A Company Should Not Ignore Its Tax Problems

Many cash-strapped companies fail to deposit its payroll taxes and unemployment tax. Unlike other creditors, Federal and state taxing authorities are not usually knocking at the company’s door demanding payment of money. The company may resolve to pay tax deficiencies later on, when cash is available, yet that day never seems to arrive, and the problem only compounds itself by acting as if it is not there. Eventually, tax collectors will appear and seek to collect the tax, penalties, and interest owed by the company. If immediate payment cannot be effected, the tax collectors may enter into an installment agreement. If payment is not made or an agreement not reached, judgments will be obtained and liens in the company’s property arise in favor of the taxing authorities for the amount of the tax, penalties, and interest due them. The taxing authorities will record notices of their tax liens in the register of deeds’ office of the county where the company is located, disabling the company from selling or mortgaging interests in real property, and impairing the company’s credit. If the company does not cooperate with the taxing authorities, the taxing authorities will seize the property of the company.

The taxing authorities may also seek to assess the company’s taxes due against the company’s “responsible persons”—those who controlled the company’s available cash, and used it to pay debts other than taxes. In the Federal scheme, such an assessment is called a “trust fund recovery penalty.” A misnomer, it consists of Federal income tax and Social Security tax withheld by the company from employees’ wages but not remitted to the Internal Revenue Service. It excludes employer matching Social Security tax. From the time a trust fund recovery penalty is assessed, the IRS has ten years to collect it. A Federal tax lien encumbers all property owned by the responsible person at the time the trust fund recovery penalty is assessed, or acquired by the responsible person during the ensuing ten years. The IRS records notice of the Federal tax lien in the register of deeds’ office of the county of the responsible person’s residence. In addition to disabling the responsible person from selling or mortgaging interests in real property, and impairing the responsible person’s credit, a notice of tax lien recorded against a responsible person may affect his or her ability to secure new employment or obtain credit for other business ventures. A trust fund recovery penalty is also not dischargeable in bankruptcy.

Under Internal Revenue Code Section 7202, anyone required to collect, account for, and pay over to the IRS any tax is guilty of a felony, punishable upon conviction by fine of up to $10,000, or imprisonment of up to five years, or both, for each offense.

New York state has a parallel scheme for holding officers personally liable for their business’ undeposited taxes. There are some things a company can do to protect its principals from personal liability for the company’s taxes:

• Keep spouse out of harm’s way. This should be a no brainer

• Retain competent counsel. A company with tax delinquencies needs to consult competent counsel about the problem. Inappropriate tax assessments may have been made against the company. The company may have grounds for seeking relief from tax penalties which have been assessed against it. The company may have made tax payments for which it has not been given credit. Perhaps the company should be advised to abandon its business entity. Certainly the company should be advised to allocate some of its monies to pay its tax obligations.

• Allocate voluntary payments. Often the best advice counsel can give a company struggling to pay its taxes is to make voluntary payments

• Do not delay without a good defense. A mistake commonly made by a company delinquent in paying its taxes is to avoid tax collection authorities. This is ill-advised, for many reasons. A cooperative working relationship with the taxing authority serves the taxpayer’s interests. There can be no such relationship if the taxpayer is evading the taxing authority. Taxpayer evasiveness will draw the ire of the taxing authority, prompting them to redouble their efforts against the taxpayer, and resolve doubts against the taxpayer.

Lesson to be learned…..DO NOT AVOID PAYMENT OF TAX LIABILITIES…your problems do not go away simply because you want them to. 

Is NYC Doomed by the Passage of New York State's TNC Bill?

What has been referred to as "Governor Cuomo's" bill has become law and allows Transportation Network Companies ("TNC"'s) like Uber and Lyft to drop off passengers in any of the 5 boros of the City of New York. While the law prohibits what is known as point-to-point transportation within NYC (pick up and drop off in any of the 5 boros of NYC), and prohibits pick-ups in NYC to any destination outside of NYC. Unlike other for-hire vehicles, Uber and Lyft (and other TNCs) will not be required to have special plates. In the old days, a vehicle with "straight plates" that picked up passengers would be considered to be "illegal gypsy cabs". I guess we have come a long way since the "good old days". While the law is supposed to evolve over time and should never stand still, this is a law that defies common sense. Does it make sense to have a vehicle that picks up a person and is paid for transportation to not have special plates like other FHV? Does it make sense to allow TNC's, who provide the same transportation as other as other car/limo services in NYC to not be regulated in the same manner? Does it make sense to kill off the taxi industry in the process of creating TNCs? Will TNC's really create jobs upstate. Does it make sense for the DMV to regulate TNC? Is the creation of TNC's in this manner the best way to provide the state with more transportation options? These are the tough questions that should have ben answered by lawmakers, but I guess it does not matter much to them as Uber and Lyft are here and here to stay.

Since Uber and Lyft are here to stay, lets look at the issue of regulation. One pat of the industry is heavily regulated and another part that provides identical service is not regulated. What a load of shit. Uber sold the state lawmakers and The Gov on this bill of goods. Uber sold the state lawmakers on the idea that they are the Salvation Army out to help the people. If you buy this, then you may want to consider buying a wonderful bridge I have for sale in Brooklyn. Lets look at the reality of enforcement of the prohibitions of this law because the devil is always in the details.

