Wednesday, August 3, 2011

Important airline ticket tax refund for some lucky ones...

This summer, as you may know, I went back to visit my Family in France as both my grand-mas are far in their years and being so busy with my real estate business, I both needed a mental break and some family get together time.

I just read today a great article that made me smile after sending so much money on the airfare, maybe you will be lucky...I will for sure try to get that refund!

This is right from the online version of the Wall Street Journal:


Jennifer Waters's Consumer Confidential
Jennifer Waters
Aug. 3, 2011, 12:01 a.m. EDT

Get a refund on some airline ticket taxes

By Jennifer Waters, MarketWatch
CHICAGO (MarketWatch) — A tussle between the Internal Revenue Service and some U.S. airlines could create headaches for consumers looking for refunds of taxes charged on the tickets they bought since the start of the Federal Aviation Administration’s budget shutdown.
At issue is the cost and hassle of processing the refunds, which the FAA estimated rings up to nearly $30 million a day. For consumers, it could mean as much as $60 for each $300 ticket.
Congress forced a virtual shutdown of the FAA starting July 23 when it failed to reauthorize taxes to fund the system, in effect lifting the taxes. With the exception of air-traffic controllers and other essential personnel, the entire FAA system is closed until Congress takes up the funding issues when it returns from recess Sept. 6.
The IRS, which addresses the issue on its website, is looking to the airlines to handle the refunds. But a handful of them have refused, directing consumers to the IRS.
“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,” according to the IRS.
But the precedent, the airline industry insists, was set by the courts the last time Congress neglected to reauthorize taxes in 1996 and again in 1997, putting the responsibility on the shoulders of the IRS.
“Your action to advise travelers to seek refunds from the airlines or travel agencies … is, therefore, puzzling,” Nicholas Calio, chief executive of the Air Transport Association, said in a letter to the IRS. He also noted that the IRS has “processes and procedures in place to administer refunds on a large scale,” something that the carriers and travel agencies cannot accommodate.
And though many airlines raised airfares to keep the bottom-line cost of the ticket the same — yes, this was a boon to the airlines which didn’t pass the tax savings onto their customers — Calio said if the “lapse,” as he called the shutdown, goes on for months, carriers will be bearing the brunt of the costs.
That’s because they will be “essentially floating a loan to the government and will not be able to offset those sums against new tax deposits since new tax collections are not occurring,” he said.
Guess who’s in the middle of that mess? If there’s a silver lining for consumers, it’s that the refunds will be made — eventually.
Here’s what you need to know.

Who gets the refund?

You get a refund if you bought your ticket on or before July 22 for travel during the shutdown, which began July 23. The airlines should not have collected any federal taxes on tickets after July 23.

How much money is it?

It could be a good chunk of change, particularly for high-priced tickets. The IRS calls them federal air transportation excise taxes, which includes the 7.5% tax on the base ticket price; a $3.70 domestic segment tax for each takeoff and landing; an 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 flights that begin or end in Alaska or Hawaii; and the 6.25% tax on the amount paid for transporting property by air. Federal taxes on a ticket that cost about $300 total a little more than $60.

Do I get refunds on Homeland Security and state and city taxes?

Oh no. Homeland Security never sleeps and will always have tax authorization. State and city fees, as well as baggage, airport facility charges and the like are all still in place as well.

How do I get a refund?

At this point, there are only a few airlines that are refunding the taxes, and Delta (NYSE:DAL)

What do I need?

Proof that you bought the ticket — so hang on to the tickets and receipts.

What if I buy a ticket before the tax is brought back but travel after Congress puts it into effect?

That’s still, well, up in the air. “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 not in effect,” according to the IRS. In other words, it depends. 

 Angelique Kenney, your Carlsbad and southern california coastal real estate specialist with Prudential California Realty.

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