Bank Endorses Government Officials' Quest to Remove Income Tax Burdens Faced by Taxi Medallion Owner-Drivers from Debt Forgiveness
Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, announced today that it will support H.R. 5617, which proposes targeted legislative income tax relief for potentially thousands of embattled individual taxi medallion owner-drivers (many of whom are immigrants) hurt by the recent crisis in the taxi medallion industry.
Signature Bank has worked thoughtfully with its taxi medallion borrowers to find solutions that would allow them to continue driving their taxis and retain their medallions. In many instances, these solutions have included forgiving a significant portion of their debt. Over the past three years, Signature Bank has agreed to forgive over $75 million of principal debt for more than 250 medallion borrowers. Now, these owner-drivers face the prospect of having to pay income taxes on the cancelled portion of their debt upon the issuance of a 1099-C reporting the debt forgiveness. Signature Bank brought this to the attention of Congressman Gregory Meeks (D-NY), who immediately recognized the critical nature of the problem. The Bill, sponsored by Congressman Meeks, would enact an additional "exception to cancellation of debt income" to exempt these owner-drivers from paying income tax on their forgiven debt. The Bill is also supported by Congresswoman Grace Meng (D-NY), Congresswoman Nydia Velázquez (D-NY), Congressman Hakeem Jeffries (D-NY), Congresswoman Yvette Clarke (D-NY), Congressman Jerry Nadler (D-NY), Congressman Max Rose (D-NY), Congresswoman Carolyn Maloney (D-NY), Congresswoman Alexandria Ocasio-Cortez (D-NY), Congressman Adriano Espaillat (D-NY), Congressman José E. Serrano (D-NY), Congressman Eliot Engel (D-NY), Congressman Peter King (R-NY), and Congressman Tom Suozzi (D-NY).
Signature Bank made conservative loans to taxi medallion owner-drivers between 2008 and 2014. In 2015, the rapid intrusion of unregulated ride-sharing companies such as Uber and Lyft into the yellow taxi industries’ markets caused declining revenue, plunging medallion values, and severe economic hardship to taxi medallion owners across the country. Almost immediately, Signature Bank began working with borrowers to modify and refinance taxi medallion loans under performance stress with the intention of keeping owner-drivers in their cabs. In many instances, these work-outs included debt forgiveness to reduce the loan to a manageable level or resolve it completely.
"Supporting H.R. 5617 affords Signature Bank yet another opportunity to stand by owner-drivers, many of whom we have worked closely with to arrive at a manageable resolution of their debt. We hope this legislation passes to allow these hard-working individuals the opportunity to continue with their livelihoods and not be destroyed by the onerous financial burden they would face if they had to pay income tax on the forgiven debt," explained Scott A. Shay, Chairman of the Board at Signature Bank.
H.R. 5617 is important legislation that will ensure efforts taken by Signature Bank on behalf of taxi medallion borrowers and the industry will not be undermined by taxing phantom "income" arising from forgiveness of debt. It may also serve as an impetus for other lenders in the industry to follow Signature Bank’s approach towards restoring stability to the taxi industry.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 31 private client offices throughout the New York metropolitan area and Connecticut as well as San Francisco. The Bank’s growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.
For more information, please visit www.signatureny.com.
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