It will surely be a tremendous challenge for law enforcement (particularly the inept NYC Taxi and Limousine Commission) to identify TNC vehicles attempting illegal pick-ups while in NYC. How can enforcement identify such vehicles with ease when they have “straight plates”. Trip data from the TNC's may be exempt from disclosure under the state law. Also, a federal court recently declared the previously-longstanding practice of seizing unlicensed FHV's to be illegal. Unless there is a traffic violation, what basis would a cop or NYC Taxi and Limousine Commission enforcement agent have for stopping a TNC vehicle.

The future of the NYC for-hire industry is in the balance. While the NYC Taxi and Limousine Commission should develop effective enforcement plan to prevent TNC from illegally operating in NYC, the reality is that such is unlikely. The regulators job is to regulate what they have authority over and that is the rest of the NYC licensed bases. So the NYC regulators will likely impose more and more burdensome regulations on local car services, which will surely put many more out of business and make the rest, who are able to compete, to be at a severe disadvantage.  The only way to level the playing field and to be fair to all is to deregulate the entire industry...or at least hold NYC bases to the same standards of operation and enforcement as the TNCs. To do otherwise is an affront to the free market and a slap in the face to one of the pillars of our society....that all should be treated equally and all are entitled to fair play and substantial justice.

After practicing law for the past 20 years I can honestly say that I have become a bit bitter, jaded and cynical, at least when it comes to the law and justice. Most people simply do not realize that justice does not automatically happen. People are part of the system. Those people include lawmakers and judges. Most of all, those people include the electorate. State lawmakers and state executives like The Gov are elected leaders and they are not placed (or continue to be placed) in a leadership position unless they are elected or re-elected. Th best way to have your voice heard is to call your local assembly person or state senator, write a letter to The Gov, call the hotlines, go on social media, etc., etc.......but do something because doing nothing is not going to lead to anything good in the short or long run.

The Night Shanker saved NYC from Bankruptcy- 1975

On October 16, 1975, New York City was deep in crisis. At 4 p.m. the next day, four hundred and fifty-three million dollars of the city’s debts would come due, but there were only thirty-four million dollars on hand. If New York couldn’t pay those debts, the city would officially be bankrupt.

At the Waldorf-Astoria, in Midtown, seventeen hundred guests were gathering for the Alfred E. Smith Memorial Foundation benefit dinner, a white-tie fund-raiser for the Catholic charities named in honor of Al Smith, a former governor and the first Catholic candidate on a major-party Presidential ticket. As day turned to night, the bad news continued to come in. Banks were refusing to market the city’s debt, which left New York unable to borrow. Federal help was repeatedly refused by President Gerald Ford and his advisers. The only hope left was pension funds. And the only one that had committed to buying the city’s bonds—the Teachers’ Retirement System—was now pulling back.

The mood was grim as New York’s financial and political élite settled in at the hotel to hear the evening’s featured speakers, Robert Moses and Connecticut’s first female governor, Ella Grasso, try their hands at political comedy.

Abraham Beame, who was in his second year as the mayor of New York, was no stranger to the city’s budget and its challenges. During two stints as comptroller, he had seen the drop in manufacturing jobs, the wave of middle-class families moving to the suburbs, and the massive growth of the city’s labor force. He was aware of, and at times condoned, the gimmicks that were used to mask widening budget gaps, such as borrowing against city pension funds to run operating deficits for the city’s buses and subways.

Yet while Beame was described by allies and adversaries alike as kind and honorable, he also seemed paralyzed by the intensifying challenges of his office. Ed Koch, who was serving in Congress at the time and would go on to succeed Beame as mayor, later said “Abe Beame is an accountant, you know, but it’s hard to understand that he has that title.”

A few months before, in mid-April, the city had run out of money for the first time. Governor Hugh Carey was willing to advance state funds to allow the city to pay its bills under the condition that the city turn over its financial management to the state. This led to the creation of the Municipal Assistance Corporation, which was authorized to sell bonds to meet the city’s borrowing needs. (Its detractors referred to it as “Big mac,” because of its authority to overrule city spending decisions.)

The mac, which was chaired by the financier Felix Rohatyn, insisted on significant reforms, including a wage freeze, a subway fare hike, the closing of several public hospitals, charging tuition at the previously free City University, and tens of thousands of layoffs.

But the financial picture continued to deteriorate. Koch remembers hearing testimony before Congress about the city’s fiscal situation and thinking that “it was like somebody escaping from the Warsaw ghetto and saying they’re killing people there. Nobody believed it.”

At the Al Smith dinner, diners were working their way through what was being called a “bicentennial menu,” featuring Maryland terrapin soup and baskets of Colonial sweets. Speeches that had been loaded with humor in past years sounded notes of gloom.

Mayor Beame used his turn on the five-tier dais to excoriate Washington for refusing to bail out New York: “The problems were simpler and less complex in Smith’s day, and there even seemed to be a greater sense of responsibility on Washington’s part.” He then left the dinner to return to the debt negotiations.

Robert Moses, who had previously referred to the city’s leaders as “third-rate men,” simply paid tribute to Governor Smith. Only Governor Grasso tried to infuse some humor, joking that she must have been chosen to speak to the dinner because she was Italian, and that the cardinal and all the bishops “have been working for my people for many, many years.”

By ten o’clock, Rohatyn and others had learned that the Teachers’ Retirement System wouldn’t invest in more mac bonds. The Teachers’ trustee, Reuben Mitchell, said, “We must watch that investments are properly diversified, that all our eggs aren’t put in one basket.” Governor Carey left the dinner and phoned state and federal leaders with a simple message. Default was imminent.

