Taxes on non-refundable tickets

Old Oct 28, 17, 9:13 am
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Taxes on non-refundable tickets

I have spent some time flying ULCC's this year. Given how cheap the fares are, I often will book and miss a flight.

I have been thinking about this - of course the fare is non-refundable, but I am fairly certain the taxes must be refunded. It is illegal to keep funds called "taxes" when the actual taxable act did not occur (charging sales tax and then keeping it is illegal for instance).

So my question is this - if there is a non-refundable fare is anyone aware of a mechanism for forcing the refund of the taxes on an unused ticket?
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Old Oct 28, 17, 9:28 am
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Originally Posted by FlyingBeanCounter View Post
I have spent some time flying ULCC's this year. Given how cheap the fares are, I often will book and miss a flight.

I have been thinking about this - of course the fare is non-refundable, but I am fairly certain the taxes must be refunded. It is illegal to keep funds called "taxes" when the actual taxable act did not occur (charging sales tax and then keeping it is illegal for instance).

So my question is this - if there is a non-refundable fare is anyone aware of a mechanism for forcing the refund of the taxes on an unused ticket?
Some airlines will. According to the contract of carriage, UA will not
  1. General Rule Except as provided in Rules 4 and 27 C), UA will not refund any portion of a Ticket that is purchased with a non-refundable fare, including the fare and any taxes, fees, or other charges included within the total price paid for the Ticket.
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Old Oct 28, 17, 9:34 am
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Presuming that OP is talking about US domestic taxes. Not sure of his source for "illegal" retention of taxes.

On a non-refundable ticket, the sale has been made and the ticket used. All of the government taxes (including things called "fees" imposed by the government) have been collected and paid by UA to the appropriate agency.

Whether you choose to physically sit in the seat which you reserved and paid for is a personal decision.

In other countries, the tax scheme is different. If you are talking about a UA ticket from LHR, by way of example, the UK taxes such as APD are refunded if you cancel prior to departure.
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Old Oct 28, 17, 9:34 am
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huh. Interesting.

I guess they just remit that to the taxing authority? Keeping it is illegal as it is not technically revenue.

What happens if it is not in the contract of carriage like that?

Originally Posted by Often1 View Post
Presuming that OP is talking about US domestic taxes. Not sure of his source for "illegal" retention of taxes.

On a non-refundable ticket, the sale has been made and the ticket used. All of the government taxes (including things called "fees" imposed by the government) have been collected and paid by UA to the appropriate agency.

Whether you choose to physically sit in the seat which you reserved and paid for is a personal decision.
I am actually just curious in general. Not just about UA. on ULCC's I tend to find a flight for $20 or so and buy it as a backup on occasion.

The key for this as I understand it is they have to remit the collected taxes, they cannot just sit on them. You indicated above they did this, which is fine and legal.

The interesting part of this is that as a consumer in normal transactional situations, you have the right to have your taxes back if you do not commit the taxable event to incur the taxes as we are the one paying the taxes.

not super worried about it, just curious. I am also trying to reconcile what I know will cause problems in for corporate entities (forcing the payment of taxes without cause) with airline fees. admittedly airline taxes and fees are a specialty all unto their own.

One thing I think could be the case is that the law requires taxes paid on any fare - flown or not. So, for UA to keep the fare they have to also remit the taxes. That seems odd as a canceled/missed flight had no taxable event but stranger things happen.

Last edited by WineCountryUA; Oct 28, 17 at 10:47 am Reason: merging consecutive posts by same member
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Old Oct 28, 17, 9:48 am
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Originally Posted by Often1 View Post
On a non-refundable ticket, the sale has been made and the ticket used.
I don't believe that's true. Just because the CoC says they won't refund the taxes and fees doesn't mean it's legal for them to do so. I just doubt anybody's ever bother to challenge them on it. I would be particularly suspect of facility fees and customs fees when you never use the facilities.
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Old Oct 28, 17, 11:02 am
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Previous experience...you can collect taxes back only if requested...WN does this automatically. This is called re-fareing. If taxes are not refunded they are still sent to the taxing entity...UA does not keep the funds and essentially you gave away money.
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Old Oct 29, 17, 1:51 pm
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Originally Posted by Often1 View Post
On a non-refundable ticket, the sale has been made and the ticket used. All of the government taxes (including things called "fees" imposed by the government) have been collected and paid by UA to the appropriate agency.
But clearly this is not so for refundable fares, because then you get your taxes back. Further, even on non-refundable fares there is a mechanism for UA to refund the taxes, because that is what happens when there is a cancelation caused by the airline that results in a refund.

I find it very unusual that a taxing authority would set its laws and rules for collection and remittance based on the policies of a private enterprise.

I think the OP may be on to something.
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Old Oct 29, 17, 2:31 pm
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Originally Posted by FlyingBeanCounter View Post
I guess they just remit that to the taxing authority? Keeping it is illegal as it is not technically revenue.
It is revenue. That's the whole point. Per the terms of the contract, UA earns the fare whether you fly or not.
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Old Oct 29, 17, 2:36 pm
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Originally Posted by Halo117 View Post
Previous experience...you can collect taxes back only if requested...WN does this automatically. This is called re-fareing. If taxes are not refunded they are still sent to the taxing entity...UA does not keep the funds and essentially you gave away money.
I can confirm this:
Whether or not a seat has actually been "sold", UA remits 100% of the tax and fees as if it was sold. (A friend of mine is a programmer who writes code for these tax/fee reports).
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Old Oct 29, 17, 3:54 pm
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See page 29 of IRS Publication 510. The last paragraph before the discussion on Manufacturers Taxes.

https://www.irs.gov/pub/irs-pdf/p510.pdf

And United cannot collect but not remit.
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Old Oct 29, 17, 4:15 pm
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I do not know about UA, but I have gotten taxes back from AC for flights missed on a nonrefundable ticket. It took about two months, as there isn't apparently a standard procedure for refunding the taxes. My memory is that it was about $400, but that seems a bit high, so perhaps it was less.
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Old Oct 29, 17, 4:16 pm
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It goes without saying that a merchant, e.g. UA must remit taxes it collects to the taxing authority.

The refundable ticket example is a red herring. That ticket is refunded. In OP's example, he has purchased a non-refundable ticket, thus there is no refund and the sale is complete when the ticket is purchased (or after 24 hours to be precise).

OP has no claim against UA because UA has simply acted as a pass through and he would need to make a claim against the taxing authority which would simply advise that it does not matter whether OP flew or not, the ticket was purchased and used one way or the other.
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Old Jan 30, 19, 11:41 pm
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surprised there is not more discussion of this on Flyertalk

bump surprised there are not longer threads on this topic.
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Old Jan 30, 19, 11:57 pm
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Originally Posted by writetorich View Post
bump surprised there are not longer threads on this topic.
Why? How many different ways are there to say that US domestic taxes need not be refunded, by law, except that you may be able to apply for a refund for the $5.60 TSA fee? (From the TSA -- not from UA). That said, to the best of my knowledge, nobody's ever worked out how to do that.
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Old Jan 31, 19, 12:22 am
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Originally Posted by jsloan View Post
Why? How many different ways are there to say that US domestic taxes need not be refunded, by law, except that you may be able to apply for a refund for the $5.60 TSA fee? (From the TSA -- not from UA). That said, to the best of my knowledge, nobody's ever worked out how to do that.
So WN is just being magnanimous in automatically refunding taxes when a flightvis canceled or modified?

Seems like this would be a worthy add for UA rather than free direcTV. Or in addition to.
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