With airlines under pressure from lawmakers, Delta Air Lines said it would refund tax money paid by travelers in the wake of a suspension of non-essential services by the Federal Aviation Administration.

Funding for the FAA expired on July 23. Delta said it stopped collecting several taxes at that time imposed on ticket sales, including a 7.5 percent tax on the base ticket price, a $3.70 segment tax, and facilities taxes on international travel and travel to and from Alaska and Hawaii. However, the airline has been accused along with others of increasing their fares by approximately the same amount they had been collecting in taxes and pocketing the difference. A group of senators wrote to Delta CEO Richard Anderson, who also chairs the industry group, the Air Transport Association (see Senators Tell Airlines to Stop Pocketing Ticket Taxes).

Delta noted that the Internal Revenue Service has advised travelers who paid for tickets on or before July 22, 2011, for travel beginning on or after July 23 and prior to the reinstatement of FAA funding, that they may be entitled to a refund of those taxes (see IRS Says Airlines May Get Refund on Ticket Taxes).

Delta said Monday that it is awaiting guidelines from the IRS on the process of providing refunds. However, in order to streamline the process, the airline said it would process refunds directly for customers once an agreement is reached with the IRS on the procedure for doing so. Information on how travelers can apply for a refund will be posted to the company’s Web site, www.delta.com.

In response to Delta Air Lines' announcement, IRS Commissioner Doug Shulman praised the move. “I commend Delta Air Lines for taking this important step and providing top quality service to their customers,” he said in a statement. “The IRS is committed to working with Delta and other airlines to ensure they can provide a smooth refund process for their passengers.”

The ticket sales of a competing air carrier, Spirit Airlines, have reportedly soared since the company announced last Friday that it had removed the extra tax costs from its fares, according to USA Today.

A few other airlines have avoided charging passengers extra since the temporary expiration of the ticket taxes, including Alaska Airlines and Hawaiian Airlines. But a number of others raised their fares, including American Airlines, Frontier, JetBlue, Southwest and US Airways. Several of the airlines are now reportedly telling customers to contact the IRS, as they may be owed refunds.

In the Senate on Tuesday, following the passage of a bill raising the debt ceiling, Sen. Barbara Boxer, D-Calif., called on her colleagues to pass the FAA reauthorization bill that would allow the FAA to once again begin collecting taxes. She pointed out that thousands of air transportation employees have been furloughed and airport construction projects stopped as a result of Congress's failure to pass the FAA reauthorization bill. The dispute stems from a disagreement between Republican and Democratic lawmakers over union voting rules.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access