Despite Rumors, It is Highly Unlikely That You'll Need to Pay U.S. Taxes on the Value of Mileage Points

A number of listeners to The Travel Show, presented by my daughter and myself ( www.wor710.com/arthur-frommer ), have expressed concern that they may need to pay federal taxes on the mileage points they've earned either through flying or racking up purchases on a points-related credit card. The panic results from Citibank reportedly mailing form 1099s to clients who have received points by using that bank's credit card. The fact that Citibank has taken that surprising step was mentioned on our program by Brian Kelly, the man behind The Points Guy ( www.thepointsguy.com ).
 
Although you'll have to consult your own attorney if you're worried about incurring tax obligations on the points you earn, and I can only cite a very offhand, flimsy, and possibly incorrect opinion, I have often regarded such fears as unfounded, for the following two reasons:
 
First, if you have earned points from a purchase of some sort that you have made with your own money, those points are best considered as a discount that you have received and not as the receipt of income. It is only when you earn points by taking a flight that someone else (like your employer) has paid for, that it could be argued that you have received extra income and owe taxes on the value of such points. I have often spoken about corporate executives who take many, many flights each year that were paid for by their corporation, but for which they obtained the points -- which they then use to take their family to Hawaii on vacation. On that kind of transaction, it seems that an argument could be made that income has been received on which taxes should be paid.
 
But the argument, in my view, will never be made by government tax officials for a very simple reason (the second explanation as to why no one pays tax on points earned). The largest recipients of points (or frequent flyer miles, as they used to be called) are Members of Congress, who each receive government-paid air tickets on numerous occasions throughout the year to return periodically to their districts. I've been told that such Congress people are rolling in points, drowning in points, receiving incredible numbers of points based on all the free flights (40 a year?) that the rules of Congress allow them to receive and which are paid out of the Federal treasury. Such members of Congress would be apoplectic if the Internal Revenue Service were to send them a tax bill for the value of such points.
 
So that's why, in my untutored, hesitant viewpoint, the IRS will never tax the use of points. And the act of Citibank in mailing out 1099s relating to such points seems beyond belief.
 
Is there anything I am missing here? Should users of points they have earned, and then converted into flights, record such transactions on their tax returns?