get 1x without having to carry all three.
If you won't spend enough on UR cards to justify CSR over CSP, it's probably best to just get the occasional bonus and not worry about 5/24.
I could spend enough to justify $450-$300 (travel credit) = A $150 annual fee. But I'd rather just save $55/year.
CSR doesn't give rewards on the $300 anymore, so it's more like $75 more...but by the time you've even met minimum spend the difference is small.

And if you don't put much travel/dining spend on it, there's not much reason to cool off the bonus chasing to get either Sapphire card.
I spend a ton on dining every year (talking at least $3,000)... Way too much to be honest. Travel spending would be moderate but not as much as frequent travelers. I'd use miles and hotel points, but they may not cover the cost of an entire trip. I think I'd get a UR mostly for Hyatt points... I love their hotels and the earning rate would be better than the actual Hyatt cards themselves, and then the free nights aren't exactly a ton of points either for what you earn on Chase cards.

MDV, you are just a pup w/ 3k annually, try personal & biz between 18k - 20k, lol!

Re: Why does AMEX charge an Excise fee/tax?

K-in-Boston — Mon, 09 Jul 2018 01:07:28 GMT

I don't dare calculate what I spend on dining, but I spend at least $2500 a year just at Dunkin' Donuts.