Wed, Aug 10, 2011
IRS Says Travelers Will Not Get Refunds On Taxes For Flights
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.
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