No Ticket Tax Refund Leaves Fliers Stuck With The Bill

Fliers expecting a federal ticket-tax refund for flights they took during the Federal Aviation Administration's partial shutdown the past two weeks are out of luck.

The IRS said Friday that no one who flew during the shutdown that began July 23 is eligible for a refund.

Airlines and the IRS previously said fliers who bought tickets before July 23 and traveled after that date during the shutdown might receive a refund for federal taxes paid on each ticket.

Airlines stopped collecting the taxes on July 23 because Congress was unable to reach an agreement to reauthorize the FAA. Most raised fares so that tickets cost the same as when they were collecting tax.

President Obama signed legislation Friday that ended the partial shutdown and reauthorized FAA operations through Sept. 16. The shutdown, which caused a furlough of nearly 4,000 FAA employees and halted more than 200 aviation development projects, resulted from an FAA funding standoff between the House and Senate.

IRS spokesman Frank Keith says temporary reauthorization of the FAA's operations means people who bought tickets before July 23 and flew during the shutdown are not due a refund, and those who bought tickets during the shutdown do not have to pay the federal ticket taxes.

Airlines must resume charging the taxes today, the IRS says.

The Air Transport Association of America, which represents U.S. airlines, says the refund issue was solely an IRS matter. "The Internal Revenue Service is the ultimate arbiter on tax matters, and we defer to its decision regarding the collection of federal ticket taxes," says Steve Lott, a spokesman for the group.

Kate Hanni, executive director of passenger-rights group FlyersRights.org, says she's "flabbergasted" by the IRS' announcement, and says "the flying public has been deceived about the ticket tax refunds."

She says fliers who bought tickets before the shutdown and traveled during it received no benefits from the taxes they paid. "At what point does the flying public matter to our government?" she asks.

Before the IRS announcement, firms that bought tickets for employees who flew during the shutdown may have expected large refunds. Shane Downey of the Global Business Travel Association, which represents about 5,000 corporate travel departments and travel suppliers, says "the important thing" is that no passengers will be retroactively taxed. "This outcome is the best you can hope for from a bad situation."