TAX

It’s the most taxing time of the year

You know the holiday season is over when three things happen:

  • Ads with Christmas trees and Santa Claus stop appearing on TV.
  • You’ve gone back to work or school.
  • The Internal Revenue Service (IRS) announces the opening of tax season; that is, the first day it will accept tax returns filed for the previous year.

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An extra $55 for taxes on my pre-paid car rental? Seriously?

Photopixel/Shutterstock
Photopixel/Shutterstock
Question: We booked a ten-day vacation package in Cancun, Mexico through Hotels.com that included air, hotel and a rental car. Taxes were included in the price of the rental car.

When we arrived at the Hertz rental counter, we were told there was an additional tax of about $55. I paid the additional tax at checkout, expecting to be reimbursed from Hotels.com.

I’ve written two emails to Hotels.com, but both have gone unanswered. When I called the company, a representative told me the $55 charge was a “deposit” that would be returned to me. But a call to Hertz confirmed it was a tax and no refund was due.
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I couldn’t get a customs stamp — is a refund out of the question?

A stamp for you. / Photo by Sarah Parrott – Flickr Creative Commons

Note: You’ve probably noticed two things about today’s post. 1) It wasn’t available this morning; and 2) We’re back to Disqus 2012. The two are not related. We had server problems this morning. Disqus removed the ability to view comments on mobile from the “old” version, so we were forced to upgrade. (I am very unhappy with Disqus, but feel I have no choice.)

What’s an immigration stamp worth? If you said $61.55, you must know Nancy Bestor. She’s been fighting with her credit card over a tax refund after a recent trip to Italy, and she wants me to help.
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Another tax on air travelers? It’s nonsense

Rochelle Peachey is no stranger to high taxes and fees on airline tickets. A frequent flier between Miami and London, she routinely sees government charges that double the price of her ticket.

Not when she flies domestically, though. Here, taxes add about 20 percent to the cost of a fare.

But all that might be about to change. The Obama administration’s deficit-reduction plan includes a new mandatory $100 surcharge per flight for air traffic control services, which airlines would pay directly to the Federal Aviation Administration. The fee, however, would almost certainly be passed along to customers. The plan also raises the passenger security tax from $2.50 to $5 per non-stop flight, and eventually to $7.50.
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Is this enough compensation? Orbitz splits the difference on departure tax

Departure taxes are the final “gotcha” when you’re flying. Just as you’re getting ready to board a flight back home someone asks you for money, and threatens to deny you boarding if you can’t cough up the cash.

Fortunately, most departure taxes are already built into the airfare. For example, when I visited St. Lucia in 1993, I was told that if I didn’t come up with the money, I couldn’t fly back to New York. I had to stop by an ATM and pay up. But last month when I flew from St. Lucia to Miami, the $26 departure tax was included in my airfare.

Eduardo Castresana wasn’t so lucky on his recent trip to Peru. The country’s departure tax — about $6 — should have been included in the TACA airfare he purchased through Orbitz. He says for some reason, it wasn’t.
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Drivers want Congress to curb car rental taxes

Should Congress limit the taxes a city or municipality can impose on a rental car?

It’s a question elected representatives are likely to take up soon, as they consider the End Discriminatory State Taxes for Automobile Renters Act of 2009. The law, which is backed by car rental companies, would limit the excise taxes a municipality can impose on rental cars.

Cities are fighting the measure, saying it would curb their ability to raise money and represents an unwanted federal intrusion.

But a survey of more than 600 travelers conducted last week by this site and the Consumer Travel Alliance suggests drivers are on the side of car rental companies.

Asked if Congress should freeze the discriminatory excise taxes imposed by some cities, 78 percent voted “yes.” Only 21 percent rejected the idea.
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America’s taxing destinations: Cities that sock it to travelers

Which American cities impose the highest discriminatory travel taxes on lodging, car rentals, and meals? A new survey by EconFirst Associates and the NBTA Foundation reveals the answers, and you probably won’t guess the winner — I mean, loser.

Did you say Portland, Ore.? If you did, it’s either a lucky guess, or you get around, or you live there. P-Town’s discriminatory taxes against travelers added up to a whopping $21.55 a night. (Discriminatory taxes are calculated by excluding general sales taxes to count only taxes that target car rentals, hotel stays and meals.)
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Government says airlines “not required” to refund taxes on nonrefundable tickets

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).”

