The envelope said I’d won. But I’d been tricked before by fancy graphics and promises “you’ve already won millions of dollars.” I opened it anyway. “Congratulations!” the letter exclaimed. “You’ve been selected as a Prize Winner in the BankAmericard Visa `Be There’ Sweepstakes.
The prize: “Trip for Two to The Skate America International ’97 in Detroit, Oct. 25-27, 1997, where you will meet a member of the U.S. Figure Skating Team.”
The approximate retail value of the trip: $2,000.
Yeah sure, I thought. I never entered any contest for Bank of America. Yes, I had its Visa card. But I live in Arlington, Va., and the bank is based in California–how could I have entered a contest?
Turns out I did, just by being an energetic consumer in the merry month of May. Every time I used the card in May 1997, I was automatically entered in a drawing. Bank of America took the 8 million electronic transactions made that month, sent them through some complicated, lottery-like process and then randomly selected 20 winners.
Out of six million BankAmericard cardholders, I won.
Now, all I had to do was get the affidavit notarized verifying that neither I nor my traveling companion work for the bank and return it in the prepaid envelope. Bank of America would pay for three days and two nights at a hotel, airfare, round-trip ground transportation and tickets–all for two–to the event.
What’s the catch? What do I really have to do to get this all-expenses paid weekend in Detroit?
I called the non-800-number in Milford, Conn., asking for the information I was sure was written in print too small for my eyes. No catch, replied Susan Hurley, who was coordinating the event for Bank of America. Just send in the affidavit and they’d send me the plane tickets.
Of course, there is a catch. At the bottom of the letter, in tiny print, it states: “Taxes are the sole responsibility of individual prize winners.” I didn’t know what that meant.
As I soon learned, the trip is legally considered a prize. And one has to pay taxes on the approximate retail values–ARV, in tax-monger argot–of such a prize, based on your income bracket. So for our family, the “free” trip to Detroit would cost about $600 in taxes. The bank would send a Form 1099, made out in the amount of the ARV, to the Internal Revenue Service. I’d have to declare the amount as income–and pay tax on it.
This fact I discovered by chance. A friend told my husband how his brother won a trip to a Super Bowl. At tax time, he received a letter from the donor valuing the trip at $7,000! Because his brother was in the 31 percent tax bracket, that meant the “free” trip cost him roughly $2,100.
I called Susan Hurley back. She confirmed that yes, we’d have to pay taxes. But, she allowed, the final value was yet to be determined. The possibility that it could be less than $2,000 led me to send in the notarized affidavit.
In mid-October, as promised, two tickets (costing $300 each) and a $75 check for transportation costs arrived. Included were an event schedule, hotel brochure and two luggage tags.
On the way to the airport, my son, Cutter, began leafing through the packet of information. The Atheneum Suite Hotel on Brush Avenue in downtown Detroit, where we were booked ($145 a night if we’d paid), blew him away. Forget ice skating: What thrilled a 10-year-old boy was the prospect of a fancy hotel with room service and movies. Dinners and breakfasts, we later earned, were on us. Lunch at the Joe Louis Arena on that Saturday was on Bank of America.
Saturday at 11:30 a.m., the 20 winners and their guests climbed aboard a chartered bus and headed to the arena for skating practice. Dawn Murai, our on-site coordinator from San Francisco, handed out disposable cameras. Everyone on the bus, except for my son and me, had flown in from the West Coast.
At the arena, we sat 10 rows back from the ice with Claire Ferguson, who was the first female president of the U.S. Figure Skating Association. Dan Hollander, 25, a member of the U.S. Figure Skating team, joined us. Not many people, save for diehard skating fans, were at the practice. While Ferguson talked, Hollander, who was not skating in this competition, handed out autographs and posed for pictures.
After watching the men’s free skating and the free dance pairs practice, we filed downstairs for lunch. The itinerary promised “lunch with athletes,” but only Hollander joined us. Lunch was a buffet with pasta, fried chicken and cold cuts.
During lunch, I brought up the issue of the trip’s valuation with Ann Lindsey, an assistant vice president for marketing with Bank of America. She said it would be $2,500. I said that seemed out of sight. She promised to check into it. After that, I marched to the box office in the arena and showed them our tickets. Although they had no printed price on them, the agent said they would have cost $40 a session (or $80 each for the afternoon and evening sessions we attended).
By my reckoning, the trip cost about $1,000–not $2,500. It was fun: We got to watch Michelle Kwan and Tara Lipinski skate. Later, Cutter cornered Todd Eldredge and Scott Davis, both U.S. champions, and asked for autographs.
All told, it was a pretty cool trip. But would we have gone out of our way to fly to Detroit and get tickets? Absolutely not. And how much was it really going to cost us?
About 10 days after we returned, Lindsey called. “I spoke to several people regarding your concerns about the value of the trip,” she said. “Just wanted you to know that we’d be filing a 1099 for about $1,049 plus the value of the event tickets.” (The actual amount I ended up paying taxes on: $1,192.62.)
The message: Whether you win a dining room set or a trip to Hawaii, ask about the tax liability. The larger the value of the gift for the corporation, the better the tax break for it–and the more expensive for you. So do your homework and don’t be afraid to do battle. And remember what your parents told you: There really is no such thing as a free lunch.
