Refunds, Airline Ticket Tax Holiday Starting Tonight?
Airline Ticket Tax Holiday May Start This Weekend
Friday, July 22, 2011: Speaking of congressional gridlock, it appears highly likely that the FAA will not be reauthorized by tonight's Friday night deadline to continue to collect taxes on airline tickets.
Which means an airline ticket "tax holiday" would start in the wee hours of Saturday morning July 23, saving consumers up to 15% or more on new airline ticket purchases as well as on unused tickets you currently hold (and more on this shortly).
Let me break it down for you. The following taxes currently collected on airline tickets, cargo and jet fuel will no longer be gathered until Congress reauthorizes the FAA which is currently in congressional gridlock (oh, by the way: they have extended authority temporarily 20 times since 2007 so a similar last minute "stay" could still occur):
Airline Ticket Taxes that May Be Affected
- 7.5% sales tax on domestic transportation
- 7.5% sales tax on the purchase of miles
- $3.70 per plane takeoff tax ($14.80 for a roundtrip connecting flight)
- $16.30 international departure/arrival tax (each-way)
- $8.20 tax for flights between Alaska and Hawaii
- 6.25% sales tax on cargo
- 19.3 cent tax on aviation gasoline would be reduced to 4.3 cents per gallon
- 21.8 cent tax on non-commercial jet fuel reduced to 4.3 cents per gallon
Listen as FareCompare CEO Rick Seaney talks to editor Anne McDermott about what you can do to start saving money on airfare right now.
Passengers May Save 13% on Airline Ticket Taxes
What this means to you is that a $240 roundtrip ticket for a connecting itinerary today will cost you $210 on Saturday; a savings of approximately 13%.
Transportation secretary Ray LaHood says this works out to about $200 million dollars in revenue a week. The downside is that FAA will likely furlough "non-essential" employees until this issue is addressed. My guess is this will be over fairly quickly so you'll need to act fast over the weekend.
Interestingly if you hold a current ticket for departure between July 23rd and the date that closes this loophole, the taxes you already paid would be considered an overpayment and ticket holders can request a refund from airline or the IRS.
A word of warning regarding refunds: the last time ticket taxes expired, in the mid 1990's, courts decided that airlines were not required to provide refunds, so your only recourse would be the IRS and it might not be worth the time and effort.
Either way, we rarely see a 15% off coupon for air travel, so this is a welcome relief especially since most airlines have raised prices up to $20 the past few days for domestic travel.