Right?

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.
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US Airways fined $40,000 for failing to disclose full airfares

In yet another sign that the Transportation Department is serious about protecting the rights of consumers, the government this morning fined US Airways $40,000 for failing to disclose the full price consumers must pay for air transportation.

“When consumers shop for air travel, they have a right to know how much they will have to pay,” Transportation Secretary Ray LaHood said in a prepared statement, adding, “We will continue to ensure that airlines comply with our price advertising rules.”

Here’s the full consent order (PDF).
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Whoever wins in tax war, guests will still pay the bill

hotelNext time you book a hotel room online, consider what happens to the taxes you’ve paid.

Occupancy taxes can take a big bite out of your vacation budget. San Francisco hits its hotel guests with a 14 percent tax. Washington’s is 14.5 percent. Chicago adds 15.4 percent.

Where does all the money go? That’s a question the courts have tried to answer in recent months.

Online travel companies, which make money by negotiating a lower rate with a hotel and then offering it at a higher price to travelers, believe they should pay hotel taxes based on the lower rate they negotiated with the hotel. Some cities disagree, alleging the companies should remit all the taxes they’ve collected — not just a portion.
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A 73 percent tax increase on car rentals in Wisconsin? That can’t be right

But it is right, according to the car rental industry, which is doing everything in its power to prevent the passage of a new law in Wisconsin that would raise car rental fees from $2 to $18 per rental to fund mass transit projects, and giving the Badger State the highest car rental taxes in the nation.

The new surcharges, which are proposed as part of Wisconsin’s budget bill, have already passed the Assembly and are being considered by the Senate today. So why haven’t you heard anything about this 73 percent increase in your car rental bill? A look at the bill (PDF) — hope your computer has lots of memory — shows how this issue has gotten buried in the 2009 budget debate.

But car rental companies are making a last-ditch effort to derail the tax. Here’s what it sent to Wisconsin legislators earlier this week:

I am writing today as your constituent and as an employee of Enterprise Rent-A-Car to ask that you oppose the KRM rail authority fee, which will increase the rental vehicle tax in Kenosha, Racine, and Milwaukee counties to 73.6% tax on a $30 rental.

Our customers already pay 20% in taxes, most of whom are Wisconsin residents accustomed to paying a standard 5.6% sales tax for other goods and services. Adding an additional $16 per transaction ($18 total) is even more unfair; and if enacted, these counties will have the highest rental car tax in the country – by a long shot.

Higher taxes means fewer car rentals, and this in turn will limit employment opportunities for my fellow employees and me. Every day, Kenosha, Racine, and Milwaukee residents and businesses use rental cars for a variety of reasons:

* Some need a specialty vehicle for a household project, like a pick-up truck or a van.
* Many employers prefer to rent a car for employees traveling on in-state business in lieu of reimbursing for mileage on a personal vehicle. Many employees prefer this too, as they don’t rack up miles on their own car.
* Also, many of our customers simply don’t own cars, either because they can’t afford it, or simply choose not to for other reasons. These residents rely on affordable rental cars for transportation when public transit is not an option.
* Some need to rent a larger vehicle for a vacation or out-of-town trip
* Many parents rent cargo vans to move their children to college
* Some families rent an additional vehicle to accommodate family visiting from out of town
* Some rent a luxury car for a special occasion like a wedding

I can think of no reason why Wisconsin residents using a rental car for these purposes should bear the burden of a 73% tax to pay for a commuter rail line.

At a time when the auto industry is clearly struggling, I ask you to oppose this $18 fee and any new rental car tax, and support a funding mechanism that spreads the burden across a larger group of beneficiaries.

A 73 percent tax increase seems a little steep to me. And for what? A train that tourists are unlikely to use, like South Florida’s Tri-Rail? Well, we don’t know that — yet.

It is more than just a little ironic  that the now-bankrupt car industry allegedly systematically dismantled mass transit in the 20th century. Today, cars are funding the return of trains.

But I believe there’s a right way and a wrong way to do this. And a fly-by-night approach to raising taxes on drivers, many of whom can’t vote and may not benefit from the mass transit projects, is the wrong way. This issue deserves its own debate, far removed from the the chaos of Wisconsin’s budget bill.