Even big companies mess up, and American Express just proved it. They got caught misleading small and mid-sized businesses with bad tax advice. Instead of working with tax professionals, they sold products that promised tax benefits but didn’t actually follow the rules. Now they’re paying over $138 million in fines.
This is a reminder for business owners and CPAs: Not all tax advice is legit. If you rely on salespeople instead of real tax experts, you could end up with fines, audits, or worse.
Tracy said:
What exactly were they telling businesses that was wrong?
Between 2018 and 2021, they were pushing wire transfer products like Payroll Rewards and Premium Wire, telling businesses they could deduct the fees as business expenses. Turns out, those claims weren’t true because the fees were way higher than competitors and mainly benefited individuals, not businesses.
From the DOJ report: ‘The wiring fee was not an ordinary or necessary business expense.’ Basically, AMEX didn’t check with tax pros before selling these products.
Tracy said: @Ari
So they convinced people to pay extra fees, claiming they’d get a tax benefit… but the numbers never really worked out?
Exactly. They made it sound like, ‘Pay more and deduct it later!’ But the tax laws don’t work that way. If it’s not an ordinary and necessary expense, it doesn’t count for a deduction.
@Ari
Not quite. The real issue was that AMEX sales reps told business owners they could earn points on these transactions and those points were tax-free income. But in reality, if you claim a deduction on a purchase, any rewards you earn should be subtracted from that deduction.
Tracy said: @Ari
So they convinced people to pay extra fees, claiming they’d get a tax benefit… but the numbers never really worked out?
Maybe AMEX figured people wouldn’t question it? Either they planned to hike fees later or they assumed no one would notice the tax issue until it was too late.
Tracy said: @Roan
So employees were getting personal rewards for spending company money? That’s shady as hell.
Yeah, employees sometimes rack up personal rewards using company funds, like with flights or credit cards. The problem here was that AMEX told business owners they could fully deduct the fees, even though they weren’t really business expenses.
Tracy said: @Zen
Wouldn’t that count as embezzlement if an employee was using company money just to get personal perks?
It could be, but most companies would just fire the employee rather than take legal action. Plus, business travel perks are a common gray area. Employers usually don’t track every single purchase to see if it’s the absolute cheapest option.
Tracy said: @Roan
So employees were getting personal rewards for spending company money? That’s shady as hell.
Yeah, this was more about how the system works rather than straight-up stealing. Lots of companies allow employees to pick flights or hotels based on personal preferences, and the IRS usually doesn’t crack down on it.
@Roan
Exactly. Airline and hotel points are a perfect example—companies pay for travel, and employees keep the rewards. It’s common and usually not a problem unless someone tries to game the system too much.
Flynn said:
So AMEX gets fined, but do they actually lose anything, or is this just a slap on the wrist?
They lost more than they made from the scheme. The DOJ made them pay back $60.7 million in profits, plus a $77.7 million criminal fine. On top of that, they had to settle separate civil claims.
This case has been dragging on for years. It all boils down to AMEX selling a product that gave people points but claiming those points were tax-free income while still deducting the purchase as a business expense. Simple rule: don’t give tax advice unless you’re qualified.