I 
108TH CONGRESS 
1ST SESSION H. R. 1139
To amend the Internal Revenue Code of 1986 to clarify the treatment of 
frequent flyer mileage awards. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2003
Mr. MEEKS of New York introduced the following bill; which was referred to 
the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to clarify 
the treatment of frequent flyer mileage awards.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Frequent Flyer Tax-
Free Liability Act of 2003’’. 
SEC. 2. FINDINGS. 
Congress finds as follows: 
(1) Individuals should be able to receive and 
use frequent flyer benefits for business or personal 
use without incurring tax liability.
(2) Taxation of frequent flyer benefits would 
raise a myriad of questions, including questions re-
garding timing, valuation, and foreign airlines, with-
out obvious answers. 
(3) Taxation of frequent flyer benefits would re-
sult in additional paperwork for consumers, airlines, 
hotels, car rental companies, credit card issuers, and 
the Internal Revenue Service. 
(4) Clarifying that frequent flyer benefits are 
not taxable will encourage people to travel and aid 
the economy of the United States. 
(5) The traveling public pays too much in taxes 
for travel-related services. 
SEC. 3. CLARIFICATION OF TREATMENT OF FREQUENT 
FLYER MILEAGE AND AWARDS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 139 the following new section: 
‘‘SEC. 139A. FREQUENT FLYER MILEAGE AND AWARDS. 
‘‘(a) IN GENERAL.—If an individual receives a fre-
quent flyer benefit as a result of the purchase of property 
or services—
‘‘(1) no amount shall be includible in such indi-
vidual’s gross income by reason of receiving such 
benefit,
‘‘(2) no deduction otherwise allowable for the 
purchase of such property or services shall be re-
duced by reason of such benefit, and 
‘‘(3) no deduction shall be allowed for the por-
tion of any travel-related service purchased using 
such a benefit. 
‘‘(b) FREQUENT FLYER BENEFIT.—For purposes of 
this section, the term ‘frequent flyer benefit’ means any 
right to receive (or the receipt of) travel-related services, 
including air transportation services, lodging, automobile 
rental services, and passenger cruise ship accommoda-
tions, for an individual for free or at a reduced cost by 
reason of prior purchases of property or services. Such 
term shall include such a right only if the value of such 
right is de minimis relative to the cost of property or serv-
ices purchased in order to receive such right.’’. 
(b) CLARIFICATION OF TREATMENT UNDER REIM-
BURSEMENT ARRANGEMENTS.—Subsection (c) of section 
62 of such Code is amended by adding at the end the fol-
lowing: ‘‘An arrangement shall not be treated as described 
in paragraph (2) merely because it permits the employee 
to retain a frequent flyer benefit (as defined in section 
139A(b)).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code
is amended by inserting after the item relating to section 
139 the following new item:
‘‘Sec. 139A. Frequent flyer mileage and awards.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
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