Agreed. I actually posted on that back in 2018. It is already happening in some parts of the world:
In Singapore, Citi reining in cash back for certain MCCs
It is noteworthy, I think, that once again in that example it is one of the “big banks” taking the lead.
Needless to say when it comes to the “big banks”, I’m not a fan. 
Are you a lawyer? I didn’t realize. Or perhaps you are a judge?
Either way, I’m not buying what you’re selling.
If the IRS acts to tax my rewards I will sit up and take notice. Until then:
yawn
It is & I let my accountant take care of the process. Seems to be ok with God & conscience. 
…and at that point you better have more substantial reasoning than “I dont wanna pay and I dont care about any court ruling”, or the tax levy will be the least of your problems.
Don’t be silly. Are you unfamiliar with plausible deniability?
I have lived for years with “gray areas” of the tax law. Now when the law is clear I pay up; no cheating. But the gray areas are quite another thing. I do my own taxes and I study the tax law, as required, personally and quite extensively.
And given the IRS has ignored this issue entirely for at least the last ten years, I’m confident worst that can happen is they send me a bill. And frankly, absent something concrete out of them in advance at which point I would pay anyway, I do not anticipate even so much as a bill.
Again, just because you don’t report it and they don’t send you a bill, does not mean your profits are tax-free.
Here’s another excerpt form the court’s ruling (one the previous quotes I posted was from the IRS Commissioner’s summary, not the actual ruling):
These people not only bought Visa GCs, but also reloaded debit cards and purchased MOs directly with the Amex CC, so the court had to account for all three types of purchases. It’d be stupid to think that purchases of CDs would be treated differently than purchases of MOs or debit card reloads.
It was kind-of disputable before, but now the law is clear. Not paying now is cheating. No matter what justifications you tell yourself.
Is when you know you’re a cheat but the IRS can’t prove it 
Your accountant is responsible only for filing your taxes correctly using the information you provided. If you didn’t provide something, such as telling them that you earned 2% cash back on your business expenses, then the resulting miscalculation is not their responsibility, it’s yours.
Not a problem!
If I didn’t know any better, I would absolutely think @shinobi was a Trumper living in some kind of batsh*t crazy alternate reality. Oh wait…
One more thing.
So I pay all these bills with a credit card. I submit the bills on my income tax & I have a receipt that those bills were paid. How does anyone know I receive a bonus in cash if the credit card company doesn’t send me a 1099 or something. End of story!!
Well, yeah, you’d have to be audited to get caught. But that’s “getting away with it”, not “doing it correctly”.
How does anyone know that a retail store gets paid CASH for the things they sell? The customers don’t send them a 1099. End of story???
A big part of the tax system relies on the honesty of the taxpayers. It’s not your bank’s responsibility to know that you put business expenses on a personal credit card. It’s your responsibility. Or you can just get a business credit card that only gets business expenses, and any rewards earned will be easier to track and separate from your personal expenses and rewards. I’m just pointing out that what you are doing is not what you are required to do by IRS rules. But what you do with this information is up to you, obviously. Just don’t pretend that what you’re doing is right or legal.
I have long maintained, right here on this thread, that my CD purchase activity is only a second rate form of MS (manufactured spending). As such, this activity is engaged in by few professional MSers. The reason is simple:
Profits from full strength manufactured spending far exceed my own because I turn my money over much, much more slowly than the pros.
I have never personally engaged in professional MS activity and I do not know how to go about it. In reading some of the references linked above I see it apparently involves purchase of gift cards, money orders, and other such cash equivalent items which can quickly be monetized. Also such purchases generally require, and tie up, far less capital than does my own less aggressive approach to MS.
The point is that, because it is so profitable, full strength MS attracts far more participants than does my own form of the activity. And if the IRS decides to tax certain CC rewards, those folks will be first and foremost in the line of fire. And it’s a LOT of folks. You could hear the angst in their posts, and nobody posting there was buying certificates of deposit.
So it will be interesting to see, going forward, just exactly what the IRS does, if anything. They have taken no interest in this matter for at least ten years. Will that change? Stay tuned. 
Now on another subject entirely, I find amusing posts here by holier than thou, virtue signalling scolds who spend their lives looking for ways to spend other people’s money. As such, they constantly face the dilemma of running out. You people have me exactly right. I will do what I can to hang onto my own money in order to safeguard it from being wasted by profligate spenders like yourselves. And if that does not comport with your very effete views of how your world should be, do not look to me for solace.
