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Delta Agrees To Refund Airline Passenger Taxes

by Mike Godfrey, Tax-News.com, Washington

04 August 2011


Delta Air Lines has confirmed that it will process tax refunds for customers travelling during the period that the United States airline ticket tax and other aviation-related taxes remain suspended, as had been requested by the Internal Revenue Service (IRS).

Congress failed to renew the laws authorizing the taxes on July 22, 2011. Since the following day, Delta and other airlines have stopped collecting several taxes imposed on ticket sales, including the 7.5% tax on the base passenger ticket price, the domestic segment tax of USD3.70 per person per charge (a single take-off and single landing); the international travel facilities tax of USD16.30 per person for flights that begin or end in the US (or USD8.20 per person for a flight that begins or ends in Alaska or Hawaii).

The IRS advised that travellers who paid for tickets on or before July 22, for travel beginning on or after July 23 (and prior to any reinstatement of the laws), might be entitled to a refund of those taxes. As an airline would have collected the federal passenger air transportation excise taxes from the purchaser, airlines would also be permitted to refund those taxes to the passenger, just as they do in the ordinary course of business when issuing refunds for unused refundable tickets.

Additionally, the IRS said that, because the airlines and travel service providers already have the information about passenger ticket purchases and travel, and in many cases have payment card information that may facilitate streamlined refunds, it has asked the airlines to provide refunds to eligible passengers when requested.

In that respect, while Delta is still awaiting guidelines from the IRS on the process of providing refunds, it has confirmed that it will, in order to streamline the process, give refunds directly to customers once an agreement is reached with the IRS on the procedure for doing so. Information on how to apply for a refund will be posted to the company’s website.

However, other airlines have yet to agree to process the refunds to this specific group of airline passengers. Some are said to be studying the matter, while others are still referring the affected passengers to the IRS.

In addition, while airlines are temporarily absolved from charging tax on passenger tickets, this does not seem to have resulted in lower fares, as all air operators appear to be selling tickets at the same total price, so as to reap the additional income in the intervening period.

TAGS: tax | air passenger duty (APD) | law | aviation | excise duty | travel and tourism | legislation | United States

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