The Internal Revenue Service (IRS) issued new rules following its July 22 statement on the airline ticket tax and other aviation-related taxes that expired at midnight on Friday, July 22.
The IRS said it continues to monitor pending legislation related to this issue and said it will work with the airline industry to address issues relating to the collection and payment of the taxes involved.
The IRS's promised guidance (July 27) includes the following, including its Q&A answers.
Lapse of Air Transportation Excise Taxes after July 22, 2011: Frequently Asked Questions (In Full)
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. Which federal air transportation excise taxes expired at the end of July 22, 2011?
A. Until they are reinstated by Congress, the following federal air transportation excise taxes do not apply to transportation beginning on or after July 23, 2011:
• 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; and
• 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.
Q. If I purchase my ticket after the tax expired and I travel before it is reinstated, can the airline collect the tax?
A. No, airlines are not authorized to collect the tax during any period in which it does not apply.
Q. If I purchase my ticket at a time when the tax is not in effect but I travel after the tax is reinstated, will I be subject to tax?
A. That depends on how such travel is treated in any legislation reinstating the tax. The legislation could either impose tax on all travel occurring after its enactment or provide an exemption for passengers who purchased tickets during the period when the tax was not in effect.
Q. If I travel on or after July 23, 2011, and I purchased my ticket on or before July 22, 2011, am I entitled to a refund for the federal air transportation excise taxes that I paid when I purchased the ticket? If so, will my airline refund the tax to me?
A. Passengers who paid for tickets on or before July 22, 2011, for travel beginning on or after July 23, 2011, may be entitled to a refund of the tax. Airlines are permitted to refund the tax to the passenger, just as they do in the ordinary course of business when issuing refunds for unused refundable tickets (including the associated taxes). Because the airlines and travel service providers already have the information about passenger ticket purchases and travel, and in many cases have payment card information that may facilitate streamlined refunds, the IRS has asked the airlines to provide refunds to eligible passengers when requested. However, passengers who are unable to obtain a refund from the airline may obtain a refund by submitting a claim to the IRS. Because the IRS has no information about passenger ticket purchases or travel dates, travelers who are unable to obtain a refund from the airline will be required to submit proof of taxes paid and travel dates to the IRS under procedures that are under development. The IRS will provide additional guidance at a later date.
The IRS notes that neither the ticket tax nor the tax on air freight applies to excess baggage. Accordingly, tax on those fees was not collected and will not be refunded.