IRS to inmates: Return checks
Coronavirus relief funds sent to prisoners in what agency now calls mistake
BOISE, Idaho — Hundreds of thousands of dollars in coronavirus relief payments have been sent to people behind bars across the country, and now the IRS is asking state officials to help claw back the cash that the federal tax agency says was mistakenly sent.
The legislation authorizing the payments during the pandemic doesn’t specifically exclude jail or prison inmates, and the IRS has refused to say what legal authority it has to retrieve the money. On its website, it points to the unrelated Social Security Act, which bars incarcerated people from receiving some types of old-age and survivor insurance benefit payments.
“I can’t give you the legal basis. All I can tell you is this is the language the Treasury and ourselves have been using,” IRS spokesman Eric Smith said. “It’s just the same list as in the Social Security Act.”
Tax attorney Kelly Erb, who’s written about the issue on her website, says there’s no legal basis for asking for the checks back.
“I think it’s really disingenuous of the IRS,” Erb said. “It’s not a rule just because the IRS puts it on the website. In fact, the IRS actually says that stuff on its website isn’t legal authority. So there’s no actual rule — it’s just guidance — and that guidance can change at any time.”
After Congress passed the $2.2 trillion coronavirus rescue package in March, checks of up to $1,200 were automatically sent in most cases to people who filed income tax returns for 2018 or 2019, including some who are incarcerated. A couple of weeks later, the IRS directed state corrections departments to intercept payments to prisoners and return them.
The IRS doesn’t yet have numbers on how many payments went to prisoners, Smith said. But initial data from some states suggest the numbers are huge: The Kansas Department of Correction intercepted more than $200,000 in checks by early June. Idaho and Montana combined had seized over $90,000.
Washington state, meanwhile, had only intercepted about $23,000 by early June. Some states, like Nevada, have refused to release the numbers, citing an IRS request for confidentiality.
While the IRS says checks sent to jail inmates also should be returned, the sheer number of jails and detention centers across the country makes it difficult to tell if many are following those instructions.
The IRS seems to have decided by itself to pull back the payments approved by Congress, said Wanda Bertram, a spokeswoman for the Prison Policy Initiative, a think tank focusing on the harm of mass incarceration. She says prison officials are accustomed to intercepting tax documents to screen for potential scams, priming them to follow this request.
“It appears that the IRS is just making this up,” Bertram said.
Inmates and their families need the money, she said, especially as prisons try to reduce the spread of the virus by instituting lockdown conditions or releasing thousands of inmates who are then trying to get back on their feet.
Lockdowns can increase expenses for inmates because they are often given lower-quality food or fewer meals and need to supplement by buying food from prison commissaries. Family and friends on the outside often cover those costs, and many have lost jobs during the economic downturn, Bertram said.
Those inmates who are released before year’s end and who didn’t get a check can try to claim the missing money as a credit on their 2021 tax returns, but it’s not clear if the IRS will honor such claims, Erb said.