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You Paid For It: Hidden Taxes

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You Paid For It: Hidden Taxes

By Aaron Diamant

You could be paying taxes for stuff you didn't even do, and good luck getting a refund. If you've ever canceled a trip, you got hit with a tax penalty. That's just what happened to Jay Schecter and his wife, who had to cancel their flights when he got sick. The ticket was non-refundable, but he wanted to get back the $38 he'd paid in taxes and fees. Those taxes pay for things like air traffic control and post 9/11 security. "Since I didn't use the services, I don't understand why I should pay for the services," he told us, confused. We were too. We asked an aviation tax expert why you don't get a refund on unused trips on U.S. carriers. Joakim Karlsson, the expert we found, tried to explain. "It is simply an issue of the tax rules being written in such a way that they are collected upon payment and not refunded with the exception of a fully refundable ticket,” Karlsson said. That's the law. Whether or not you fly, you have to pay the tax. Same goes for the passenger facility charge. We discovered security fees are refundable. You just have to ask the airline supposedly, but there seems to be some confusion. Congressman Richard Neal, a Democrat from Massachusetts and a member of the Ways and Means Committee, explained. "Well actually the law is in conflict to the extent that the IRS has one position and the Division of Homeland Security has another competing position," he told us. So what's this mean to you? Depends on who you fly with. We called several major U.S. airlines. Three said they don't refund anything. Several foreign airlines which fly here apparently refund everything, even the taxes, which the IRS said is against the law. Pete Sepp of the National Taxpayers Union said that's not right. "If you don't end up using the services you're being charged for, why should you pay for the taxes?" Sepp said. The National Taxpayers Union wants change. Congressman Richard Neal agreed the issue should be looked at. "I think it would be helpful to clarify for the consumer the difference of opinion that exists between Homeland Security and the IRS," he said. Jay schecter doesn't get it, but he knows where to look for answers. "I don't think we can blame the airlines. The airlines are operating under guidelines that are issued by federal agencies," he sighed. So what's next? Lawmakers are talking about the issue.