Schumer urges IRS to release unused transit funds to LIRR customers

Senate Majority Leader Chuck Schumer on Monday vowed to propose legislation, if necessary, to force the IRS to refund unused transit funds to thousands of Long Island Rail Road customers.

Schumer gathered with state Sen. Todd Kaminsky (D-Long Beach) and several transit advocates at the Merrick LIRR station to call on the Internal Revenue Service to address the dilemma faced by several current and former LIRR riders. The riders stopped commuting during the pandemic and now find themselves with hundreds of dollars sitting in accounts administered by programs such as WageWorks.

Internal Revenue Service regulations prohibit account holders from receiving refunds, or from using the money on anything other than transit costs.

"Riders across Long Island still can’t unlock money they saved up and set aside for their commutes amid the COVID uncertainty," said Schumer, who was accompanied by three LIRR commuters who, collectively, have about $3,000 stuck in pretaxed transit accounts. "This is a lot of money, and this money is imprisoned by the federal government … Let these folks get their money."

Schumer wrote a letter to IRS commissioner Charles Rettig urging "flexibility" on rules governing pretaxed transit benefits. If that doesn’t work, Schumer — the Senate’s top Democrat — said he would pen legislation to "force a fix," potentially as part of a broader infrastructure bill.

IRS officials did not respond to a request for comment. In written responses to lawmakers seeking a resolution to the problem, IRS representatives have noted that commuters enrolled in pretax benefit programs are able to stop or reduce their withholding at any time, and that account funds remain available to them for future commuting costs.

To provide additional flexibility for affected customers, the LIRR in January announced that it would allow riders with funds in Mail & Ride monthly ticket accounts to use the money to purchase other kinds of tickets, including single trips.

But that’s of little use to former LIRR rider Christine Gietschier. While working from home, the Westbury resident let $1,600 build up in her transit account, assuming she would one day return to commuting full-time. Upon retiring earlier this year, Gietschier said she’s been "writing anybody and everybody" trying to get her money back, even if she has to pay taxes on it.

"They have to come to some sort of a solution It’s not rocket science," Gietschier said. "It’s our money. It just needs to be taxed. You tax everything else, so why can’t you tax this money?"

Kaminsky, who was among the first elected officials to push the IRS to address the problem, said he’s heard from many Long Island families similarly frustrated that they cannot recoup their earned wages deducted for transit. He expressed confidence that Schumer’s intervention would yield a resolution.

"This is the beginning of the end of this problem," Kaminsky said.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.