IRS Announces Refunds for Expired Aviation Taxes

by  Molly Fergus | Jul 29, 2011
Plane / Biletskiy_Evgeniy/iStock

The partial FAA shutdown and resulting expiration of certain taxes has wrought a whole mess of money issues for airlines and their passengers, and now the IRS is providing some much-needed guidance.

The good news so far: If you’re flying during the partial shutdown but bought plane tickets before it began, you should receive a refund. The annoying news: You’ll probably have to wade through IRS red tape to get that cash.

In a notice on its website Wednesday, the IRS announced 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 on the tax.”

The notice goes on to explain that airlines may refund passengers, “just as they do in the ordinary course of business when issuing refunds for unused refundable tickets (including the associated taxes).”

Surprise, surprise, the airlines – almost all of which have snatched the tax savings from customers to keep for themselves – are not too keen on this. Currently, JetBlue is the only major carrier accepting customers’ refund requests; the others are volleying passengers right back to the IRS.

Happily, the IRS will comply. The agency has not yet nailed down the exact procedure for requesting refunds, but it did announce that passengers who do not receive money back from their carrier may submit a claim, which must include proof of travel dates and taxes paid.

The remaining puzzle piece here is what happens once the FAA is fully functional and passengers are flying on low-tax tickets. Will the FAA ask for that money back? Will airlines be required to collect that money from passengers? Essentially, no one will know until the FAA is back in business.

“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,” according to the IRS statement.

We’re crossing our fingers for an exemption – or better yet, turn the tables on the airlines and ask them to fork over all those extra profits they built into fares, as Senator Jay Rockefeller IV, from West Virginia, and Senator Marie Cantwell, from Washington, are suggesting. After all, turnabout’s fair play.

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