IRS: No Tax Refunds for some Air Travelers - NBC 7 San Diego

IRS: No Tax Refunds for some Air Travelers

Airlines prospered from expired federal tax



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    Federal taxes on airline tickets are coming back, and they're retroactive to July 23, when airlines stopped collecting the money.

    Does that mean people who bought tickets in the last two weeks will have to send a check to Uncle Sam?

    Apparently not.

    The Internal Revenue Service said Friday that it "intends" to give those people a break.

    The news isn't so good for another group -- customers who bought plane tickets before July 23 and paid the excise taxes, then traveled on or after July 23, when the government had no authority to levy the taxes. Government officials had suggested those consumers might get a refund.

    No refund for them, the IRS said.

    Airlines stopped collecting many federal ticket taxes when Congress let authority for the taxes expire as it fought over aviation legislation.

    The IRS said airlines will have to resume collecting taxes when tickets are sold by one minute after midnight on Sunday night.

    It's not clear whether consumers will see any difference in the final cost of a ticket on Monday.

    When the taxes expired, most airlines raised their prices. That way, travelers paid the same amount for their tickets, but the airlines pocketed some of the money that used to go to the government.

    It was a nice windfall -- estimated at $400 million in just two weeks -- for the airline industry.

    Jamie Baker, an airline industry analyst for J.P. Morgan, predicted that airlines will begin rolling back price increases to keep fares where they were before the taxes expired.

    Airline officials declined to comment, saying antitrust laws prevent them from discussing future pricing moves.

    (Copyright 2011 by The Associated Press. All Rights Reserved.)