U.S. Rep. Gregory W. Meeks (D- Jamaica, Laurelton, Rosedale, Cambria Heights, Saint Albans, Springfield Gardens, The Rockaways, JFK Airport), 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.
“Taxi drivers have worked tirelessly for decades to serve New Yorkers. They have been an essential part of our city and have played by the rules. They have hit hard times through no fault of their own. These struggling drivers and medallion owners do not deserve to have their livelihoods ripped away from them. They desperately need assistance and we must step-up to help stop the suffering, and ease this crisis. I am committed to doing everything possible to accomplish that critical goal, and the Tax Relief for Taxi Drivers Act is an important effort towards providing relief for those who are hit with unfair tax bills. I’m proud to support this legislation and will work with Congressman Meeks to move it through the House,” said U.S. Rep. Grace Meng (D-Bayside, Flushing, Forest Hills, Fresh Meadows, Glendale, Kew Gardens, Maspeth, Middle Village, Rego Park).
“Taxi drivers across New York have endured crippling financial hardship over the past six years. In their pursuit of the American dream, taxi drivers were instead crushed by unconscionable loans and high tax burdens. Congressman Meek’s legislation will provide great relief to these drivers and I look forward to seeing this federal legislation pass,” said State Senator Jessica Ramos (D-Corona, East Elmhurst, Elmhurst, Jackson Heights, parts of Astoria, Woodside).
