Citibank NA has agreed to pay $1.75 million to settle a class action lawsuit alleging it improperly reported the taxable value of customers’ promotional American Airlines miles to the Internal Revenue Service.

If you received an IRS Form 1099 from Citibank that reported to the Internal Revenue Service that you received income from the receipt of promotional American Airlines miles between Jan. 1, 2009 and July 13, 2017, you may be eligible for compensation from the Citibank class action settlement.

According to the Citibank class action lawsuit, Citibank failed to adequately disclose to customers that it would report the taxable value of promotional American Airlines miles to the IRS. The plaintiffs also allege that the airline miles do not constitute reportable income and that Citibank overvalued the airline miles for reporting purposes.

“Citibank regularly offers promotional American Airline miles to induce customers to open up checking or savings accounts at Citibank, usually with a minimum deposit of $25,000,” plaintiffs Bertram Hirsch and Igor Romanov allege in the Citibank class action lawsuit, which they originally filed in February 2012.

However, Citibank failed to inform customers who signed up for the American Airlines miles promotions that it would file an IRS Form 1099 reporting that the customer received miscellaneous income at the rate of 2.5 cents per mile for the airline miles promotion, the plaintiffs allege.







Hirsch and Romanov claim that airline miles are not considered taxable income by the IRS, and even if they were taxable, Citibank’s valuation of the miles at 2.5 cents per mile is “grossly unfair and deceptive,” especially since the airline miles do not have a fixed value at the time they are received. The plaintiffs estimate that the average value of airline miles ranges from .76 cents per mile and 1.2 cents per mile.

Citibank denies the allegations but has agreed to settle the airline miles class action lawsuit to avoid the expense, inconvenience and distraction of continued litigation. The bank has agreed to pay up to $1.75 million to eligible Class Members who file timely and valid claims.

Class Members who would like to opt out of or object to the Citibank class action settlement must do so no later than Oct. 11, 2017.