Some Summer Travelers Due Airline Ticket Tax Refund

There's been a deal on the debt ceiling, but Washington legislators have left the Federal Aviation Administration in limbo, according to news reports. 

The FAA was forced into a partial shutdown in late July, after its final operating extension expired. Construction projects throughout the country stopped, and the FAA lost the ability to collect taxes on airline tickets. 

The FAA has been without a long-term funding plan since 2007, when its long-term operating authority expired, the Associated Press reports. Congress has approved 20 separate short-term extensions. The last one expired at midnight July 22. 

As a result, according to news reports, travelers who purchased tickets before July 22 for travel after July 23 may be due a refund on taxes. Airlines quickly raised ticket prices by the amount of the lost taxes, so prices didn't change. With that action, the Seattle Times reports, the FAA's estimated $30 million per-day loss in tax revenue is going to the airlines that raised fares.

Congress allowed the taxes to expire, the Seattle Times reports, but it is not yet clear how easy it will be for travelers due a refund to get the money coming to them. 

Until the situation is resolved, the Seattle Times reports, airlines can't collect the taxes on any tickets sold after the July 23 shutdown, and the government can't collect taxes on tickets sold before then if the travel happens during the shutdown. 

The IRS has asked the airlines to deal with the refunds, but many are sending passengers to the IRS. The IRS has posted an FAQ about the airline taxes on its website. 

Here's the key paragraph about refunds from the IRS FAQ:

Because the airlines and travel service providers already have the information about passenger ticket purchases and travel, and in many cases have payment card information that may facilitate streamlined refunds, the IRS has asked the airlines to provide refunds to eligible passengers when requested. However, passengers who are unable to obtain a refund from the airline may obtain a refund by submitting a claim to the IRS. Because the IRS has no information about passenger ticket purchases or travel dates, travelers who are unable to obtain a refund from the airline will be required to submit proof of taxes paid and travel dates to the IRS under procedures that are under development. The IRS will provide additional guidance at a later date.

JetBlue and Delta have come up with a plan to refund taxes directly to travelers. USA Today and the Sun Sentin report Virgin, Frontier Spirit, Hawaiian and Alaska airlines have said they will pass the tax savings on as reduced fares.

Senate efforts to come up with a compromise failed Monday, Reuters reports, "raising the near certainty that the standoff will go through August."

The House left Washington on Aug. 1, according to Reuters, and the Senate is due to leave for its August recess Aug. 2.

So far, the shutdown has lasted 10 days, prompted the furlough of 4,000 FAA employees, and 241 stop work orders on projects throughout the country. None of the projects are in Wisconsin. See the full list of stop work orders here.

Reuters reports the shutdown has already caused a loss of $250 million in revenue that would have gone to a trust fund to pay for airport infrastructure projects, and that a shutdown through August would raise that total to more than $1 billion.

The battle is over a House Republican-supported $16.5 million cut to rural air service subsidies, the Associated Press reports. But the lost tax revenue has already outpaced the $200 million annual budget of the air services program.

Senate Democrats don't want to support the measure, the Associated Press reports. Senate Democrats blocked a House bill that continued the subsidy cuts, and Senate Republicans blocked the Democratic extension bill that didn't include the cuts.

Also at issue is a labor provision which the Associated Press says would "overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting." The old rule treated non-voting workers as "no" votes.