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US Air Travellers Won’t Get FAA Ticket Tax Refund

Internal Revenue Service (IRS) & Federal Aviation Administration (FAA) LogosAir travellers which flew during the partial closure of the Federal Aviation Administration (FAA) but purchased their fares before it should not expect to get a refund for the taxes they paid. The Internal Revenue Service (IRS) had previously said that some passengers could be entitled to a refund, as the federal government was not authorised to obtain taxes on tickets during the shutdown. It had been estimated that customers would get as much as $60 back for a $300 round-trip.

However, all of this changed on Friday when US President Barack Obama signed a bill that would see the FAA restarted. The bill technically made the taxes retroactive to Saturday, July 23, which is when the shutdown began. According to IRS spokeswoman Julianne Breitbeil, this means taxpayers will not be owed refunds. Despite the taxes being retroactive, however, the IRS says it will not attempt the collection of back taxes from either airlines or passengers. Carriers have until Monday at 12:01am to add the taxes back to ticket prices.

The brief end of the congressional deadlock about funding for the FAA came during a short Senate session. Lawmakers were scattered during August’s recess for Congress, but the bill only needed two senators to consent to it so that the operating authority could be restored through September 16. This means that about 4,000 FAA staff will get to go back to work on Monday. An estimated 70,000 construction workers will also get to return to work after airport projects had been stalled.

Because the FAA was not authorised to collect taxes on tickets during the shutdown period, airlines quit collecting them as well. However, the carriers raised fares so that customers were paying the same amount – as if the taxes were still in place – but they were pocketing the money, which is estimated to be about $400 million. The only carriers who passed on the tax savings were Alaska Airlines and Horizon Air. Now, with airlines having to add the taxes back to their tickets, these carriers’ prices will rise again.

Since the bill was signed on Friday but not made effective until Monday, airlines were expected to take advantage of the ‘trick’ fares over the weekend. It’s estimated they are making $30 million a day from the difference. When the taxes are put back in place on tickets, most carriers will presumably roll back the increases they made. However, there is a slight possibility that some of the price rises will stay – though it’s not likely that they will stick for very long. The last time that airlines tried to raise ticket prices by a few dollars they retreated on the move, and some actually announced discounts for some flights during the off-peak season.

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