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Taxing Problem
ChrisCrossings · September 7, 2000

Q: I recently rented a Hertz auto in Tucson and guess what I found on my bill? A charge quoted as "7.5% exc. tax on FF mi". It amounted to a 29 cent charge for the rental car company to update the car renter's frequent flier miles. I think this ranks right up there with the $.75 per call charges at hotels. What can I do about it?

-- Gerald S. Brown

A: Not much. In accordance with the Tax Relief Act of 1997, all companies that purchase frequent flier miles from airlines for use as earnings must pay a 7.5 percent excise tax on the cost of airline miles. The amount you were assessed represents the tax expense on the cost of the miles earned on your rental. The tax only applies on certain carriers to rentals in the United States.

Most baffling, the frequent flier excise tax is itself taxable in all states except Arizona, California, Missouri, Oregon and Wyoming.

I'm afraid this surcharge is as inevitable as … well, taxes. There's no getting around it. Never mind that it makes very, very little sense. Never mind that Hertz probably neglected to tell you about the tax before you rented the car. Never mind that you never voted for the tax. (I don't know a traveler in his right mind who would.)

That doesn't mean you have to pay the tax. Here's how to get around it:

Hertz, like most other car rental companies, has phone agents that often "forget" to mention surcharges. For good reason. If you're with a car rental company, you'll want your price to sound the most competitive. Adding the taxes to the grand total doesn't help.

When you get a price quote, be sure to ask for the agent's name and station number or extension. You'll see why in a moment.

When you return the car - and see the tax - you have to react indignantly. "This is outrageous. No one ever mentioned these charges!" you'll exclaim.

Then call the rental company's 800-number and mention the problem. You were quoted this price by this agent (here's where you pull the agent's name out of your notepad) but he or she neglected to mention the tax. Don't forget to tell the operator what a good customer you are and how disappointed you'd be if this tax were left on your bill.

Poof! Three out of four times, that little 7.5 percent tax will magically disappear.

Try it for yourself.

Christopher Elliott's column appears on Thursdays. All e-mailed questions to ChrisCrossings become property of Ticked.com and may be edited, condensed or republished at the site's discretion. You may reach Elliott at chris@ticked.com. Or visit his home page at http://www.elliott.org.