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Baggage Fees Not Taxable

by Bea February 5th, 2010 | Airlines
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No, baggage fees are not taxable. Or so the Internal Revenue Service said a few days ago.

In a letter to an airline released by the IRS this month, they wrote to the airline that there is a A tax code specifying that charges for transportation of baggage aren′t subject to excise taxes. Although the name of the airline was not disclosed, the letter was posted on the IRS website.

This statement that the U.S. airline baggage fees aren′t taxable is a “victory” for those carriers who are trying to make money off of this new method of revenue. Who am I kidding? This is a victory for every carrier because they are trying to make money off of anything that they can. This statement is a method of protection for a growing revenue stream that may reach $1.76 billion this year.

Yes, you read that correctly, $1.76 billion. That’s a $117 million increase over last year’s total. Jay Sorensen, president of IdeaWorks, an airline consulting firm in Shorewood, Wisconsin, says that this is a good thing for airlines because “it will allow the airlines over the long term to realize all the revenue. They won′t have to share with the government. Some people are worried that the baggage and other fees are diverting the revenue from the federal tax fund for government aviation costs, such as air-traffic control.A Among top carriers, Delta Air Lines and Continental Airlines increased their checked baggage fees earlier this month. United Airlines and American Airlines followed these two carriers shortly after. However,A travelers, A there is still some hope– Southwest Airlines doesn′t charge for the first two bags.

Carriers have been turning to sources other than tickets for revenue for a long time–but you knew this. It is a pain to have to pay for checked baggage, and airlines have made it so that they force you into having to pay an extra amount on top of your already overpriced ticket. It is all a little bit ridiculous.

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