The governor placed another call that night, summoning to his office a developer named Richard Ravitch, who had been serving as a minister without portfolio for the governor. When Ravitch arrived at the governor’s office, Carey was still in white tie. He told Ravitch to find Al Shanker, the powerful head of the teachers’ union, and convince him to buy the bonds that would save the city. A car and driver were waiting outside.

In his memoir, Ravitch would later write that when he got to Shanker’s apartment, Shanker “was genuinely distressed by his decision not to buy mac bonds. He knew the risks to the city, but he believed his primary obligation was his fiduciary responsibility to his teachers. As city employees, they had already been put at risk by the city’s fiscal crisis. It was no small thing to make their pension money subject to the same risk.” They talked until five o’clock that morning, but reached no consensus.

At the same time, Mayor Beame, convinced that there would be no stay of financial execution, had assembled a small team in the basement of Gracie Mansion. Ira Millstein, then a young lawyer at Weil, Gotshal, & Manges, prepared the legal filing.

Sid Frigand, the mayor’s press secretary, recalled the point at which the conversation turned not from if the city would go under but how. “We needed to figure out which services were essential, and which weren’t,” he said. “It was an interesting exercise because when you think of what is essential and what is not essential that there are functions of public service that we don’t know about that are very essential. Bridge tenders who raise and lower bridges were essential. Teachers weren’t life-or-death. Hospital services and keeping the highways open were essential.”

As the mayor’s team was making the list, Sid remembers looking over and seeing Howard Rubenstein writing on a pad of paper. Rubenstein was a sort of unpaid booster for New York City who was making his living doing public-relations work for many of the city’s real estate developers and unions. This magazine would later describe him as “ubiquitous, trusted, a kind of gentle fixer for those who run New York.”

Rubenstein and Beame were friends. At one point in the late sixties and early seventies, Rubenstein had lived across the street from Beame, in Belle Harbor, Queens. One of Rubenstein’s more vivid memories is seeing Beame on the beach, tucking a series of folded papers into his bathing suit. Rubenstein asked what they were, and Beame showed him that each was covered with tiny handwriting: he was writing a platform for his mayoral run. Here’s my program,” Beame said. Rubenstein’s response: “What happens if you go in the water?”

In 1974, on the power of that platform, Beame became mayor. And now, less than two years later, Beame was about to announce the bankruptcy of America’s richest and largest city.

As October 16th became October 17th, the mayor’s team was in constant contact with the mayor’s Contingency Planning Committee as they sought to determine how, exactly, a bankruptcy would play out. Police, fire, sanitation—those were essential. Hospital and emergency care were, too. But what would the mayor say? Rubenstein was working on the mayor’s statement. Even in the moment of crisis, there was some score settling. Beame had no love for the comptroller and wanted him implicated in the bankruptcy. The first words of the statement read, “I have been advised by the Comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today.…”

Rubenstein handed Beame the statement after many hours of work. The mayor looked at it, said nothing, and nodded. Rubenstein had it typed up. At 12:25 a.m., Beame attempted to call President Ford to advise him that default was imminent. Ford was asleep.

On the morning of October 17th, New Yorkers woke to a series of grim headlines. (“Balk by UFT pushing city to default,” in the Staten Island Advance; “Teachers Reject 150-Million Loan City Needs Today,” in the New York Times.)

The city ordered the sanitation department to stop issuing payroll checks, and one bank said it would not cash city payroll checks unless they were drawn on an account held by the bank itself.

New York City’s bonds, issued by the mac, plunged to between twenty dollars and forty dollars per thousand-dollar face value, and city note-holders began to line up at the Municipal Building in an attempt to redeem whatever they could. That morning, Rohatyn told the press that everything hinged on the teachers’ union: “The future of the city is in their hands.”

It was more than just the future of one city. New York’s bonds were held by banks throughout the United States and around the world. By some estimates, New York’s default would bring down at least a hundred banks, and expose others to liability for selling suspect or fraudulent products.

Economists warned that New York’s default would hurt the dollar abroad. The Dow dropped ten points at the opening bell, the price of gold began to rise, and, as reported by the United Press International wire service, “trading of bonds of other cities and states slowed to a near standstill, and even the prices of most credit-worthy bonds fell.” One newspaper in North Carolina ran a cartoon of a bum lying on trash, under the Brooklyn Bridge, with the caption, “We’re going down, America, and we’re taking you with us.”

President Ford began hearing from leaders around the world about the dangers of a New York default. His press secretary, Ron Nessen, said that Ford would continue to monitor the situation throughout the day, but wouldn’t change his mind about granting assistance to the city. In Nessen’s words, “This is not a natural disaster or an act of God. It is a self-inflicted act by the people who have been running New York City.”

Al Shanker, just a few hours removed from his meeting with Dick Ravitch, now went to Gracie Mansion to meet with Mayor Beame and former Mayor Robert Wagner. That meeting, too, yielded no consensus.

In the late morning, with the city’s 4 p.m. deadline looming, Shanker asked Governor Carey for another meeting. But since Carey’s office was swarmed with reporters, Shanker asked if they could meet somewhere private. Ravitch’s apartment, at Park Avenue and Eighty-fifth Street, was between Gracie Mansion and the governor’s office.

Ravitch still remembers how unprepared he was to host such a high-level meeting. There was so little food at his apartment that Harry Van Arsdale, the head of the New York Central Labor Council, began eating matzo he had found in the cabinet.

