For fliers hoping to capitalize on the FAA shutdown and its resulting “tax holiday,” the IRS has some disappointing news.
Those hoping to be reimbursed for federal taxes they paid on flights taken during the nearly two week FAA shutdown were coldly denied by the IRS on Friday. When the FAA partially shut down on July 23 — furloughing thousands of workers and halting some 200 construction projects — it also gave up the right to collect taxes on airfare. This meant that anyone who had paid taxes on flights taken between July 23 and Aug. 4, when the FAA was reinstated, were technically entitled to a refund.
But there was no way the airlines were going to make it easy for travelers to get their money back. In fact, most airlines hiked up their ticket prices to make up the difference — even though that money wasn’t going to the FAA. Only a select few airlines kept their prices the same in order to pass the savings on to their customers, and even fewer still said they would refund the taxes directly to travelers. Most airlines actually foisted the responsibility of giving refunds onto the IRS, which wanted no part in the matter, especially considering the airlines have all the purchasing and credit card information regarding ticket purchases. The IRS played along for a little while, saying that they were trying to implement a system to give refunds, but advised fliers to try their hardest with the airline first.
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But perhaps the biggest slap in the face is that IRS spokesman Frank Keith ever so graciously announced that the FAA would “provide relief” to passengers by not forcing them to retroactively pay taxes on flights they took during the shutdown — which was, of course, precipitated by the government’s inability to reach a deal on FAA funding. Even better still: The IRS does not plan to go after the $400 million in airfare hikes that the airlines amassed by charging the difference that was lost when the federal tax was suspended.