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Legal and tax status of ‘gift’ raised by free MetroCards in bus strike

February 20, 2013 By Charisma L. Miller, Esq. Brooklyn Daily Eagle
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After a monthlong strike, the New York City school bus drivers have returned to their routes.  The strike forced thousands of students—many of whom are disabled—to take taxis, public transportation or car services to school.

To help alleviate the financial burden of unexpected transportation costs, the Department of Education announced, at the beginning of the strike last month, the DOE would reimburse parents for the cost of transporting their child(ren).

In addition to receiving reimbursements for gas and/or cab services, free 30-day unlimited MetroCards were available for students and parents alike.  The 30 days began at the time of the first swipe.

Now the DOE is asking for those cards back. New York City Schools Chancellor Dennis Walcott remarked “now that yellow bus service is resuming, parents please return any MetroCards you received during the strike to your child’s school.”

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But were the MetroCards a gift from the DOE given free and clear? In general, a gesture is considered a gift if there is an intent to give, acceptance of the gift, and finally delivery of the gift.

When the DOE offered free MetroCards , one could argue that there was an intent to give. There was delivery and acceptance of the gift when a parent retrieved the MetroCard from the department.

“The elements may be present,” said Brooklyn attorney Jeffery Peltz. “But I am not sure I would go out on a limb and consider this a gift under New York law,” Peltz continued.  

A tax specialist from Connors and Sullivan confirmed Peltz’s assumption. “Corporations and governments cannot give gifts,” noted the specialist who asked to remain anonymous.

The DOE reportedly spent roughly $20.6 million in transit cards, taxis and gas mileage to get tens of thousands of stranded students to school during the strike.  “The monthly cards were pre-purchased by the City,” an MTA spokeswoman told the Brooklyn Daily Eagle. “The cards purchased were monthly cards that automatically expire after 30 days.”

Citing costs, the DOE is requesting that the cards be returned immediately.  Once the cards are returned the department, it will in turn return the cards to the MTA. “Returning cards to the MTA will help reduce the total cost to the DOE,” noted Erin Hughes, a DOE spokesperson.   

For unused cards “the MTA will provide credit to the DOE,” Hughes said. For parents who started using their cards after the first day of the strike, the cards may contain unexpired time. In these instances, “The MTA may provide credit to the DOE for the unused portion of these cards,” Hughes concluded.

The DOE did not indicate whether or not there were penalties for not returning the MetroCards.

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