The teachers’ union was in a bind. Shanker later called it blackmail. If the city went bankrupt, a judge could order thousands of teacher dismissals, undo the raises the teachers had recently negotiated, and override any pension laws, stripping retirees of their pension checks.

Three hours into the meeting, Shanker left to meet with the Teachers’ Retirement System. Ravitch remembers that the only evidence of the momentous decision that had just taken place in his apartment was a trail of matzo crumbs.

At 2:07 p.m., the teachers’ union announced that it would reverse course and would make up the city’s hundred-and-fifty-million-dollar shortfall with their pension funds. “No one else was coming forward to save the city,” Shanker said.

The mayor’s statement, prepared by Rubenstein, was never read. Published for the first time here, it speaks in a workmanlike way to how grim a bankruptcy could have been. Only at the end is there a rhetorical flourish, referring to New York’s “great and continuing promise.”

The entire original article written by Jeff Nussbaum can be found here https://www.newyorker.com/news/news-desk/the-night-new-york-saved-itself-from-bankruptcy

When will the Elected Leaders of the State and City of New York Learn from Its Past Mistakes?

During the 1920s and 1930s, easy entry into the taxi cab industry led to an oversupply of taxis, resulting in traffic congestion, fare-cutting wars, low driver wages and other unsafe and sometimes illegal activities. The Great Depression created an influx of unemployed workers which worsened these problems, with the number of cabs spiraling to 21,000 in 1931.

To address problems of oversupply, in 1937 the City of New York enacted the “Haas Act” (sponsored by City Alderman Lew Haas) in order to freeze the number of taxi medallions. In 1996, 2004 and 2006, the City auctioned off a total of 1450 medallions. Thus, by 2012 the total cap was set at 13,237. While being a passenger in a taxi was not always the most pleasant of experiences, it was just another option for the millions of New York City residents and the multi millions of City visitors to obtain transportation for-hire on demand. Of course, demand always exceeded the supply of available taxis. That is why the value of the yellow medallion soared from $10 in 1937 to approximately $1,000,000 (one million dollars) in 2012. The purchase of the yellow medallion was one the best, if not the best investment in the world. It also provided many immigrants with the ability to realize the “American Dream”.

While the yellow taxis have traditionally served those persons who live and seek transportation in Manhattan, the non-medallioned “livery” industry has always served the residents of the 4 outer boroughs of New York City. The residents of Brooklyn, Queens, the Bronx and Staten Island always had a reliable car service to call to obtain transportation by pre-arrangement. By 2012, the livery industry has some 38,000 licensed drivers in 23,000 vehicles that were affiliated with approximately 450 bases.

As far back as January 2011, Mayor Bloomberg first proposed allowing non-medallioned livery vehicles to accept street hails (i.e., a person standing on the street waving to vacant taxicabs to be picked up, as opposed to a trip pre-arranged by telephone or other means) outside of Manhattan. With the help of the Mayor Bloomberg and then TLC Commissioner Yassky, the State legislature created a law, later known as the “Street Hail Law” that allowed the Mayor to issue up to 2,000 new taxicab medallions and allowed the TLC to issue 18,000 “HAIL licenses,” valid for street hails outside the Manhattan Central Business District. Thus, the creation of the green taxicab. These granny apple green cabs were supposed to provide the residents of the 4 outer boroughs of New York City with more transportation options.

Those who had been heavily involved in the for-hire transportation industry and knew much more than the elected leaders in Albany about what was good and what was bad for the transportation industry in New York City were essentially ignored. The leaders of the taxi and livery industry knew that the Mayor’s proposal and the state’s new law was a bad idea and vigorously fought it all the way to the New York Court of Appeals, New York State’s highest court. The Court of Appeals upheld the law as it is required to give great deference to enactments of the State Legislature when it comes to matters of health, safety and welfare of its citizens. Of course, transportation always involves the health, safety and welfare of the citizens of New York State and New York City.

On the implicit promise from the City of New York that these green cabs would be money makers, similar to the yellow medallions, and because the City was offering incentives for green cabs retrofitted to accommodate passengers in wheelchairs, many small time investors bought into this bad bill of goods. A new generation of immigrants who were looking for the same “American Dream” that their predecessors did via the yellow medallion, bought into the green cabs. All the while, there was this little know company named Uber that was lurking in the background.

The leaders of the taxi and livery industry knew at the time that Uber was operating illegally. They surely complained to the City Council, the TLC, the New York State Attorney General and even the Federal Trade Commission. All elected leaders and those in power ignored the pleas of the leaders of the taxi and livery industry to stop Uber from operating illegally. It was not a matter of Uber taking away business from the yellow taxis and the livery bases, but a matter of fairness. Two entities that provide the same service were being treated differently. The taxi and livery industry have always been heavily regulated, but Uber was not being regulated. This created an unfair playing field that is the antithesis of our American way of life that has thrived on fair play and substantial justice. This was the seed of the downfall of the industry. The City’s failure to regulate Uber created a vacuum that allowed it to expand in ways that Uber surely planned, but the City’s leaders refused to acknowledge.

The elected leaders of the City and the TLC took no action to regulate Uber. They all bought into Uber’s claim that they were not a transportation company, but a technology company. While I believe that Uber’s technology was surely excellent, I also believe in the old saying of don’t pee in my ear and tell me it is raining. By the time the City and the TLC got around to regulating Uber, it had become a behemoth with money, political power and influence. In no time at all, Uber’s fleet of vehicles eclipsed the number of yellow taxis….and then some.

