IRS says airlines can issue ticket-tax refunds

DALLAS — The IRS is asking airlines to refund taxes to people who bought tickets before last weekend but are just now taking their trips. Those travelers might be owed a refund because Congress let the taxes expire. The Internal Revenue Service said on its website Wednesday that airlines can refund the taxes, just as they do when exchanging a refundable ticket that wasn’t used. But the airlines aren’t required to issue the refund, and some are directing customers to the IRS, which is still working on a procedure for handling refunds. American, United, Continental and Southwest were directing customers to the IRS. JetBlue invited customers to email refund requests to the airline. Other airlines didn’t immediately comment. The IRS said it asked the airlines to provide refunds when customers ask, but it stopped short of requiring them to do so. Passengers who can’t get a refund from the airline eventually will be able to submit a claim to the IRS along with proof of taxes paid and travel dates, the agency said. Several federal taxes include a 7.5 percent excise tax on tickets expired, but others are still being collected, including fees for passenger security and local airport construction projects. The expiration of some taxes is turning into a windfall for airlines, most of which raised prices enough to replace the taxes. That way, customers pay as much as before, but airlines keep some of the money that used to go to the government. Delta Air Lines said Wednesday it’s getting an extra $4 million to $5 million a day — great news for Delta investors. “Sure, this probably won’t go on forever,” said J.P. Morgan analyst Jamie Baker, but similar tax holidays lasted nine months in 1996 and three months in 1997, “and in both cases revenue improvement was clearly evident.”