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CNN’s Richard Quest revives that old chestnut of a question: Does your employer own the frequent flyer miles you earn on business trips?

A German court recently ruled that employers have the right to miles their workers earn on travel paid by the firm. Quest quotes analyst/consultant Ravindra Bhagwanani, who estimates that a company performing such a mileage raid could reduce its travel budget by up to 10%.

But would it really? Frequent-flyer mile travel doesn’t necessarily fit the same parameters as business travel, and the administrative hassles might overshadow any savings in airfare. Besides, business travelers might revolt (and productivity could drop) if this little perk were taken away — especially if the miles you earned sitting in RJs were spent by folks in the executive suite on first-class travel to exotic locales…

The issue also has tax consequences. The question has come up in the United States before, with the government determining, effectively, that employers own the miles, and that miles are a form of income. But the Internal Revenue Service essentially gave up (pdf, see p.17) trying to measure thosse miles. Yes, they’re income, but the IRS doesn’t want you or anyone else to report it. (The IRS does specify, however, that if you sell miles earned on business trips for cash, that payment is taxable.)

But if the miles were truly the company’s and treated as such, then you would have two levels of problems: 1) coordinating the use of miles within the firm, and 2) managing mile earnings and spendings from a tax viewpoint. Think of all the things that throw a wrench into any realistic mileage commandeering scheme:

• The reporting burden:
  - The miles are issued by the airline, not the employer, and are credited to the individual member at the airline’s discretion. So who tells the IRS (or heck, the company!) how many miles were earned: the employer, the airline, or the traveler?

• Redemption challenges:
  - The conventional wisdom is that mileage redemption is challenging and the rules are inflexible. Businesses tend to require flexibility, short notice, and specific travel dates. Those can be booked using miles, but with higher rates and, increasingly, fees. The value proposition of miles sinks quickly.
  - Right now, booking tickets for non-family members is a pain in the butt. Even within families, it can be hard: My wife has a different last name than I do; if I book an award ticket over the phone for her, I have to trek to the airport to sign for the tickets. They won’t just take my word for it over the phone. (If I book online, no further proof is necessary.) Would businesses want their employees spending time doing this? Or would they spend the money to have an airline liaison in the travel office who manages these tickets?

• Earnings/Accrual accounting
  - If I sign up for a 5000-mile promo and then fly a qualifying flight for my employer, who gets the bonus miles?
  - When would the miles be recorded as income? When they are flown/earned, or when they are cashed in?
  - What about credit card miles? If I just happen to charge a business expense to my miles-earning credit card, and later get reimbursed for the expense, are THOSE miles the employer’s as well? If so, do I get to write off a percentage of the card’s annual fee?
  - How many cents-per-mile would you calculate for earned miles, since they can be redeemed at varying rates? Canada has a system for this, which involves calculation of alternate fares, but it sounds like a hassle, and not necessarily an accurate reflection of the value of miles.

• Status and Upgrades
  - If you earn elite status flying for business, are all your upgrades the company’s property, too? Do you have to add income for complimentary lounge access?

I’m sure there are more. In the end, I hope that governments give up the idea that the miles belong to companies. And that journalists stop giving companies such bright ideas… But if companies start taking your miles away, let me know. And ask your accountant about the possibility of writing off the value of those miles as an unreimbursed business expense.