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Delta Joins Spirit By Giving Passengers A Tax Break

Good news for airline travelers. Yes, you read that right. Delta Airlines said Monday that 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 around $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.

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“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.” Spirit Airlines did not raise fares last week and passed on the tax savings to customers by lowering domestic non-stop fares by 7.5%.

As Pay Dirt reported last week, rather than pass savings along to travelers, most U.S. airlines hiked fares over the weekend 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.

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

Other encouraging signs of possible refunds directly from the airlines: A spokeswoman for Southwest Airlines says, “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 says it’s “looking for further guidance from the IRS on refunds in the days ahead.”

Pay Dirt readers, if they raise fares together, should they all refund together?

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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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