The Internal Revenue Service isn't usually the U.S. government's most popular agency this time of year, but it has some new fans among tour operators and agents.

That's because new tax rules the IRS just issued tightened loopholes that allowed nonprofit organizations to use their tax-exempt status to package tours that directly compete with products offered by for-profit operators.

For years, trade groups such as the National Tour Association and ASTA have been complaining that the IRS's Unrelated Business Income Tax rules were unclear and consequently unfair. They claimed that some nonprofits were being granted tax exemptions and other benefits on tours that they promoted as "educational" travel packages when, in fact, the educational part of the tour was provided by a third party.

Under new rules issued last month, tax-exempt status will be granted only if the nonprofit group takes an active role in the educational part of the tour, rather than merely making travel arrangements.

It's tough enough competing on a level playing field in this business. Thanks to the new tax rules, agents and operators won't have to battle nonprofit groups that profit from an unfair advantage.


The IRS isn't the only government body coming to terms with the trade. After years of battling the Society of Travel Agents in Government (now the Society of Government Travel Professionals, or SGTP), the Defense Department finally capitulated and agreed to let agents charge fees for servicing its $3 billion in travel.

Although details have yet to be worked out, the DOD acknowledged that airline commission cuts have made fee-based pricing inevitable.

Kudos to the SGTP for fighting the good fight.

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