Cash Rewards for Money Order, Debit Card Purchases Included in Income

Abstract

[...]the reward dollars paid as statement credits for the charges relating to cash equivalents were an accession to wealth. According to the court, to avoid offending its long-standing policy that card rewards are not taxable, the IRS sought to apply the cash equivalence concept, but that concept was not a good fit in this case. [...]the court stated that its holdings were not based on the application of the cash equivalence doctrine, but instead on the incompatibility of the direct money order purchases and the debit card reloads with the IRS policy excluding credit card rewards for product and service purchases from income.