Great points. This was really a case of the age old question - should I assume I’m going to get shut down and just go as big as possible for as long as they let me, or should I try and figure out the right amount to stay under the radar and do it for as long as possible? Turns out, if you got in right at the right time (assuming 2013 was the right time), you could do millions in MS before Amex shut you down, so the “go big” plan was a good one for them. BUT, they went so big, the tax man noticed, so in the long run, it looks like it wasn’t nearly as profitable as they originally thought. Regardless, I have to tip my hat to them for fighting the fight. Maybe this guy wasn’t on a forum, but if he were in contact with some big time MSers, it may have made sense for them to pool their resources to get him the best legal representation in the land because this is clearly a giant blow to their hustle.
I think what I am most curious about was how this family was able to do that sort of volume. How many hours a day did they spend on this? Did his much higher than average intelligence level help him figure out some sort of method to churn through this much money faster than most? Or was it more old fashioned social engineering and getting to know the clerks and shifts at your local stores that were the best to work with? Or some mix of the two?
I’m also curious to know how the IRS caught them. I wonder if it was a whistleblower at their bank.
I can’t speak for that guy, but I had a store back in 2013/2014 that would sell me as many VGCs as I could pay for. The real limit was how many Blackhawk would ship into their store, which they did by the shopping cart full by the time they adjusted to my volume.
Buying 100k+ per day was easy. My biggest day was >400k. Unfortunately, this was a Pathmark and they went bankrupt in 2015.
Edit: some additional notes on time. Ringing up and paying for the cards only took a few minutes. Staff at the store was quite familiar with the process and I’d come mid-day on weekdays when they were less busy.
The biggest timesink was freeing the cards from the cardboard packaging, swiping them into a computer and typing the CVV codes. This tool was quite helpful: Avery Dennison M00PLS01 Black Plastic Label Scraper - 10 / PK | Wasserstrom
This is the sort of reply that shows you are NOT the person to listen to on this and are not taking this new court ruling and memo seriously.
I am a CPA with a small seasonal tax business. While I don’t live and breathe this stuff everyday, I know much more than most. Based on what I read in that ruling and what you have posted about doing, everything @scripta has written to you has been 100% accurate. You are profiting off of cash equivalents. Based on this ruling the IRS would consider the profits from your hustle taxable income.
I assure you that your claim that what your are doing is “second rate” and not “professional” would not hold any sort of sway over the IRS or the US Tax Court.
I want to reiterate the distinction that @scripta made. You originally claimed what you are doing does not create taxable income. This court ruling makes clear that it does. “Manufactured spending” doesn’t show up once in this court ruling. “Cash equivalents” shows up multiple times. This ruling is NOT limited to people using gift cards, reloadable debit cards, and money orders.
If you want to claim that you “feel” you don’t need to pay taxes on your credit card rewards because the IRS has, in the past, said that credit card rewards were not taxable income to individuals, that’s fine. We totally understand. But you are clearly coming around to the fact that it is taxable because you have now switched your tune to saying this:
This has made it clear that you are more concerned with the IRS catching you, not whether or not what you are doing is actually taxable. At least you are starting to understand the gravity of your situation.
I don’t know who exactly you are referring to with this post, but generally speaking, not paying taxes because you don’t like what the government is doing with your tax money has to be one of the least convincing arguments for tax evasion I’ve ever heard. But hey, whatever helps you sleep at night!
I figured the purchasing of the cards wouldn’t be too time consuming. I assumed the purchasing of the MOs and the subsequent depositing of the MOs would be the more difficult part. Did you buy the cards and convert them to MOs at the same store immediately afterwards?
After this case, are you worried about the IRS finding out and coming back at you for your income?
This is key and I hope other MSers pay careful attention. This is important stuff:
I do my own taxes. Always have. When you agree to do otherwise, when you submit your information to a third party and do not prepare your own taxes, at least face reality:
That third party is going to play safe. There are gray areas where taxes and IRS rules are concerned. Do your own taxes and you can slant those gray areas to your own advantage. Entrust your tax preparation to a “pro” and they will not . . . . out of fear.
Consider:
Some court might declare taxability of certain income, meaning that income is subject to taxation. But the IRS, for practical reasons, might choose not to enforce taxation of that very same income. Now you could always choose to pay those taxes regardless, voluntarily. But that is more likely to happen if you hire a tax preparer than if you do not.
So if you decide to place your tax preparation task into a third party’s hands, at least do so with eyes open.
To answer your second question , I’m much more comfortable now that there is precedent indicating that it was NOT income. I was purchasing a product and collected rewards on that product. Due to the nature of some of my agreements (that had 3rd parties involved), I actually did pay tax on portions of the gains, but that’s another issue entirely. Liquidation is always fluid (pun half-intended). At points this was done online via billpay services, at other times I was lucky enough to also have a store that would let me purchase unlimited MOs with VGCs. That part was somewhat time-consuming as I had to swipe each card for payment. The rest I had automated. A program I wrote scanned each MO, stamped my name / signature / endorsement on it and electronically deposited it to my checking account, stamping the confirmation number on the back. When doing volume automation is a big part of the game.