<p>If my D was on track to incur $600 in ATM fees (at $3/pop that would be 200 trips a year to the ATM machine) I’d be sending her a Harry Potter Howler OwlGram and sending her card thru the shredding machine as soon as I got my hands on it. So I think the risk, to me at least, and I think most people, is remote.</p>
<p>Yet, as a geeky CPA I feel the need to succumb to my intellectual curiosity and further pursue an issue that has no real possibility of having any affect on me whatsoever :).</p>
<p>I found a discussion forum on bankers online where bankers were asking this very question among themselves. No one had a definitive answer, altho the following post was somewhat informative (dated January 2010): </p>
<p>"I am sharing the following from IRS email Tax Assistance (provided to me by a colleague at another bank who raised the issue with the IRS again this year):</p>
<p>Your Question Was:
What is the tax law governing the treatment of ATM surcharge refunds credited back to the customer’s account by the institution that owns the bank-customer account relationship? For example: John Smith has a checking account and ATM card at ABC Bank. He goes to 1st Bank of America and withdrawals $20.00. 1st Bank of America charges John Smith a $2.00 fee for that transaction (since he is not a customer). Therefore, the total withdrawal amount equals $22.00. However, ABC Bank credits the customer $2.00 back into his checking account for the ATM usage. Is the bank required to show the $2.00 credited back to the customer on any IRS tax form sent to the customer? PLEASE INCLUDE REFERENCES TO SPECIFIC TAX LAW WHEN RESPONDING TO THIS QUESTION.</p>
<p>The Answer To Your Question Is:
The refund you describe is being made by your bank on a transaction performed by another bank and as such would not be treated as a rebate for information returns reporting purposes. We are not aware of any tax law currently available that addresses your specific question, and this location is not authorized to make such determinations. We recommend that you contact the Office of Chief Counsel, Internal Revenue Service, and request a Letter Ruling on your specific situation. Please see Internal Revenue Bulletin (IRB) 2009-1 for information on requesting a Letter Ruling. IRBs are available at [Internal</a> Revenue Service](<a href=“http://www.irs.gov%5DInternal”>http://www.irs.gov).</p>
<p>Ms. Miller
ID# 0269864"</p>
<p>So the IRS said its not a rebate (and therefore not reportable) but they stopped short of saying it was reportable (and taxable). </p>
<p>The problem with taxable income is that the IRS considers all income to be taxable unless a specific exemption exists that says that particular type of income is not taxable. </p>
<p>I don’t think CTScoutMom is off base in raising this as an issue. It appears that there is uncertainty out there (at least in the banking world) as to the correct treatment. But I think the issue is unlikely to affect the vast majority of us, since we’re not likely to cross the $600 threshold, and even if we did, I doubt that most banks have started to treat this as 1099 reportable (and probably won’t until the IRS says they have to).</p>
<p>Ok, time to go and get my next Howler Owlgram prepped. I love those things.</p>