FAA Funded Temporarily, But Fliers Won't See Any Refunds
President Obama has signed a temporary funding deal for the FAA that the Senate passed on Friday. The two-week FAA partial shutdown is over--for now, but travelers shouldn't expect any refunds of their FAA ticket taxes.
The IRS said Friday that it will not be issuing federal ticket-tax refunds for flights taken during the two-week partial shutdown. The government agency is also not exercising its legal right to retroactively collect tax from passengers.
More bad news: The battle isn't over. The deal means 74,000 FAA employees can go back to work, and the government will be able to stop the financial hemorrhaging caused by its inability to collect an average of $200 million a week in federal excise ticket taxes.
But the temporary funding bill will extend the FAA operations only until September 16. This is the 21st temporary extension granted since the FAA's permanent funding expired in 2007, which means negotiators could be back to square one in a few weeks.
What's Behind the Disputes
Some say Congress' dispute over funding is really about labor disputes, with Delta Air Lines at the center of the debate because it's the only major airline in which only the pilots are unionized. Democrats have argued that Delta has pressured the Republican party to insert stricter union language into the funding bill.
But as the battles over FAA funding went on, consumers have been hurt. A majority of U.S. airlines have kept the airfares the same and simply pocketed the difference. Some notable exceptions included Spirit Air. An airline that never met an ancillary fee it didn't love, Spirit nonetheless did the unthinkable and actually refused to keep the tax money.
A few days later, Delta, responding to an outcry among travelers that its decision to keep the tax money--while legal--smacked of bad faith, agreed to refund the tax money.
Normally, taxes are only given to the government once a ticket is used and the passenger has flown the flight. So initially, Delta agreed to refund the taxes to anyone who bought a ticket before the FAA shutdown and who hadn't yet taken their flight. But that has all been put to an end with the IRS' announcement.
Looking Ahead
While the government will most likely not go after those back excise taxes, it will try to figure out how to gain back that huge shortfall in tax revenues, now estimated about $400 million and counting.
You know what that means: a double whammy for business travelers. Not only did fliers not get to enjoy that tax holiday (but most airlines did, at our expense), you can almost count on an increase in that federal excise ticket tax when the FAA reauthorization bill finally gets revised.
That means we will have been doubly taxed. Not a pretty picture.
Related:
- Airlines Benefit from "Tax Holiday," Not Travelers
- Airlines Profit from Fees, But Will Travelers Put up with It?
- Feds to Expand Passenger Rights
- Airlines with a Busted Moral Compass
