ConsumerWatch: FAA Deal Revokes Flight Tax Break
SAN FRANCISCO (CBS 5) - There is some bad news for consumers who thought they were going to catch a break after they paid airfare ticket taxes before the July 23rd partial Federal Aviation Administration shutdown and flew on or after that date. The Internal Revenue Service now says the FAA is keeping the federal tax money and not giving customers refunds.
Just last week, representatives from the IRS said they were sure that consumers would get money back, but now that does not seem to be the case.
During the partial shutdown, the FAA did not have the authority to collect taxes and for some became an airline tax holiday. Some companies took advantage of the tax break and raised prices so that customers paid the same amount for the tickets while airlines pocketed the extra tax money.
While customers who bought tickets during the shutdown itself do not have to pay back taxes, a majority of the airlines did raise prices enough so that not paying the tax does not come as a huge pay-off.
Consumer advocates are outraged, saying passengers paid federal taxes, but ended up receiving no federal benefits.
Since Monday morning, airlines are now collecting taxes again. It is unclear whether ticket prices would lower across the board but some companies have already made their tickets cheaper.
United and Southwest Airlines said their base ticket prices have lowered as of Sunday night to match prices before the FAA shutdown.
Delta and American have said they are trying to compete with other airlines and are only lowering ticket rates in certain markets.
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