New Yorkers are losing transport benefit money due to pandemic

Many commuters have considerable amounts of money tied up in transit benefits

‘I hear from people when they’re unhappy and this is one of the biggest things they’re unhappy about,’ says Gerry Bringmann, chairman of the Long Island Rail Road Commuter Council (AFP via Getty Images)

Any bit of savings helped when Eileen Damore was spending more than $400 (£290) a month to travel by train and subway from her Long Island home to her job at a printing company in Manhattan.

So she enrolled in a benefit that allows commuters to deduct up to $270 a month from their paycheck for transit expenses while lowering their taxable income. But when Ms Damore, a pricing manager, started working from home early last year because of the pandemic, the transit benefit kept being taken out of her paycheck until she remembered to stop it.

Now, she has $662.50 that she cannot use or get back.

“It wasn’t top of mind to stop the deduction,” Ms Damore said.

The unused benefits have become another headache for many commuters in New York, where more people use public transit than in any other American city and where the pandemic has emptied out subways, trains and buses.

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The benefits, which aim to reward commuters for taking transit to work, could now end up costing people money instead.

Many commuters have hundreds or even thousands of dollars tied up in transit benefits – money they earned and cannot use for other purposes like bills and mortgages. And they risk losing these benefits if they are laid off or change employers, or if they simply do not go back to taking public transit.

Before the pandemic, about 1 million people commuted daily to New York from surrounding suburbs, according to a 2019 city planning report. Of those commuters, about 61 per cent used transit, while 38 per cent drove.

“I hear from people when they’re unhappy and this is one of the biggest things they’re unhappy about,” said Gerry Bringmann, chairman of the Long Island Rail Road Commuter Council, an advocacy group for riders, who has received dozens of complaints about money locked up in transit benefits.

The issue has even fueled a black market for Long Island Rail Road passes, Mr Bringmann said. Commuters are using transit benefits to buy passes and then selling them at a discount to recoup some of their money.

A bipartisan congressional group representing Long Island and Queens, including Repsrisentatives Kathleen Rice and Thomas Suozzi, has urged the Treasury Department and the IRS to consider options to help people who have accumulated unused commuting benefits during the pandemic.

The Metropolitan Transportation Authority, which operates the subway, buses and two commuter rails, has called on the IRS to give riders access to their unused transit funds. The authority itself has offered more ticket flexibility during the pandemic by allowing riders to use transit benefits on 10-trip tickets instead of just monthly passes.

“The current regulations are creating a difficult situation for customers whose commuting patterns have changed,” said Pat Foye, chairman of the authority.

Existing rules already provide flexibility by allowing deductions to be reduced or stopped, a Treasury official said. The Treasury and IRS did not respond to questions for this story.

And some employers are giving commuters the option of applying unused transit funds to parking near their offices, which is usually not considered a transit expense, after the Treasury gave its approval.

But the economic shock set off by the pandemic has caused many people to lose their jobs and, under current regulations, they forfeit whatever funds they had accumulated under the transit benefits.

“Let’s be clear, this money belongs to the commuters,” said Ms Rice, a Democrat. “It is wrong that they cannot access it when they have either lost their job or have to work from home.”

Ms Damore knows what it’s like to see transit benefits disappear. In 2011, she had $500 set aside for her commute when she was laid off from a Manhattan pharmaceutical company. She never saw that money again.

Now, Ms Damore said, she felt like she was being penalised again because her work life had been upended by something out of her control.

“I feel the rules have to be reconsidered based on everything that changed in the pandemic,” she said.

A handful of cities including New York, San Francisco and Washington, as well as the state of New Jersey, have mandated that certain employers offer transportation benefits to their workers. In New York City, most employers with 20 or more full-time employees are required to offer the benefits.

Francena Amparo, 43, a legal assistant who lives in the Hudson Valley, did not sign up for the transit benefit this year because she still has $1,137 left over from last year. Ms Amparo, who used to spend $475 a month on a Metro-North train pass to commute to Manhattan, has been working from home during the pandemic.

“I’m unhappy because it’s a lot of money,” said Ms Amparo, adding that she could use the funds to pay down her bills. “Having that large of a sum of money sitting in an account – without access to it – is troubling.”

Under federal rules, any unused funds for transit benefits cannot be returned to commuters, though the money can usually be rolled from one year to the next depending on an employer’s specific plan. Some employers may charge fees to do so.

The pandemic has left many commuters uncertain about their jobs and commutes even as the nation inches toward recovery.

Paul Fitzpatrick, 59, a lawyer who lives on Long Island, has $1,060 in transit benefits. He does not know when or if he will be able to use the money since he started working from home.

“It’s very much up in the air what the company will look like once things return to the new normal,” he said. “I’m not certain I’ll go back to commuting.”

The New York Times