I and many of my friends and colleagues in the for-hire vehicle industry pled to the City Council Transportation Committee and the Mayor to place a temporary cap on the growth of Uber until all interested parties could get a handle on what the effects of Uber were likely to be. The City’s leaders took no action and the City’s transportation regulators even took affirmative action to let Uber thrive. Before Uber’s explosive and unchecked growth, the yellow taxi industry was still doing well and the livery industry too. Then the TLC allowed a driver of a for-hire vehicle to accept dispatches form more than one base. This old requirement that a livery or black car vehicle be affiliated with only one base and its driver only be allowed to accept dispatches from that base was created for the safety of the public. All of a sudden, without any real reason or justifiable explanation, the TLC allowed drivers to accept dispatches from bases in which there was no affiliation. This was the equivalent of the ability to mint 18 carat gold bars for Uber because it allowed them to send dispatches to virtually anyone it wanted and thus expand its fleet in ways that few, except Uber, ever imagined.

Today, Uber and other companies such as Lyft, have an army of nearly 50,000 licensed vehicles that transport hundreds of thousands of people across the city every day. Uber and Lyft are rapidly transforming transportation in New York. They not only threaten the existence of the taxi industry, but they siphon passengers away from subways and buses, all while raising concerns over worsening street congestion. According to city data, the proliferation of Uber and Lyft appear to be contributing to increasingly gridlocked streets. Average travel speeds in the heart of Manhattan dropped to about 8.1 miles per hour last year, down about 12 percent from 2010. Uber and Lyft are also succeeding at the expense of others. The Metropolitan Transportation Authority has taken a hit to its budget because it receives financing from a 50-cent surcharge on taxi trips. Officials at the MTA say the shift from taxis to Uber has cost the MTA about $28 million since 2014.

So back to the taxis industry. Many of those who invested in yellow or green cabs have seen their investments wiped out. For-hire vehicle drivers are flocking to Uber with their false promise of making large sums of money all while being your own boss. Since 2013, approximately 5,000 taxi drivers have thrown in the towel. Those who own yellow medallions are either barely paying their loans back or are in foreclosure. Last month Queens-based Melrose Credit Union, one of the largest lenders of money to those who purchased taxi medallions, was seized by state after delinquent taxicab loans soared tenfold in just 18 months. The stock price of another one of the City's taxi lenders, Medallion financial Corp., has fallen so far that one share of its stock now costs less than a ride on a NYC subway. And lets not forget that the City itself has a financial interest in the sale of medallions as it takes a 5% transfer tax on each sale/transfer. This is much less money to go to the City coffers.

Moreover, the drivers that have flocked to Uber and Lyft are not looking at the big picture. Uber has made its plans to develop a self-driving vehicle very clear. In other words, the day will come very soon, when Uber will no longer need drivers. Then the for-hire vehicle drivers will have no work. The taxi industry will be on life support or dead and the out of work drivers will then cause the unemployment lines to swell.  Worst of all, the public just does not see the ills inherent in Uber and Lyft. Their explosive growth was made possible by luring riders away from taxis and the traditional modes of for-hire vehicle transportation (livery/community car services) with artificially low prices because they are being subsidized by a massive influx of cash by large pocketed investors. Uber has engaged in anti-competitive conduct since its inception. Competition has always been good for the consumer as it keeps prices low and the incentive to innovate high. This is why the law prohibits monopolies. So all while Uber and Lyft take all measures necessary to kill off the competition, they continue lure the public to their apps.

The public and the elected leaders of the City and State need to wake up and realize that at some point in the near future, the combination of significantly reduced competition with the eventual need for Uber to turn a profit, will lead Uber to drastically increase prices. When Uber has little or no competition, what options will the public have? Taxis may very well be gone, community car services will slowly be wiped out and the MTA is always in disarray, financial and otherwise. Uber will then be in the position to raise prices to whatever it wants and will be able to fleece the pockets of anyone with a smartphone. If we stay on this path, the public will have two options. One is to walk to their destination or be financially raped by Uber. Neither sounds like a very good option to me. And what will the elected leaders do then? Will they seek to regulate the prices of Uber trips? Will they create further regulations to stagnate the vitality of for-hire transportation in the City? Will they do nothing and just let the public deal with the problems? At this point in time, all I know is that the City and State have not learned the lessons from their past errors and mistakes. Someone needs to force the elected leaders of the City and State to open their eyes…or perhaps the public should just vote those with blinders on out of office.  

So at this point in time, what can the public do, short of voicing their opinion through the power of the ballots? The public can support their tried and true local car service. Don’t turn your backs on the liveries that provided transportation to the City during a past time in recent history, such as the late 80‘s and early 90s, when it was unsafe and unpopular to so, especially in the outer boroughs. Car services such as Carmel Car and Limousine Service and Dial 7 Car and Limousine Service have been in business since the late 1970's/early 1980’s and have apps that are just as good as the one created by Uber and Lyft. Carmel and Dial 7 have been there for the public in its time of need and now the public should return its loyalty to Carmel and Dial 7, and other livery bases, by refusing to utilize Uber and Lyft. Support your local car service is akin to only buying American made goods. Sometimes it may be hard to do so, but in the end, who will be the loser by continuing to use Uber which will allowing Uber to kill off the competition. The public will suffer. I speak my peace not because I have the magic 8 ball that allows me to see into the future, but because I care. I take the time to think about the future of our City, the needs of the public and the path to destruction that the transportation industry is now on. I hope that some elected leaders take a good long look at history, think about what I am saying/preaching in this article and give my opinions its due consideration and not let campaign donations and the desire to stay in office cloud their judgment. I also hope that members of the public think about what I am saying and use your good sense to realize that Uber is not the solution, but is the problem. 

