If you bought an airline ticket on or before July 22 for travel, either domestic or international, starting July 23 don’t throw out your receipt. You may be due up to $60 in a tax refund.
The one good thing about Congressional wrangling, which has most recently led to the partial shutdown of the FAA, is that travelers don’t have to pay certain travel taxes while the agency is shut down.
At midnight on July 22, the FAA stopped collecting federal ticket taxes, including everything from excise to international facilities taxes, and as a result, millions of consumers are due refunds, from about $30 for those who bought a ticket for $200, to as much as $60 for those who purchased a $500 ticket, said Rick Seaney, CEO of FareCompare.com.
“All accounting for airlines is done in the month of travel not the day you bought the ticket,” he explained, so you actually are paying the taxes on your ticket for the days you travel.
Overall, he added, travelers could end up with a refund of about 15 percent of their ticket purchase price.
Here’s a rundown on the taxes that expired from the Internal Revenue Service:
- 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.
- The 6.25 percent tax on the amount paid for transporting property by air.
But the big question is, how you’re going to get your refund?
“People are massively confused,” said Chris Elliott, consumer advocate and syndicated travel writer. “Some airlines say, go to the IRS, other say, they’d do a refund.”
The IRS asked the airlines to pay the refunds directly, and a few have announced they are planning on doing so.
Delta was one of the first major carrier to announce it would be sending passengers refunds directly.
“Delta is awaiting guidelines from the IRS on the process of providing refunds,” the company said in a statement. “However, in order to streamline the process, the airline will process refunds directly for customers once an agreement is reached with the IRS on the procedure for doing so.”
Indeed, Seaney said, none of the airlines have yet to implement a process by which consumers can get their refunds, but he’s monitoring the situation on his web site, and suggested that consumers also monitor the IRS site and the airline’s site where they bought the tickets.
For some consumers the money may not be worth the hassle, noted Elliott, but for corporate travel managers, or people with big families that travel, he said, “it’s not an insignificant amount of money.”
For the rest of you fliers who bought your tickets after July 22 and think you’re going to get a break on travel taxes because of the FAA shut down, forget it. Most of the major airlines raised their prices to make up the difference and are pocketing the windfall, said Seaney, except Spirit Airlines and Alaska Airlines.
Maybe it’s time for a trip to “The Last Frontier.”