Legally Speaking – with Bob Mionske: Your miles, my miles, our miles

Dear Bob,My team pays for travel and recently informed us that they own ourfrequent flyer miles and that we are to turn them back into the team.I seem to recall a legal case dealing with this issue. Can they do thislegally and what are the tax implications?Definitely Anonymous Dear D.A.,To begin, there are no potential tax implications regardless of whetheryou, or your team retains frequent flyer miles acquired via business travel.In 2002, after years of speculation and confusion surrounding the issueof potential tax implications for frequent flyer miles, the IRS issuedAnnouncement 2002-18,

By Bob Mionske

Dear Bob,
My team pays for travel and recently informed us that they own ourfrequent flyer miles and that we are to turn them back into the team.I seem to recall a legal case dealing with this issue. Can they do thislegally and what are the tax implications?
Definitely Anonymous
 Dear D.A.,
To begin, there are no potential tax implications regardless of whetheryou, or your team retains frequent flyer miles acquired via business travel.In 2002, after years of speculation and confusion surrounding the issueof potential tax implications for frequent flyer miles, the IRS issuedAnnouncement 2002-18, which stated that it would not assert a federal taxliability for frequent flyer miles as a result of business travel. Thereis one caveat to this announcement, if an individual keeps the miles andattempts (or is successful) to convert the miles into cash, tax liabilitywill arise.As for your question, all of the treatment of frequent flyer miles Iencountered dealt with the employer/employee relationship. I don’t knowhow your team is organized, but in any case, the relationship between youand the team is at least similar to that of an employee/employer relationshipand I will treat the team as your employer for purposes of this answer.According to the airlines, mileage earned belongs to the person traveling.However, because miles are transferable, there is nothing illegal aboutemployers forcing the hand of employees to transfer the miles accumulatedvia business travel to their corporate accounts. In essence, it is an optionfor the employer (or in this case sponsor or team management) to decideif the benefits of recapturing the miles from employees (or members ofthe team) outweighs the advantages of allowing employees to keep the milesfor personal use.Generally, large companies will allow employees to retain their milesin an effort to keep employees happy. In fact, as of 2000, only 6 percentof organizations viewed frequent flyer miles earned as their property with89 percent viewing the miles as belonging to the employees. The main reasoncompanies opt not to recapture miles earned is because of the difficultyin tracking and transferring the miles. The primary difficulty is separatingthe employees miles earned through personal travel from those earned viabusiness travel.The bottom line is that your team is within their rights to claim astheir own the frequent flyer miles you earned through their spending. However,in doing so it is most likely their responsibility to track and transferthe miles. In conclusion, unless you want to switch teams to one who allowsfor the retention of miles your current team is entitled to the miles earnedthrough their spending.Personally, I feel the stress and discomfort experienced by a travelingathlete more than justify retention of the miles the accumulate.In other words I believe the traveling athlete has earned the miles anddeserves to keep them. Perhaps the team members can come together and appealto the team management. If the team would let you keep the miles you haveearned, they will earn your goodwill – which is worth more than a few freeflights.
Good luck
Bob Mionske
(Research and drafting assistance provided by Justin Reiner JD. Willamette University School of law)


Now read the fine print:
Bob Mionske is a former competitive cyclist who representedthe U.S. at the 1988 Olympic games (where he finished fourth in the roadrace), the 1992 Olympics, as well as winning the 1990 national championshiproad race.After retiring from racing in 1993, he coached theSaturn Professional Cycling team for one year before heading off to lawschool. Mionske’s practice is now split between personal-injury work, representing professional athletes as an agent and other legal issues facing endurance athletes (traffic violations, contract, criminal charges, intellectual property, etc).If you have a cycling-related legal question, please send it to mionskelaw@hotmail.comBob will answer as many of these questions privately as he can. He willalso select a few questions each week to answer in this column. Generalbicycle-accident advice can be found at www.bicyclelaw.com.Important notice:
The information provided in the “Legally speaking”column is not legal advice. The information provided on this publicweb site is provided solely for the general interest of the visitors tothis web site. The information contained in the column applies to generalprinciples of American jurisprudence and may not reflect current legaldevelopments or statutory changes in the various jurisdictions and thereforeshould not be relied upon or interpreted as legal advice. Understand thatreading the information contained in this column does not mean youhave established an attorney-client relationship with attorney Bob Mionske.Readers of this column should not act upon any information contained inthe web site without first seeking the advice of legal counsel.