Does anyone use RewardsNOW, or any other online customer rewards program?

I am wondering how others are handling 1099 INT reporting for these customers?

bump

Let's try this a different way then...

Customer opens an account with us as we incented them with a $25 gift to do so. At account opening, we give them directions and a passcode to go online and choose thier gift card at their convienvence. Once we give the customer a code, we are billed by the company for the reward amount and charge, regardless if the customer redeems the reward or not, and we are not given any proof one way or another if the reward is redeemed. We have determined that this event is reportable via a 1099INT.

Question. Is the customer's acceptance of the passcode event enough to file a 1099INT for the gift, or do we need solid proof that they actually redeemed the the passcode for the giftcard?

My thought is since they accepted the passcode, we produce and report the 1099INT, and it is up to the customer to determine if they need to include the amount on their tax return or not.

Thoughts?

If you were to follow the logic that says the customer had to use the passcode to obtain the giftcard before reporting requirements kick in, you could take another logical step and say that receipt of the giftcard isn't a taxable (reportable) event, and the customer has to spend the value of the giftcard before the trigger is pulled. And suppose the giftcard is used to buy an Andrea Bocelli CD. Does the consumer get value at the time of purchase, or not until he or she listens to the CD? What if the CD is entirely in Italian, and the consumer doesn't understand it?

Obviously, I'm using ridiculous arguments to prove my point. I think that the passcode has a value and its acceptance would be the reportable (and taxable) event.

So do I assume in your discussion that the $25.00 gift is reportable on a 1099-INT because they opened a savings account not checking? And if it was a checking is the $25 non-reportable?

Interest defined under Regulation Q and the IRS are totally two different things. The bonus would have to be reported on all accounts on a 1099INT, whether associated with a DDA or savings account.