The Reign of the Yellow Cabs is Surely OVER...but What Will the Riding Public Do When Uber is the Only Game in town?

The reign of the yellow cab in NYC is surely over. While the yellow cab itself may be a symbol of the city itself, the actual number of yellow taxis on the road is dwindling. The yellow cab may be as synonymous with New York as pizza, Broadway and the Empire State Building, but for more and more people, it is no longer the ride of choice. The yellow cab was once the main alternative to subways and buses, hailed by rich and poor alike. Cabdrivers were a kind of ambassadors of the streets. But the Yellow cab owners did not see what havoc that was going to be caused a few years back by a new form of technology. Now, fleets of cars are summoned by an army of "ride-hailing apps" like Uber and Lyft.

The yellow cab numbers are comparatively bleak: today, there are 13,587 yellow cabs on New York City streets. The total number of black cars: 60,000, more than 46,000 of which are connected with Uber, though they may be hooked up to other car services as well. Back in the pre-Uber days (the good ole days) around 2010, yellow cabs made 463,701 daily trips and brought in $5.17 million in fares during the month of November alone. Six years later, the numbers have not just dropped, but yellow cabs are on a fast downward trajector.

Uber and Lyft have flooded neighborhoods where taxis once flourished. And they appeal to a new generation of tech-skilled riders who live on their phones, ordering everything from groceries to books and movies. Uber and Lyft  (the so called “Ride-hailing apps) have gained a huge market share in a short period of time. They have expanded the market tremendously, but have also stolen market share from taxicabs and all other for-hire vehicle services alike. Yes, I said stole because they entered the market and operated illegally for so long that by the time the NYC Taxi and Limousine Commission got around to regulating them, it was too late to do anything. The means by which the public can obtain for-hire transportation has changed along with the expectations of the riding public. The new generation of tech-skilled riders want pretty much what everyone else wants, transportation on demand. 

Black cars have long served Wall Street banks and law firms, but they were not for casual or last-minute users because they had to be prearranged. Traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC. Both the liveries and the black cars have been hit hard  by the rise of Uber. Many of the long standing car services, like Carmel Car and Limousine Service, have been able to overcome the "Uber challenge" and adapt by having an app of its own that provides pre-arranged transportation and what also amounts to transportation on demand.  

While the yellow taxis have ben hit hard, the livery and the black car bases have been harmed as well and such harm to the car services has caused harm to the public in ways that most people are not aware. Since traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC, the rise of Uber has caused many drivers to deflect from the traditional car services in order to drive for Uber. This has caused those people who live in Queens, Brooklyn and the Bronx to have less means available for transportation. Unlike in Manhattan, not everyone who lives in Queens, Brooklyn and the Bronx (and Staten Island too) have quick access to the subway or other public transportation. These residents have always relied upon livery bases to provide reliable transportation. Contrary to popular opinion, Uber is not so readily available in Queens, Brooklyn and the Bronx. So what are those residents supposed to do to get to work, to the doctor and to the food store. 

Fortunately, some car services, like Carmel, have been able to adapt to the changing needs of the public and continue to provide the arrangement of safe and reliable transportation for the riding public. But this is not true of all livery bases. Many have either died or are dying a slow death. They don't have the money or technology to compete with Uber. Just like the taxi's, some car services have been rendered irrelevant. 

While most people will take a hands off approach and say that if Uber is winning the transportation game by having a better product and service, then so be it. But the problem is that it is not that Uber's service is better than anyone else, but that Uber has gotten to where it is by competing on a unfair playing field. Uber has engaged in many underhanded tactics in order to lure drivers away from other car services and to get people to use their service rather than the service of the long standing car services. The Federal anti-trust laws were set in place in the late 1800's in order to prevent illegal monopolies and unfair competition. The problem is that the NYC government and the NYC Taxi and Limousine Commission let Uber operate in an unregulated manner for so long, that it expanded in ways that those who are properly regulated, were not permitted to do so. This is tantamount to improper favoritism by a municipal entity. This is not competition on the merits, but an un level playing field that the City of New York was instrumental in causing.  

 In the old days, taxis were the only ones allowed to pick up people on the street. But now, with smartphone apps that can dispatch cars in minutes, there is little practical distinction between taxis and Uber. This is the whole point....while there is little practical difference between the means by which Uber and other for-hire vehicles operate, the New York State government, and particularly the governor, is trying to push legislation forward that will allow Uber to essentially operate throughout the state with very little if any regulations. It is important to keep in mind that compliance with regulations is a large cost of doing business for the for-hire transportation industry. If Uber does not have to be regulated or regulated in the same manner as other for-hire transportation providers, then the State Government is also seeking to become complicit in creating an unloved playing field between Uber and all other for-hire transportation providers. 

