Whistleblower Tipped IRS About AmEx Tax Scam

A whistleblower contacted the IRS about tax advice that American Express was giving its clients. The company claimed that card-processing fees from their business income could be deducted for tax purposes, then the rewards triggered by those fees could be transferred to AmEx cards they controlled for personal use without paying taxes on the rewards. Now the IRS has launched an investigation. According to the Wall Street Journal, which first reported the story, the advice was based on a “shaky interpretation of tax law” and “was part of a strategy to persuade business owners to sign up for costly payment services.” American Express reportedly advised a number of clients about the scheme, among them eye doctors, McDonald’s franchisees and payroll companies. A bipartisan bill has since been introduced in Congress designed to shore up the whistleblower process.