AmEx Pitched Business Customers a Tax Break That Doesn’t Add Up

The pitch went out to eye doctors, McDonald’s Corp. franchisees and payroll companies: “Reduce your taxable income burden to Uncle Sam.”

In phone calls, emails and in-person meetings with thousands of business owners, American Express Co. salespeople laid out the strategy. Use AmEx to pay your employees and suppliers, they said. You’ll have to pay a fee, but you’ll come out ahead. That’s because you can earn rewards on the transaction that can be converted into untaxed cash, while also deducting the transaction fees for tax purposes.