D.C. Circuit: Airline’s claims for refunds of ticket-related security fees from TSA
Upheld TSA’s denial of refunds of the security fees with regard to currency exchange rate differences
Airline’s claims for refunds of ticket-related security fees from TSA
The U.S. Court of Appeals for the District of Columbia Circuit today—in a case concerning an airline’s requests for refunds of security fees imposed on passenger tickets—remanded to the Transportation Security Administration (TSA) an issue concerning the fees imposed on involuntary ticket transfers but upheld the TSA’s denial of refunds of the security fees with regard to currency exchange rate differences.
The case is: United Airlines, Inc. v. TSA, No. 20-1222 (D.C. Cir. December 14, 2021). Read the D.C. Circuit’s decision [PDF 243 KB]
The airline sought refunds from the Transportation Security Administration (TSA) of the U.S. Department of Homeland Security for amounts that the airline paid to the TSA. The payments related to fees charged to airline passengers, and collected by airlines, that fund aviation security measures and are to be remitted monthly to the TSA—that is, security fees imposed on tickets for travel on the airline.
In its refund request, the airline claimed that it had erroneously remitted the security fees in two circumstances:
- Tickets associated with passengers who purchased their tickets from other airlines but who were later involuntarily assigned to take this airline’s flights—referred to as “involuntary transfer” tickets
- Tickets for which, because of currency exchange rate fluctuations, the recorded and remitted fee amount deviated from the fee amount statutorily required
The TSA denied both of these requests for refunds of the security fees with regard to both sets of tickets. The airline eventually appealed to the D.C. Circuit.
- The D.C. Circuit today concluded that the TSA’s denial of the security fee refund with regard to the involuntary transfer tickets was “arbitrary and capricious.”
- However, the D.C. Circuit agreed with the TSA’s denial of the security fee refund regarding the second set of tickets—that is, the claim based on currency exchange rate fluctuations.
Accordingly, the appeals court granted the taxpayer’s petition for review in part, and vacated and remanded the involuntary transfer ticket issue to the TSA, but found the TSA’s action regarding the currency exchange rate differences was reasonable and denied the airline’s petition concerning this issue.
For more information, contact a tax professional with KPMG’s Excise Tax Practice group:
Taylor Cortright | +1 (202) 533 6188 | firstname.lastname@example.org
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.