The Internal Revenue Service said Friday that airline passengers who purchased tickets prior to July 23 and traveled during the tax holiday from July 23 to Aug. 4 are not entitled to a refund of federal ticket taxes.
The decision is an about-face in IRS policy. On July 28, the IRS said that passengers who paid for tickets on or before July 22 for travel beginning on or after July 23 may be entitled to a refund of ticket taxes.
At the time, the IRS directed passengers to obtain a refund from airlines or to submit a claim to the IRS if the airlines weren't processing refunds.
However, on Friday the IRS said that the bill Congress passed to restore FAA funding retroactively reinstated the airline ticket taxes for passengers who traveled during the lapse.
The IRS also said it “intends to provide relief for passengers and airlines with respect to ticket taxes that were not paid or collected because of the lapse.”
The Senate on Thursday brokered a deal to restore funding to the FAA, at least temporarily, ending a 13-day period in which four airline-ticket taxes were not collected.
When Congress failed to reauthorize FAA funding by July 23, the government no longer had the authority to collect the 7.5% excise tax and three other taxes. While the taxes were not being collected, the government was losing $30 million per day.
The IRS said it is currently reviewing other effects of the FAA reauthorization and will issue future guidance.