Aviation Week - Delta Yields On Tax Refunds After Congressional Pressure Escalates'
August 2, 2011
Delta Air Lines says it will process tax refunds for the passengers entitled to them because of the suspension of several federal air travel-related taxes, acceding to requests that the airlines do so instead of the IRS. it is not yet clear whether other airlines will follow suit.
U.S. airlines have been resisting the request from the IRS, with the Air Transport Association (ATA) noting the IRS was responsible for
refunds when a similar lapse in tax collections occurred in 1996 and 1997.
The industry, however, shows no sign of backing down from the fare hike that legislators also are complaining about. Most carriers increased their fares by about the same amount as the ticket taxes customers no longer have to pay.
Delta says it is awaiting guidelines from the IRS on the process of providing refunds. However, in order to streamline the process, the airline
will process refunds directly for customers once an agreement is reached with the IRS on the procedure, it says.
Ninety-one members of the House, including three Republicans, raised the tax refund and fare hike issues in a July 30 letter to Delta CEO
Richard Anderson in Anderson's capacity as ATA chairman. They complained that airlines are "taking advantage of the FAA shutdown."
Rep. Mike Thompson (D-Calif.), a House Ways and Means Committee member who has promoted passenger rights legislation in the past,
initiated the July 30 letter.
Sens. Jay Rockefeller (D-W.Va.) and Maria Cantwell (D-Wash.) made the same argument and appeal in a letter they sent a few days earlier to the CEOs of 12 airlines, in which they asked them to tell the committee what they are doing with the federal taxes they collected on tickets purchased on or before July 22 for travel after July 22.
They also want the carriers to tell the committee how much additional revenue they are making from raising fares in the absence of the taxes.
ATA President and CEO Nick Calio defends the fare-raising decision made by airlines, which he says are “merely seeking to function as
responsible businesses that are able to cover their costs.”
U.S. airlines have been resisting the request from the IRS, with the Air Transport Association (ATA) noting the IRS was responsible for
refunds when a similar lapse in tax collections occurred in 1996 and 1997.
The industry, however, shows no sign of backing down from the fare hike that legislators also are complaining about. Most carriers increased their fares by about the same amount as the ticket taxes customers no longer have to pay.
Delta says it is awaiting guidelines from the IRS on the process of providing refunds. However, in order to streamline the process, the airline
will process refunds directly for customers once an agreement is reached with the IRS on the procedure, it says.
Ninety-one members of the House, including three Republicans, raised the tax refund and fare hike issues in a July 30 letter to Delta CEO
Richard Anderson in Anderson's capacity as ATA chairman. They complained that airlines are "taking advantage of the FAA shutdown."
Rep. Mike Thompson (D-Calif.), a House Ways and Means Committee member who has promoted passenger rights legislation in the past,
initiated the July 30 letter.
Sens. Jay Rockefeller (D-W.Va.) and Maria Cantwell (D-Wash.) made the same argument and appeal in a letter they sent a few days earlier to the CEOs of 12 airlines, in which they asked them to tell the committee what they are doing with the federal taxes they collected on tickets purchased on or before July 22 for travel after July 22.
They also want the carriers to tell the committee how much additional revenue they are making from raising fares in the absence of the taxes.
ATA President and CEO Nick Calio defends the fare-raising decision made by airlines, which he says are “merely seeking to function as
responsible businesses that are able to cover their costs.”
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