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Flying Public Caught In Push And Pull Between Airlines, IRS

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A United Airlines 757 in flight after takeoff from San Francisco International Airport. (AP file photo)

A United Airlines 757 in flight after takeoff from San Francisco International Airport. (AP file photo)

RebeccaCorral20100909_KCBS_0583r Rebecca Corral
Like most journalists in Northern California, Rebecca Corral has been...
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SAN FRANCISCO (CBS SF) – Airlines have been reluctant to refund the federal taxes collected illegally after the partial shutdown of the Federal Aviation Administration.

When the midnight deadline passed last Friday for re-authorization of the FAA, federal transportation excise taxes expired.

“If you bought an airline ticket before July 23 and you’re flying after July 23, you paid these taxes,” said Joe Ridout with Consumer Action.

The airlines are not required to refund the 7.5 percent of ticket price and $3.70 per leg of a domestic flight that they typically collect. That falls to the Internal Revenue Service, which is still developing a system for refund requests.

American, United, Continental and Southwest have directed customers to the IRS rather than handling refunds directly as the government has requested. JetBlue invited customers to email refund requests to the airline.

Now there is a Congressional investigation.

KCBS’ Rebecca Corral Reports:

Senate Democrats asked 12 of the nation’s largest airlines on Thursday to reveal how much money they’re making from increased airfares during the ticket tax.

“We are writing to confirm whether your company is one of the airlines generating profits by exploiting its own customers,” Sens. Jay Rockefeller, D-W.Va., and Maria Cantwell, D-Wash., said in the letters. “Like the `ancillary fees’ that many airlines now charge for blankets, checked luggage, priority seating and itinerary changes, this recent fare increase has further damaged the industry’s relationship with airline passengers.”

Rockefeller is chairman of the Senate Commerce, Science and Technology Committee, which has oversight of the FAA, and Cantwell is chairwoman of the aviation subcommittee.

The legislative stalemate has led to the furlough of nearly 4,000 FAA employees, the halt of almost 200 airport and other aviation construction projects, and the impending layoff of an estimated 70,000 construction workers, engineers and others who worked on those projects.

Air traffic controllers remain on the job.

“These are people who work hard and were right smack dab in the middle of a construction season,” Transportation Secretary Ray LaHood told reporters after a White House meeting on the shutdown. “This is not the time to be laying off 70,000 people.”

The Transportation Department estimates the trust fund that pays for most of the FAA’s programs, including air traffic control, is losing $30 million a day during the shutdown.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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