From the IRS regarding lapse of air transportation excise taxes — frequently asked questions

Here is the official IRS FAQ page regarding the Lapse of Air Transportation Excise Taxes after July 22, 2011. The Consumer Travel Alliance has sent the IRS a request for the proper procedures for claiming the excise taxes and domestic segment fees for flights taken during this period when no taxes are due.

This information is accurate as of July 27, 2011

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.

Q. What rules apply to the collection and refund of taxes on air freight during the period in which the aviation taxes are not in effect?

A. In general, the rules for the collection and refund of taxes on air freight are the same as the rules with respect to the ticket taxes. In some cases, however, tax is imposed on the amount paid by an affiliate of the company providing the air freight service (rather than on the customer shipping the package). In those cases, only the shipper or its affiliate can obtain a refund from the IRS. The customer may contact the shipper or its affiliate about its policy of rebating such refunds to customers.

(Note: Neither the ticket tax nor the tax on air freight applies to excess baggage fees. Accordingly, tax on those fees was not collected and will not be refunded.)

In addition to the expiration of the federal air transportation excise taxes, rates for certain excise taxes on aviation fuels are reduced beginning on July 23, 2011. Starting on July 23, 2011, the tax rates on aviation gasoline and kerosene used in noncommercial aviation are 4.4 cents per gallon.

Q. I am a dealer that purchased taxed aviation fuel before July 23, 2011. If I hold that fuel on July 23, 2011, am I entitled to a refund of the difference between the pre-July 23, 2011, rate and the new, lower rate effective on July 23, 2011?

A. No, dealers that purchased taxed aviation fuel before July 23, 2011, and hold that fuel on July 23, 2011, are not entitled to a refund for the difference between the pre-July 23, 2011, rate and the rate effective on July 23, 2011. The same answer would apply if the dealer had purchased aviation gasoline.

Q. I am a
general aviation pilot who purchased previously taxed aviation fuel on July 23, 2011. Am I entitled to a refund of the difference between the pre-July 23, 2011, rate and the new, lower rate effective on July 23, 2011?

A. No, pilots who purchase previously taxed aviation fuel after July 22, 2011, are not entitled to a refund of the difference between the pre-July 23, 2011, rate and the rate effective on July 23, 2011. The same answer would apply if the pilot had purchased aviation gasoline.