As most of you know, as of midnight on Friday, July 22, Congress failed to
reauthorize the Federal Aviation Administration (FAA). The immediate
ramifications included FAA worker furloughs, suspension of various airport
construction projects and new airlines fare hikes. Because the price increases
offset the removal of the ticket taxes, air travelers generally aren’t paying more,
but airlines are realizing more revenue.
FAA since Saturday, has not collected the 7.5 percent federal excise tax on the
base ticket price or the sale of frequent flyer miles, the $3.70 domestic segment
tax, the $16.30 international travel facilities tax on flights to or from the United
States and the $8.20 departure tax for flights between Alaska or Hawaii and
the continental United States. State taxes, security fees, excess baggage fees and
passenger facility charges are among the fees still being levied.
The affected fees combined, according to various reported estimates, amount
to between $25 million and $30 million per day. Delta executives pegged the
number for their carrier at $4 million to $5 million per day.
The Internal Revenue Service, which in 1996 and 1997 accepted excise tax
refund applications from affected travelers during similar air ticket tax holidays,
wrote that “passengers who paid for tickets on or before July 22, 2011, for
travel beginning on or after July 23, 2011, may be entitled to a refund of the
tax. Airlines are permitted to refund the tax to the passenger, just as they do in
the ordinary course of business when issuing refunds for unused refundable
tickets (including the associated taxes). The IRS has asked the airlines to provide
refunds to eligible passengers when requested. However, passengers who are
unable to obtain a refund from the airline may obtain a refund by submitting a
claim to the IRS.”
According to a joint statement issued by the American Society of Travel Agents
and the Business Travel Coalition, the two groups do not expect “any retroactive
tax collections,” but suggested ticket taxes “will apply to a reissued ticket in
cases where the ticket was issued during the no-tax period and exchanged once
the tax is restored.”
As more details become available we will update you on any processes that may
require our further involvement. For immediate updates from Internal Revenue
Service, please go to:
http://www.irs.gov/newsroom/article/0,,id=242812,00.html?portlet=6
