IRS Says Travelers Will Not Get Refunds On Taxes For Flights During Impasse

When about 4,000 FAA workers returned to their jobs Monday with a deal in Congress for temporary funding of the agency, what also returned was federal taxes on airline tickets which had been suspended for the duration of the political impasse. And many airlines which had raised ticket prices by an amount equal to the missing taxes, reduced their fares back to mid-July levels once the tax collection restarted.

CNN cites FareCompare founder Rick Seaney in reporting that Southwest Airlines and its new subsidiary AirTran were the first carriers to lower fares to account for reinstated taxes. Southwest spokesman Brandy King confirmed that with the taxes back, "Customers will not see a difference in fare."

American Airlines confirmed it had reduced fares in some markets, but attributed the changes to competitive pressures, not the return of the taxes, and said it could not speak to the likelihood of any future action. FareCompare reports Delta, Frontier, JetBlue, US Airways, Virgin America and United/Continental also lowered fares Monday.

In another interesting bit of news, airline passengers who paid taxes when they booked tickets for travel during the period when the taxes were suspended will not be getting a refund. The deal in Congress made the reinstatement of the taxes retroactive, but the Internal Revenue Service issued guidance August 5 saying it will not seek to collect taxes on tickets purchased during the gap.

FMI: www.farecompare.com ; www.irs.gov/newsroom/article/0,,id=242812,00.html?portlet=6