Update (August 5, 2011): Tax Refund Not Allowed on Taxed Tickets and Tax Relief Offered to Tickets Issued With No Tax
In a surprise development, a bill passed by Congress today retroactively restores the IRS’ ability to collect airline ticket taxes to July 23. As such, passengers that flew between July 23 and the date the bill is signed on tickets issued prior to July 23, will not be eligible for a tax refund. Additionally, the IRS says it intends to provide relief to passengers that purchased tickets between July 23 and the date the bill is signed. As such, taxes will not be retroactively collected on tickets issued with no tax during these dates. These tickets will remain tax exempt. The bill will likely be signed by the President later today. The IRS says it “is currently reviewing other effects of the legislation and will issue future guidance.” For the latest announcement, see: http://www.irs.gov/newsroom/article/0,,id=242812,00.html.
What remains to be seen is how the airlines will handle the reinstatement of the new tax since many airlines benefited from a fare increase that matched the amount of the tax. Once the bill is signed, will the airlines adjust airfares downward to match fares in place on July 23, or will fares move upward by another 7.5 percent to cover the reinstatement of the tax?
The precise time when taxes will begin to reappear in GDS fare displays is undetermined. Travel agencies should continue quoting fares and taxes as they appear in the displays.
Source: ASTA (American Society of Travel Agents)
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