Government says airlines “not required” to refund taxes on nonrefundable tickets

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By Christopher Elliott

Kirk Miller knew his nonrefundable US Airways tickets was lost when he canceled his flight, but like many air travelers, he wondered about the taxes. Could he get those back?

“It is my understanding that although the fare is not refundable, the taxes included in the price of an airline ticket are refundable,” he says. “Airlines act as tax collectors, but they are supposed to hold the taxes in escrow until you actually travel, when they pay the government(s).”


Not exactly, it turns out. A US Airways representative told him the taxes were also nonrefundable. He sent a brief, polite email to the airline, and was again rebuffed. (Here’s our guide to getting a refund on a nonrefundable airline ticket.)

I’ve raised this question in the past, too. Some airlines apparently keep the money. Others return it. (Related: Are “expedite” fees for award tickets refundable?)

My advocacy team and I suggested he ask the Transportation Department about the taxes. So he did.

Here’s the eye-opening response:

This is in response to your inquiry about the refundability of taxes on non-refundable airline tickets.

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Tickets for domestic air transportation are subject to an air transportation excise tax of 7.5% of the air fare plus $3.70 per flight segment. By law, this tax applies to the sale of air transportation, not to the transportation itself. Airlines remit this tax to the government shortly after the ticket is issued. If the passenger changes his or her schedule and forfeits the air fare on a non-refundable ticket, the airline still owes this tax to the government.

Under the law, if an airline refunds the air fare, it is free to, but not required to, refund the tax. If the airline refunds the air fare but does not refund the tax, the traveler can claim the a refund of the tax from the IRS by filing form 8849 with that agency. If the airline does not refund the fare, then as indicated in the previous paragraph the tax on that fare is payable to the government.

The U.S. Department of Transportation does not regulate any of the various government fees that appear on airline tickets. The U.S. air transportation excise tax on airline tickets is administered by the Internal Revenue Service, Office of the Chief Counsel, Excise Tax Branch (202-622-3130).

Similarly, the other taxes and government fees on airline tickets are each administered by the agency that oversees the fee in question. For example, an “XF” fee is a Passenger Facility Charge of up to $4.50 per participating airport, which is used for airport improvements; this fee is administered by the Federal Aviation Administration.

On international tickets, an “XY” charge is an immigration inspection fee, and a “YC” charge is a customs inspection fee. Both of those fees are administered by the office of Immigration and Customs Enforcement of the Department of Homeland Security. There is also an agricultural inspection fee on tickets for international transportation; this fee is administered by the U.S. Department of Agriculture.

We do not have information on the policies of those agencies concerning the refundability of their fees on non-refundable tickets.

That’s fascinating.

According to the government, taxes are being remitted shortly after the sale and may be refunded if the airline wants to.

What if Yapta created an automated system to seek refunds from airlines with tax refund policies? How much money could air travelers save — particularly when taxes can sometimes account for nearly half the airfare?

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Christopher Elliott

Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can't. He's the author of numerous books on consumer advocacy and writes three nationally syndicated columns. He also publishes the Elliott Report, a news site for consumers, and Elliott Confidential, a critically acclaimed newsletter about customer service. If you have a consumer problem you can't solve, contact him directly through his advocacy website. You can also follow him on X, Facebook, and LinkedIn, or sign up for his daily newsletter. He is based in Panamá City.

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