Delta will refund ticket taxes

The airline said it will deal directly with customers who are owed refunds, rather than referring them to the IRS.

By MSN Money Partner Aug 2, 2011 1:22PM

This post comes from Quentin Fottrell at partner site SmartMoney.

Good news for airline travelers. Yes, you read that right. Delta Airlines said it will refund federal taxes to customers on flights that it didn't have to pay the government's Federal Aviation Administration during the congressional stalemate over funding, which on most airlines amounts to about $45 per $400 round-trip ticket.

And, if that wasn't enough good news, the Internal Revenue Services says it's also on board. IRS Commissioner Doug Shulman said in a statement late Monday: "The IRS is committed to working with Delta and other airlines to ensure they can provide a smooth refund process for their passengers." It also complimented Delta on its move to refund passengers.

Bing Travel

"Funding for the FAA expired on July 23," Delta said in a statement announcing the refund. "At that time, Delta stopped collecting several taxes imposed on ticket sales, including a 7.5% 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."

The tax refund will go to those who purchased tickets before July 23 for travel during the FAA shutdown. Post continues after video.

No love for consumers

As SmartMoney reported last week, rather than pass the tax savings along to travelers, most U.S. airlines hiked fares to make up the difference. They argued they were staying competitive with market prices -- and each other. Consumer advocates thought it was a missed opportunity to show customers some love. Spirit and Alaska Airlines were among those that did not raise fares.

Stay tuned for Delta to talk to the IRS and refund the money. Details will be posted on Delta.com. JetBlue, United, Continental, Virgin America and American Airlines all tell SmartMoney that customers should contact the IRS directly as they may be entitled to a possible refund. US Airways did not respond to requests for comment.

Other encouraging signs of possible refunds directly from the airlines: A spokeswoman for Southwest Airlines said, "We continue to work with the relevant agencies on a plan moving forward but we have not made any final decisions at this time." A Virgin America spokeswoman also said it's "looking for further guidance from the IRS on refunds in the days ahead."

Readers, if they raise fares together, should they all refund together?

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