FAA Update: IRS Says No Tax Refunds For Ticket Holders

The Federal Aviation Association (FAA) issued a statement Friday, August 5, saying that flyers who flew during the partial FAA shutdown starting on July 23, are not eligible for tax refunds on their tickets.

A spokesperson for the FAA said that they were unable to reimburse ticket holders because of IRS complications. IRS spokesman Frank Keith says the re-authorization of the FAA's operations through Sept. 16 means that fliers who bought tickets before July 23 and traveled during the partial FAA shutdown are not due a refund.

However, anyone who bought tickets during the shutdown will not be required to pay taxes on tickets.

The IRS made the announcement just after the Senate approved a temporary agreement to reinstate the FAA's authority until congress resumes on September 16,ending the ongoing FAA funding standoff between the House and Senate.

This statement comes after days of speculation as to whether the extra cash could be collected and time spent by airlines preparing refund programs for their passengers. During the shutdown, many airlines raised prices to make up for the missing taxes, citing it as an unexpected windfall for the companies. But, after Friday, the IRS made it clear that the airlines are not entitled to the money. The IRS expects to receive the more than $400 million in taxes collected during the shutdown.

Customers who bought an average $300 ticket could be out up to $60.

The IRS plans to instruct airlines as to the best way to resume collecting ticket taxes- many of whom changed their system just days ago to reflect the new no-tax rule. The IRS gave airlines from Friday 'till 12:01 a.m. Monday, August 8, to begin collecting taxes.

It is unclear whether airlines have reduced inflated ticket prices now that the tax is back on, or whether travelers will be paying much more than they originally planned as companies struggle to sort out the ticket price changes.