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Lawmakers Encourage IRS to Forgo Retroactive Airline Taxes

By Richard Rubin and Lisa Caruso - Aug 5, 2011 9:48 AM CT

The four top tax legislators in Congress are asking the Internal Revenue Service not to retroactively collect airline taxes on flight tickets purchased during the recent lapse in the Federal Aviation Administration’s taxing authority.

“We encourage you to utilize all your discretion and authority to extend relief for passengers and airlines with respect to ticket taxes that were not paid or collected because of the lapse and provide the industry a three-day period of time to restart processes to collect the taxes,” according to the letter, dated yesterday.

It was written by the top two members of the Senate Finance Committee, Democrat Max Baucus of Montana and Republican Orrin Hatch of Utah, and the top two members of the House Ways and Means Committee, Republican Dave Camp and Democrat Sander Levin, both of Michigan.

The IRS didn’t respond immediately today to a request for comment about how it would handle retroactive taxes for tickets purchased after July 22.

The FAA’s authority to levy the 7.5 percent tax on airline tickets, as well as other aviation taxes, lapsed July 22. After that, most airlines raised their fares by the amount of the taxes without charging the taxes. Had Congress not acted, the total forgone taxes would have reached an estimated $1.3 billion by Sept. 7.

Retroactive Taxes

The Senate voted today to end the shutdown, and President Barack Obama is expected to sign the bill into law. The text of the bill passed by the House July 20 reinstates the taxes as of July 23. Enactment was delayed because of disagreements between the House and the Senate.

In the letter, the tax-writing lawmakers told IRS Commissioner Douglas Shulman that they are concerned about the effect that retroactive taxes would have on consumers and the airline industry.

“Furthermore, we understand that the IRS has limited resources -- some of which will be required to restart systems and processes to begin collecting these taxes again going forward -- and that the retroactive collection of trust fund taxes would add further strain to those resources,” they wrote.

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Sam Hananel, Associated Press, On Tuesday August 9, 2011, 6:05 pm
WASHINGTON (AP) -- At the heart of the bitter dispute over funding the Federal Aviation Administration is an ongoing brawl between Republicans and Democrats over the rights of labor unions, one of several that have flared up during the Obama administration.

Congress struck a deal that gave the FAA temporary operating authority last week just as lawmakers began their August vacation. For nearly two weeks prior, the FAA was mostly shut down, with 4,000 FAA workers furloughed and tens of thousands of construction-related jobs idled. The unsettled labor dispute is waiting for Congress when it returns to consider a long-term FAA spending bill and could lead to another standoff.

House Republicans are intent on overturning a new rule passed by a little-known agency last year that made it easier for airline and railroad workers to unionize. Senate Democrats, meanwhile, have made clear they want to keep the new rule, one of the few big victories for organized labor under the Obama administration.Republicans have deplored other recent pro-union actions, including a decision granting airport security screeners collective bargaining rights, the National Labor Relations Board's lawsuit accusing Boeing Co. of retaliation against union workers and the board's proposal to speed up the pace of union elections.

"What is important here, and it is not some itty-bitty little thing, is that we have labor law regulators out of control," Sen. Orrin Hatch, R-Utah, told the Senate last week.

But House Minority Whip Steny Hoyer, D-Md., pledged that Democrats "will not allow a handful of Republicans to hijack the debate over a long-term FAA extension to serve an anti-worker agenda."

The FAA conflict began last year, when the National Mediation Board decided to change a 75-year-old rule that governs union elections at airlines and railroads. Since 1935, workers in those industries had to follow a rule that required a majority of all employees to vote in favor of a union. Those employees who chose not to participate in the election were counted as "no" votes.

For example, if a unit has 100 employees and only 60 of them decided to cast ballots, even if 40 workers voted in favor of the union and 20 voted no, the union would still lose because the 40 workers who decided not to vote would also be counted as "no."

The rule was designed to make it more difficult for transportation workers to organize because of the potential disruption to the public and commerce. By contrast, most other private businesses are governed by the National Labor Relations Board, which uses traditional election rules requiring a simple majority vote.

Even with the tougher rule, the aviation industry is one of the most heavily unionized sectors. Today, every major airline except Delta Air Lines Inc. is mostly unionized. But flight attendant unions at Atlanta-based Delta repeatedly lost union elections under the old rules, and the airline has vigorously resisted unionization efforts.

Some Democrats have blamed Delta for pushing the stalemate, as the airline spent more than $2 million over the past year on lobbying, including a push to reverse the new rule.

"What happened with the rule change process undermined the integrity of our government," Delta spokeswoman Gina Laughlin said. "The NMB is supposed to be neutral and operate in a fair and balanced manner, but that's not what happened here."

Delta has a key home state lawmaker in its corner, Sen. Johnny Isakson, R-Ga., who is on the conference committee trying to hash out a deal between the House and Senate on the FAA bill.

Isakson said his last offer of compromise would have let the new rule stand but allow employers the right of judicial review. He says Democrats rejected that but the offer still stands.

"It does give it sort of a more level playing field," Isakson said.

House Republicans also might consider keeping the new rule if it included an equivalent process for companies to decertify a union. Labor leaders have resisted that approach.

Ed Wytkind, president of the AFL-CIO Transportation Trades Department, called those "poison pill provisions."

"If compromise means caving in to a group of Republicans who don't particularly care for the NMB rule, then there's probably not much of an avenue for it," he said Tuesday.

In 2009, President Barack Obama appointed Linda Puchala, a former leader at the flight attendants' union, to the National Mediation Board, giving the agency a 2-1 Democratic majority. Within months, the board proposed changing the voting rules to make them similar to those of the NLRB.

Business groups called the move a blatant payoff to unions who supported Obama's presidential bid. Congressional Republicans immediately began trying to undo the rule change. In September, the Senate voted 56-43 against a GOP resolution that would have prevented the Obama administration from enforcing the rule.

House Republicans then inserted a provision overturning the rule into their version of the FAA funding bill, spurring the impasse that led to the recent shutdown. Democrats, still reeling from the concessions they made in the deal to raise the government's debt ceiling, told Republicans they would not give in on this issue.

As far as unionizing Delta, though, the new rule has not actually made a difference so far. Unions representing flight attendants, baggage handlers, ticket agents and other ground workers lost four separate elections at Delta last year under the new rules, though the flight attendants lost narrowly and are seeking a new vote.

Busboy

Seems ironic that the very people that oppose the simple majority vote rule, were elected by a simple majority vote rule.

Some of the voters being more simple than others.