Wednesday, July 27, 2011

Q&A from IRS: Refunds for Airfare Taxes Paid During Expiry Period?

The IRS sends this useful Q&A for fliers wondering how they might get refunds for federal taxes on tickets purchased before July 23 for travel after that.

As of 12:01 Saturday morning, with the failure of Congress to pass another extension of the omnibus bill to keep the F.A.A. funded, various federal taxes on airline tickets expired until the funding reauthorization bill is reinstated.

At that point, airlines stopped collecting the federal taxes, which amount to a total of about $25 million a day. Here's my column on that in the Times yesterday. As noted, airlines then raised fares by roughly the same amount as the taxes would have totaled. (The notable exceptions were Spirit and Alaska airlines).

It was the seventh across-the-board airline fare hike of the year. No one would have taken great notice of still another incremental fare hike, except for the fact that this one clumsily was initiated to coincide with the federal tax expiration.

It's a sign of how worried the airlines really are about fuel prices and a slowing in revenue growth that they chose to take it on the chin from consumers by pushing this fare increase through this way.

Anyway, it isn't clear yet exactly how the airlines and IRS will address the issue of refunds for those who already paid taxes on tickets purchased before the expiration for travel during the tax holiday period.

For one thing, a lot depends on how Congress, may God help us, fixes the F.A.A. bill, assuming this pitiful Congress is capable of fixing anything.

But this IRS Q&A is a handy guide to where things stand today taxwise.


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