An analysis by Alvarez & Marsal, Taxand US
Sooho Choi, Brian Pederson, Adrian Sosa, and Andrew Maliszewski from our US firm, Alvarez & Marsal have published an article discussing the tax implications of loyalty programs, using a recent Hyatt Hotels case as an example. Loyalty programs have become important tools for business; however, they generate revenue and incur expenses, creating complexities in taxation.
The Internal Revenue Service ruled that Hyatt should be subject to US Federal income tax on payments received from other participating hotels, a ruling which could impact various industries including hospitality, restaurants, airlines, cruise lines, and rental cars. Companies with loyalty programs may need to redesign their structures and assess ownership arrangements to comply with tax regulations and mitigate potential new tax liabilities.
Read the full analysis here.
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