In the end, this un level playing field is going to be detrimental to the riding public. Most people do not see it just yet, but consider this: what will the riding public do when Uber is the only game in town? and what will the riding public do when Uber decides to no longer subsidize the cost of trips for the public. When Uber becomes a true monopoly and there is no other service available, do you think Uber will still charge competitive prices. Of course not. They will squeeze every last nickel from the riding public and there will be nothing anyone can do about it. Then the public will have no choice but to pay the high prices Uber will demand. This is true because the public has become so heavily reliant on obtaining transportation on demand that they will pay the high costs, but what about those who previously relied on the car services in the outer boroughs for transportation. Livery services that used to be the low cost means by which those in the outer boroughs relied upon, will not get transportation because the car services they used will be gone and this sector of the public will not be able to afford to use Uber. 

So service expands in Manhattan but severely contracts in the outer boroughs. Isn't this what happened with the yellow cabs? They became a government backed monopoly that provided service primarily only in Manhattan and had no incentive to innovate and provide better service. So what will Uber do when it is the only game in town. They will not only charge high prices for transportation, but will have less incentive to make their app more user friendly to the public....and once again the cycle continues.... with the public having little choice in service providers and being forced to pay high prices. The difference here is that the City and State Government have taken away the government backed monopoly of the yellow cabs and made Uber a defacto government backed monopoly.  

Lets face it, the yellow cab industry is in sharp decline and long standing car services being forced from the market because Uber pays politicians to write laws that are favorable to them....and the politicians are all too happy to take campaign contributions from Uber. That’s it. End of the game. Politicians who make the laws are favoring one company over another and are seeking to change the laws to allow Uber to operate essentially how Uber sees fit. The best thing that the riding public can do is to contact their local City Council member and the elected officials in the Assembly and Senate in order to express frustration and outrage over what the state is proposing. Write a letter to your elected official, make a call or do anything to bring awareness to the public of the ills that Uber is causing. 

Remember, it is you, the riding public, that elects the officials that are allowing Uber to wreak havoc on the for-hire transportation industry. You have the right to call them up and tell them your opinions. You have the right to vote for someone else who does not so obviously favor Uber. You can do many thing, but the option to do nothing is not a good option because doing nothing now will only cause problems later on. Remember the old saying...you can ignore your problems, but ignoring them will not cause your problems to go away. 

Take a look into the future and think for a moment what will happen when Uber is the only game in town. In the 1800's, Standard Oil was essentially the only game in town and look how they caused harm to the public. This is why the US Supreme Court ordered Standard Oil to be broken up into many smaller entities. Because consolidation of power in the hands of one is a danger to the public that is anathema in our democratic society. 

How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and groping; kidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Uber investors expect big results, but can Uber produce? Not so far.

Uber’s business strategy has involved trampling government regulations and daring the relevant regulators to do something about it. That strategy has been worked so far, but regulators and the public have begun to show more spine in the face of Uber’s arrogance. Meanwhile, financial analysts have been turning a more critical eye on Uber’s growth and profit potential, and not always liking what they see. Whether the company can sustain its putative $65 billion valuation — derived not from actual financial results, but on the expectations of private investors — is in question.

Uber’s current strategy of dominating local taxi markets depends heavily on the cooperation of regulators (or on intimidating them) and maintaining a positive image with the public. As far as their image, Uber seems to follow the old adage that there is no such thing as bad public relations. To them, all news on Uber is good news. But in public view there are so many horror stories of customers getting assaulted that it astounds me that anyone would ever use them.

On the regulatory front, just two weeks ago Uber agreed to pay $20,000,000.00 ($20 million dollars) that it had systematically deceived drivers about their potential earnings and the terms of a lease deal it offered to help them acquire cars. Uber got away without admitting or denying the charges, but a picture has been painted as a result showing a company that engaged in wholesale deception in order to recruit drivers. In 2014 and 2015, the FTC said, Uber asserted on its website that its UberX drivers earned median incomes of more than $90,000 a year in New York. The truth, according to figures from 2013 to 2014, was that the median driver’s income was only $61,000 in New York. Fewer than 10% of all drivers in New York made as much as Uber had claimed.

Meanwhile, in 17 markets including Los Angeles and Orange County, Uber placed help-wanted ads on Craigslist offering the enticing prospect of making as much as $25 an hour, even driving part-time. In truth, the FTC said, only a fraction of drivers could clear that much. For example, in L.A. and Orange County, where Uber quoted fares of $20 an hour, fewer than 20% of the drivers reached that mark.

Uber’s representations about its auto sales and leasing program were also deceitful, the FTC said. From 2013 through mid-2015, some 7,000 drivers signed up with three subprime auto financing companies with which Uber made deals for a four-year “lease to own” arrangement or installment credit exclusively for its drivers. Uber claimed the drivers would get preferential interest rates, the FTC said; instead, many were saddled with higher rates than other buyers with similar credit scores — in some cases more than double. The bottom line is that Uber has ahabit of doing what it wants regardless of law

Uber is also running up against labor regulators calling foul on its claim that its drivers are independent contractors not entitled to the benefits of employment. The New York State Department of Labor has ruled that two former drivers are entitled to unemployment compensation. The ruling follows a similar one in 2015  by the California labor commissioner for a San Francisco driver. And in Seattle, Uber has just filed suit to invalidate a 2015 city law that gave its drivers, and those for other such services, the right to unionize. 

