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Airline ticket tax refund for some

By Kay Bell ·
Thursday, August 4, 2011
Posted: 3 pm ET

Did you buy an airline ticket before July 23 but didn't fly until that day or later? Then you paid a federal aviation tax that has since expired. And that means you're eligible for a tax refund of your ticket tax money.

The good news is that the Internal Revenue Service and some airlines are refunding the taxes.

The bad news is that it will be awhile before you'll get your money.

The ticket tax snafu came about when the Senate couldn't agree last month on a Federal Aviation Administration re-authorization bill. The House had passed a version of the bill, but because both chambers couldn't reconcile differences, the FAA was unable to collect the various ticket taxes once the existing law ended on July22.

For fliers, that means the taxes, most notably the 7.5 percent tax on each domestic ticket purchase and the $3.70 tax on each leg of your journey, are now off the books. So, too, are international travel taxes on fares of those headed further afield.

An estimated 12.5 million people paid the various aviation taxes by buying their tickets before the taxes expired, but then boarded the planes when it the taxes were no longer in effect.

The IRS really wants the airlines to take care of paying back their customers who are eligible for the prepaid tax refund. The agency's position is that the carriers have all the necessary information -- passenger name, tax amount, credit card used to buy the taxed ticket and such -- so it should be easy for the airlines to send the money to the proper customers.

But if the airlines wouldn't refund the money, passengers could get the ticket tax back directly from the IRS, said the IRS.

Most airlines at first balked at being in charge of paying back the now nonexistent tax they collected. Only JetBlue initially offered to directly refund its passengers.

This week, however, Delta and US Airways said they, too, will refund the ticket taxes paid by their customers. And Alaska Airlines reportedly is working with the Air Transport Association, the airlines' trade group, to develop a way for Alaska Airlines and Horizon Air customers to get their refunds.

Don't be surprised if other major air carriers also agree to send out the refunds.

But also don't be surprised if you have to wait a bit for your money.

While the IRS and the airlines swear fliers will get their money back, they emphasized that they still have to work out the details. Or, as Delta stated in a press release, "Delta is awaiting guidelines from the IRS on the process of providing refunds."

In the meantime, gather all the information on your taxed ticket. You'll likely need it regardless of whether the IRS or an airline refunds your ticket taxes.

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August 05, 2011 at 12:54 pm

What IRS has to say and what the provisions of the law say are two different things. If there is no provisions in the law, then the airlines are not following the provisions of the law. A directive is different from the provisions of the law. Any government agency can write a letter or put a notice on their website which could be a matter of contention.