New Jack City: Airlines Play Fast & Loose with Controversial FAA Tax Money

You purchased an airline ticket in early June for your great vacation getaway in late July. Then Congress didn’t see fit to extend FAA funding before they went on recess last week, which stopped the agency from collecting federal ticket taxes.

You’re familiar with the controversy.

So were you in luck?

It sure looked that way because if you’d paid for your ticket before July 23, 2011 for flights after that date you were surely due the tax refund.You remember all the cable news stations moaning about the tax revenue being lost.

Not so fast!

Say you paid $300 for your ticket, of which roughly $30 was the federal tax, the friendly skies guys simply increased the price of of that ticket by the same $30.

A quiet—if not deceptive—increase in my book.

Granted, it didn’t cost you any more but since you had actually pre-paid the tax when initially purchasing the ticket in June, shouldn’t you be entitled to a refund?

Sure looked that way until late last week when all signs pointed to your dubious carrier pocketing it.

That all changed however last Friday when President Obama signed legislation that ended the partial FAA shutdown and the I.R.S. ruled that you were not due a refund after all.

Apparently we were all simply squeezed between no-taxes-due and the increased ticket price deception.

Translation: No way the general public had a fair shot at benefitting from the confusion.

So starting today airlines will again be charging federal taxes on all tickets sold. Whether they will decrease their prices proportionally to those prior to their little ‘now you see it–now you don’t game’ remains to be seen.