Posted by Chuck on September 4, 2017
Class Action Lawsuits

Published on September 4th, 2017 | by Chuck

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CitiBank Class Settlement for Issuing 1099s on AA Mileage Bank Bonuses

CitiBank 1099 Class Settlement

Direct Link

It’s well known that Citibank used to send out IRS Form 1099 for American Airlines miles earned from opening a bank account (not from credit cards which constitute a rebate). They even came up with an inflated value of 2.5 cents per point, an amount most people don’t get from AA miles, and for some people the entire mileage bonus was barely worth it after accounting for the taxes.

A class settlement is being proposed to compensate those affected. Plaintiffs have three complaints:

  • That Citibank did not adequately disclose to customers that Citibank would report the taxable value of the promotional American Airlines miles (AA miles) awarded to customers as income to the IRS by issuing Form 1099s
  • That the AA miles do not constitute reportable income
  • That Citibank overvalued the AA miles for reporting purposes

Citibank denies these allegations; however, in order to avoid the expense of continued litigation, Citibank has agreed to the Settlement described herein.

Who is Eligible?

Anyone in the United States who received a Form 1099 from Citibank as a result of opening a Citibank deposit account and receiving American Airline miles through Citibank promotions in which Citibank valued the American Airline miles at 2.5 cents per mile, during the period between January 1, 2009 and July 13, 2017.

You may have also gotten a postcard addressed to you specifically about this Settlement, in which case you are likely eligible.

File a Claim Here

How Much Can We Get?

Citibank has agreed to pay up to $1.75M to class members. That’s besides up to $1.2M for the lawyers.

  • Settlement Class Members who affirm that they reported and paid taxes on the 1099 AA miles income can get back up to 70% of what they paid in federal taxes. For example, if the 1099 said $1,000 and your federal tax rate was 35%, you’ll get back up to 70% of the $350 you paid in taxes ($245).
  • Settlement Class Members who do not affirm that they reported and paid taxes on the income attributable to the receipt of the AA miles will be eligible to receive a settlement award of up to $40.
  • If the amount of settlement awards would exceed the sum of $1,750,000, the settlement awards will be reduced on a pro rata basis.

Important Dates

  • January 1, 2009 – July 13, 2017 is the timeframe in question when Citi sent out these suspect 1099 forms
  • Claim must be submitted by November 27, 2017
  • The Court will hold a hearing on January 31, 2018 at 4:00 p.m. to decide whether finally to approve the Settlement

Final Thoughts

Technically, you could have disputed the value of the 1099 when Citi used to send those out, but I’m sure there are many people who didn’t bother and just paid taxes on them. These people are all eligible for this settlement. Many class settlements amount to a mere few dollars, but this one can easily be hundreds of dollars for some people, and well worth filing a claim.

Citi no longer issues 1099s at all for AA mileage bonuses. They do still issue 1099s for ThankYou points bank bonuses (not credit card bonuses), but only if you get $600 in value from the bonuses during a single calendar year. You can see a bit more detail here.

Hat tip to Viewfromthewing

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mjs
mjs

A word of warning to anyone who “thinks” they might have been involved in this, so they fill out a form.

Citibank clearly has this tied in to the social security numbers they issued the 1099 to. My wife got a postcard about a week ago, and when she typed her claimant ID in, the next screen had all her identifying info including the formal name she used when she had the Citibank checking account that was issued the 1099. I’ve also had Citibank checking accounts that gave miles, but was small enough bonus that it didn’t trigger the 1099, and therefore I did not receive a postcard.

So, my advice is if you think you were issued a 1099, I’d call and confirm and get a valid claimant ID. Otherwise, I would definitely not not make a claim without the ID since it’s not only perjury, but since this settlement involves SSNs and the IRS it’s a bit more serious than the standard “I think I bought that product at the store” class actions.

obamarulz
obamarulz

small fish in a big pond, most people would almost certainly be ok getting the easy $40. you could easily explain it away with “I know I got citi miles for bank bonus and thought I got a 1099″…

mjs
mjs

If someone wants to risk committing perjury over $40 for a class action lawsuit that IS TIED TO THE IRS AND LINKED TO THEIR SSN, then some people are greedier or stupider than I thought.

Big, big difference between a class action related to anonymous, untraceable store purchases and something that Citibank already has tied to your tax records.

Andrew S
Andrew S

Plus, lying on class actions is just a shitty thing to do. It dilutes the amount legitimate claimants get.

TG
TG

I got the postcard but I never received a 1099 for my AA miles. I wonder if I actually qualify.

M
M

You qualify if Citi assigned you a claimant ID. It’s their responsibility to track reporting, so no need for you to worry.

Christine B
Christine B

Citibank sent me a 1099-INT valuing my 5000 AA miles at $125 in 2011. So…$125 x my 25% tax rate at the time x .7 (the settlement adjustment) = $21.88 maximum for me. Likely further reduced by the large number of folks in the settlement pool. But it’s certainly worth the 10 minutes it took me to look through my tax folder. Thanks for keeping us informed about these kind of things….

PSJc1eAmawCjwfbdf
PSJc1eAmawCjwfbdf

Given your small number of miles, you might be better off with “do not affirm that they reported and paid taxes on the income attributable to the receipt of the AA miles will be eligible to receive a settlement award of up to $40”

I believe you do not need to claim that you DIDN’T pay taxes on it, just decline to claim that you did.

That said, I’m not a lawyer. In fact, I haven’t even read the actual settlement. But something to consider.

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