The whole thing seems to be a bit murky, but basically Congress failed to authorize airlines to collect taxes on domestic and international flights. You know, some of those extra costs that seem to be added to the base price of your airfare.
Although that would mean lower total ticket costs, not all airlines adjusted their prices. As a result, some travelers paid taxes when they didn’t need to.
According to the IRS, if people paid taxes on tickets bought before the lax lapsed, for travel during that “tax expiration” time frame they are entitled to a refund.
The IRS website has the following information: Until they are reinstated by Congress, the following federal air transportation excise taxes do not apply to transportation beginning on or after July 23, 2011:
- The 7.5 percent tax on the base ticket price;
- The domestic segment tax of $3.70 per person per segment (a single takeoff and single landing);
- The international travel facilities tax of $16.30 per person for flights that begin or end in the U.S., or $8.20 per person for a flight that begins or ends in Alaska or Hawaii; and
- The 6.25 percent tax on the amount paid for transporting property by air.
The IRS cautions: Other taxes and fees, such as state taxes, security fees, Passenger Facility Charges (PFCs) and excess baggage fees, are not affected by the expiration of the taxes listed above.
Are you flying on or after July 23rd? If so, this could apply to your ticket.
Next, the IRS reports: Q. If I purchase my ticket after the tax expired and I travel before it is reinstated, can the airline collect the tax?
A. No, airlines are not authorized to collect the tax during any period in which it does not apply.
Did you buy your ticket after July 23rd? If so, the airlines should not have charged you those taxes. However, the situation is murkier if the tax is reinstated before you actually fly. In that case how the tax is handled depends on what are the stipulations in the legislation that reinstates the tax. The legislation could either impose tax on all travel occurring after its enactment or provide an exemption for passengers who purchased tickets during the period when the tax was not in effect.
Now, here’s the part that concerns me – as in I bought a ticket to fly to Europe on July 14th, and expect to fly in September and may be relevant to others as well.
Q. If I travel on or after July 23, 2011, and I purchased my ticket on or before July 22, 2011, am I entitled to a refund for the federal air transportation excise taxes that I paid when I purchased the ticket? If so, will my airline refund the tax to me?
The IRS states: 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.
But it’s the next sentence that confuses me. 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).
Permitted? Why permitted? Why not REQUIRED?
Now, the other really important part: the IRS has asked the airlines to provide refunds to eligible passengers when requested.
NOTE the word: REQUESTED.
If you don’t ask, they probably won’t automatically refund.
If the airlines refuses to refund the collected taxes that you are due, you have recourse – submit a claim to the IRS. You will be required to prove you paid the taxes paid and your travel dates to the IRS. But the procedures to do this are still under development.
In my case, I booked a flight on July 14th to Europe via American Airlines for travel to Europe in September. I paid a total of $584 in taxes and fees. Here’s what I found when I went to the AA website:
Information Regarding U.S. Ticket Tax The U.S. excise tax on airline tickets for domestic and certain international air transportation expires at midnight, July 22, 2011. Until Congress provides otherwise, tickets sold by American Airlines after July 22, 2011, will not include these U.S. ticket taxes. Passengers who paid U.S. ticket taxes on or before July 22, 2011, for travel beginning after July 22, 2011, may be entitled to a tax refund. If travel commenced on or before July 22, 2011, U.S. ticket taxes are not eligible for refund even if a portion of the travel occurs after July 22. We anticipate further guidance from the IRS. At this time, passengers may direct their refund requests to the IRS.
So, the IRS sends us to the airlines, and American Airlines (and perhaps others as well), just sent me back to the IRS. I think everyone is hoping we’ll just quietly fade away. Too much trouble for anyone to deal with the air traveling public.
What do you think?