A county employee in Santa Clara, California supposedly defrauded the local government by…
[Using] his personal credit card to pay for his travel expenses as well as the expenses of employees, all of whom are supposed to use a county credit card. In some cases, he would use his credit card to pay their expenses when he was not traveling with them. He’d get reimbursed for the expenses – and allegedly keep the points..
Wait. Say what..?
He’s accused of paying for legitimate business travel, and then getting reimbursed for the expenses. I’m shocked, shocked to find that expense reimbursements are going on here!
This story actually has witnesses hidden to protect their identity!
He ran $55,000 in travel expenses through his personal cards for the points… over the past six years. That’s less than $10,000 per year. He wouldn’t even spend enough to earn top tier elite status with United or Delta if all of the money was airfare on either carrier and for his own travel.
And employees without county credit cards are permitted to use their own cards. The county has a clear policy to reimburse travel expenses put onto personal cards. Moreover, for the past six years the expense reports have been getting approved.
The underlying news story contends that there’s a clear policy that’s being violated. But here’s the policy:
Frequent flyer credits earned by county employees for travel on County business should be applied toward future county travel. Please note that personal use of airline frequent flyer mileage credit earned on County business is a taxable fringe benefit to the employee pursuant to the IRS regulations, and County has no intention to provide such fringe benefits
First, the points-earning in question here is from credit card spend and not points earned from travel. The County has a policy, it seems, similar to what the federal government did until 12 years ago.
Second, the County ought not be in the business of giving tax advice since the IRS has clearly taken the position that miles earned from business travel will not be treated as a fringe benefit for tax purposes.
Keeping employee points earned through business travel – at least where those points are deposited into employee accounts rather than centrally pooled – turned out not to be an effective means of reducing the cost of business travel.
- Employees who can’t keep their miles don’t add their frequent flyer account to bookings.
- It’s tough to sort through which miles were earned through business travel versus other means like credit card spend, shopping portal points, etc.
- Booking business travel on points is challenging becuase the needs of the former are often incompatible with the schedule flexibility needed to deal with capacity controls.
The federal government gave up the effort. Santa Clara apparently has not. But their policy doesn’t speak to points earned through credit card spend in any case, it seems… scary words like “scheme” and claims that this came at taxpayer expense notwithstanding. At most the use of a personal credit card, contemplated by company policy, meant any rebates the county might have earned by pushing the spend through their own card were not received (if the county has such a benefit).
The news story is aghast at the promised benefits of rewards programs!
Gold Passport’s Jeff Zidell declares, “the only thing better than bacon is… free bacon!”
As so many news stories about travel are, this one gets confused between the points earned from credit card spend and the benefits that may have been accrued by putting a hotel loyalty program account number onto someone else’s room that wasn’t aware they could have added their own. I have a feeling some of my readers may even have done similar things in the past…
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