These battles strike at the heart of Uber’s business model, which depends on flooding markets with platoons of drivers, sticking them with such expenses as gas, insurance and maintenance, and skimming 25% of the fare off the top. Drivers get the benefit of being linked with passengers via Uber’s ride-hailing app, but they’re powerless to control their fares, which Uber sometimes discounts to attract passengers, or the level of competition. Uber’s interest lies in hiring as many drivers as it can for a given market; the drivers, however, end up cannibalizing each others’ opportunities.

This looks like a win for Uber and its investors, but the scanty financial information that has dribbled out about the firm’s revenue and earnings suggests that it’s nothing like a profit-making machine. Bloomberg, reporting from unofficial sources, calculated that Uber lost more than 2.2 billion in the first nine months of 2016, including $800 million in the third quarter alone. Is that really a path to profitability?

Financial analysts are beginning to question whether Uber’s profit potential is all it’s cracked up to be. Transportation industry experts have interpreted Uber’s losses as implicit subsidies to attract riders, meaning that riders were paying only 41% of the cost of their trips. The question is how Uber would keep their business if fares had to more than double to allow the company to break even.

Additionally, Uber’s growth seems entirely explained by its willingness to engage in predatory competition funded by Silicon Valley billionaires pursuing industry dominance. Uber’s business model is focused on the pursuit of monopoly power. But that’s an expensive global quest, and there’s no telling how long Silicon Valley venture investors will bankroll it. Uber already lost the battle in China, potentially a transportation goldmine. Uber gave up the battle in China last year, selling its subsidiary there to domestic company Didi Chuxing — which has hinted that it might wish to expand to new national markets. 

Perhaps in recognition of the limitations of the ride-hailing market, Uber is investing heavily in self-driving cars. But launching its own fleet of vehicles would mean a drastic transformation of its business model. Whether its investors will keep their money in a hardware company rather than a purveyor of software isn’t clear.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Time to Consider Deregulation of the FHV industry

Deregulation in the for-hire vehicle industry is something that should be seriously considered these days. It is obvious that the New York State government, in its various versions of the TNC (Transportation Network Company) bills it has recently created, proves that while there is virtually no difference in the service provided by a TNC like Uber, from that of the traditional car and limousine service, the various services are being treated differently, all without any real reason or rationale. Can someone really tell me with a straight face that providing transportation via a TNC is not transportation for hire? Is the State Legislature and the Governor going to serious claim that the provision of transportation via a TNC is not a commercial transaction. Ride Sharing is simply a misnomer. While the ride can technically be shared by more than one person, we are no talking about legalized hitchhiking. It is a commercial transaction for which a service is being provided to one person and that person is paying for the service. At least create rules that are the same for all services. Otherwise, the playing field is hardly level and will only lead to destruction of all for-hire transportation providers other than Uber and Lyft.

While new competition from all sides of the car service industry are forcing operators to improve their business, it is impossible to adapting through improved driver retention and customer service when Uber and Lyft are able to operate the same type of business as a traditional car service but can play by rules which are either non-existent or so lenient as to make it unfair competition. If there is going to be regulations, then there should be regulation for all that provide the same service. Otherwise, the government should de-regulate the entire industry.

Transportation deregulation in the airline, railroad and shipping industries have produced enormous benefits for consumers. Airfares are down sharply; trucking rates have fallen; the nation’s railroads are offering new services. A few years ago, passenger and freight transportation were among the most heavily regulated industries in the United States. Now much of the red tape regulation has been totally eliminated.

This wave of deregulation stems from a growing recognition that government controls of transportation have not fostered the public interest. Regulatory agencies tend to protect the interests of the industries they regulate. Studies by experts representing the whole spectrum of political persuasion have confirmed that regulatory agencies reduce competition at the expense of the public. Typically, industry-oriented individuals are appointed to commissions, often from industry itself. Once in office, regulators perceive their duty as protecting the financial health of the companies they regulate. The easiest way to accomplish this is to reduce competition, thereby increasing rates and creating monopolies. This seems to be the exact case in New York City and soon to be throughout New York State. 

Uber to pay $20,000,000.00 to settle unfair practice claims

Uber just settled a claim filed by the FTC (Federal Trade Commission) forcing them to pay $20 million and alter various business practices including misleading their own drivers on how much they would make driving for Uber. 

Uber apparently had inflated its hourly drivers' earnings in its ads in order to attract drivers to its company. But once Drivers started to receive their paychecks, they discovered that their actual earnings were substantially less than Uber claimed. Additionally, Uber's vehicle solutions program, which helped drivers find vehicles to lease or own, advertised the "best financing options available." Yet, drivers who leased through the platform received worse rates than customers with the same credit score would typically obtain.

According to the FTC, many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber. The company is now barred from misrepresenting drivers' earnings and financing and lease terms for its vehicle leasing terms.

While this settlement may put millions of dollars back in Uber drivers’ pockets, the real issue is how long are the Uber drivers going to allow themselves to be taken advantage of. Uber claims to be the best option for anyone looking to earn money on their own schedule, but the reality is that they control your every move and in the long run, that are going to seal your own fate. It is public knowledge that Uber wants and is in the process of creating a driverless vehicle….and they will eventually get it. When that happens, a large part of the competition will be eliminated and you will be left with no job because they will not need you any longer. All you will have been left with is the forms to fill out to get unemployment….and I am sure Uber will fight you on that too. Don’t be fooled. Uber is not the company you should be driving for. Go and stay with a car service that has been around for decades, knows how to treat its customers and respects its drivers. To accept anything less, is not fair to you. The drivers of New York City deserve better.