In July, the Federal Aviation Authority failed to extend the operating authority resulting in a temporary end to taxes being collected on airline tickets.
On August 5th, Congress extended the FAA authorization and this resulted in some questions with regards to passengers who traveled on and after July 23.
Retroactive Reinstatement of the Air Transportation Excise Taxes: Frequently Asked Questions
Q. How are federal passenger air transportation excise taxes (commonly referred to as “ticket taxes”) collected?
A. The tax generally is imposed on the “amount paid” for commercial air transportation. When a person purchases a ticket for air transportation, the airline collects the federal passenger air transportation excise taxes from the purchaser and then later pays the collected amount over to the IRS. The amount of tax collected from the purchaser is shown on the purchaser’s receipt as a separate line item, often-labeled “federal taxes.”
Q. What just happened to the FAA excise tax?
A. On July 22, the Federal Aviation Administration budget authority expired and with it, so did the authority for airlines to collect the excise taxes on tickets. On Aug. 5, Congress passed an extension of the FAA authorization, which also retroactively reinstated the excise tax from July 23, 2011. During the roughly two-week lapse, airlines were not authorized to collect the taxes, but the retroactive reinstatement in the law put the taxes back in place as though they had never expired. The IRS is providing relief for airlines and taxpayers who purchased tickets during that two-week lapse. This means the IRS will not be retroactively collecting the tax since it was not collected and paid during this two-week period. Airlines had until 12:01 a.m. on Monday, Aug. 8, to resume collection of the ticket taxes.
Q. If I purchased my ticket before July 23, 2011, and traveled on or after July 23, 2011, during the partial-shutdown of the FAA, am I entitled to a refund for the federal air transportation excise taxes that I paid when I purchased the ticket?
A. If you purchased the tickets before July 23, when the lapse of the excise tax initially occurred, and traveled during the partial-shutdown of the FAA, you are not entitled to a refund because of the retroactive reinstatement of the law.
Q. If I purchased my ticket after the tax initially expired and I traveled before it was reinstated, can the airline collect the tax?
A. No, airlines were not authorized to collect the tax during any lapsed period in which the tax did not apply.
If you purchased a ticket between July 23, 2001, and August 7, 2011 — regardless if you flew then or at a later date in time — the airlines were not authorized to collect the tax and so passengers did not pay the excise tax. While the tax was reinstated retroactively by Congress, the IRS has provided relief during this lapse for taxpayers and airlines and will not collect the excise tax covering that period.
Q. If I purchased my ticket after the tax expired and I travel after it was reinstated, will I now have to pay the airline ticket tax since it was reinstated?
A. If you purchased your ticket during the two-week lapse of the tax and plan to travel after the tax was reinstated, you did not pay the airline ticket tax. However, the IRS is providing relief for these taxpayers and will not be collecting the excise tax on this ticket purchased during the lapsed period of time.
Q. Which federal air transportation excise taxes expired at the end of July 22, 2011, and were retroactively reinstated on Aug. 5?
A. The following federal air transportation excise taxes were affected:
The 7.5 percent tax on the base ticket price.
The domestic segment tax of $3.70 per person per segment (a single takeoff and single landing).
The international travel facilities tax of $16.30 per person for flights that begin or end in the U.S., or $8.20 per person for a flight that begins or ends in Alaska or Hawaii.
The 6.25 percent tax on the amount paid for transporting property by air.
Caution: Other taxes and fees, such as state taxes, security fees, passenger facility charges (PFCs) and excess baggage fees, are not affected by the expiration of the taxes listed above.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.