NYC Taxi Bailout Plan May Provide a Bonus to the IRS

As an attorney who has had his finger on the pulse of the taxi industry since the crisis began in early 2016, I am compelled to comment when I think that an injustice is occurring

Although, on the surface, the NYC restructuring program with Marblegate/Depalma/Fieldpoint that formally rolled out on September 19, 2022 looks promising on the surface, an issue that had held the rollout back until now has not been adequately addressed – namely the tax consequence of the loan reduction.

Since this issue has not been adequately resolved, it has been buried in a general disclosure and disclaimer that most taxi owners may be missing since their pro-bono counsel have just made the possible tax consequence of the forgiveness of debt a “check off” on the disclaimer in their retainer rather than properly advising drivers that the real cost of these loan reductions could exceed $100k in tax liabilities if a Form 1099-C is issued to a driver and filed with the IRS by Marblegate, or any of its affiliate companies

The only way to avoid the possible tax consequence is for a driver to first file for Chapter 7 bankruptcy, receive a discharge, and then enter the restructuring program. In this manner, the personal liability under the promissory note is discharged, and the lender cannot issue a Form 1099-C.

The above is the opinion of this attorney and should not be relied upon solely on its face by any reader. Every driver’s situation is unique, and must be analyzed to seek the optimal solution for each driver. This writer strongly urges every driver who has not yet sought bankruptcy protection to seek independent counsel before executing any documents under the NYC program.