Congressman Gregory W. Meeks (D-Queens), with support from the entire city’s Congressional delegation, elected state and city leaders, the New York Taxi Workers Alliance, and Signature Bank, on Friday announced federal legislation that, if passed, will ensure taxi medallion owners are not taxed for debt forgiveness.
The measure comes as the value of taxi medallions has fallen about 80% in recent years, causing many drivers to fall into crippling debt and become trapped in poverty. Now, drivers seeking forgiveness for their loans are seeing that relief taxed as income. Meeks says, “This is a crisis that never should have happened.”
Some private lenders, notably Signature Bank, have forgiven debt owed by medallion holders. However, under current law, this debt relief would qualify as taxable income, making taxi drivers liable for five or six-digit tax bills. The “Tax Relief for Taxi Drivers Act” would ensure that debt relief would be excluded from gross income for tax calculations.
“The federal government cannot treat debt forgiveness as taxable income,” says Meeks. “Drivers finally free of unsustainable debt will now face an impossible to pay five or six-digit tax bill. That would not be justice.”
Meeks noted that the city and many banks were found to have been profiting from inflated medallion prices, and is calling for the city government, Congress and the National Credit Union Administration to “do the right thing” before the upcoming tax season. “This bill is a crucial step that will provide real relief for many riders.”
Meeks hopes this vast support from all levels of government will help to see the bill expedited through the House.
City Councilman Stephen Levin (D-Boerum Hill, Brooklyn Heights, Brooklyn Navy Yard, Downtown Brooklyn, Dumbo, Fulton Ferry, Greenpoint, Vinegar Hill, Williamsburg), co-chair of the city’s Taxi Medallion Sale Prices Task Force, is thrilled by the vast support of the current plan to relieve medallion holders of debt without taxation.
“This is a very important part of what we think the solution be,” he says. “We have all hands on deck here – city and federal government working hand in hand to make sure that we right a historic wrong,” he said.
U.S. Rep. Carolyn B. Maloney (D-Manhattan, Queens, Brooklyn) said after years of predatory lending and inflated medallion prices, the city’s yellow cabs became financial traps for thousands of drivers. And those hurt most are disproportionately immigrants and people of color. It’s past time we make these hardworking New Yorkers whole.
“The Tax Relief for Taxi Drivers Act will make sure that defrauded New York taxi drivers will get the debt relief they need and deserve and not face absurd IRS tax bills,” she said.
U.S. Rep. Yvette Clarke (D-Central Brooklyn) said the Tax Relief for Taxi Drivers Act is a huge step in the right direction to undo the injustice that has burdened far too many of New York City’s taxi drivers.
“The Taxi Medallion Loan Crisis has stripped families, especially immigrant families, of their life, liberty and ability to pursue the American Dream. Because of exploitative lending practices, thousands of NYC taxi drivers have been led down a path towards financial ruin. In tragic and unjust instances like this, it is the duty of government to intervene and prevent these big lenders from pocketing millions upon millions of dollars from working Americans under false loan advertisements,” said Clarke.
