Pa. group sues federal officials over stalled relief payments
WASHINGTON — As Congress resumes negotiations for another economic relief package this week, thousands of low-income and disabled Americans have been blocked from receiving $500 checks for their dependents — a lingering issue from the first COVID-19 aid package that federal officials have suggested could delay the checks until 2021.
Last week, five Pennsylvanians and a Philadelphia nonprofit filed a lawsuit in the U.S. District Court for the Eastern District of Pennsylvania that argued the Trump administration deprived due process rights and failed to follow instructions in Congress’ $2.3 trillion aid package approved in March.
On Friday, lawyers representing the group filed a motion for preliminary injunction that demanded the U.S. Treasury Department and IRS give people more time to claim the direct cash payments for children.
“People really need this relief right now,” said Jennifer Burdick, an attorney with Community Legal Services of Philadelphia, which filed the suit along with Villanova Tax Law Clinic and a law firm, Berger Montague.
“They needed it two months ago,” she added.
The dispute stems from the frantic weeks in April and May following the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Congress — in addition to approving supplemental unemployment benefits and funding for small businesses, health providers and
local governments — directed the Treasury Department to send $1,200 cash payments to most Americans and $500 payments for children under 17.
While the process went smoothly for many Americans who had filed 2018 or 2019 federal tax returns, the department struggled to quickly identify individuals who receive only federal benefits. Those individuals receive Social Security retirement benefits, survivor or disability benefits or Railroad Retirement Board benefits and therefore would have no or minimal income to report to the IRS for tax purposes.
After some initial delays, the department eventually agreed to automatically issue $1,200 direct checks to those beneficiaries. But it required non-filers to file claims for the $500 checks for dependents through a hastily constructed online portal the IRS never directly announced to those beneficiaries.
The IRS issued a special alert on April 20 — communicated through a press release and social media accounts — giving people as little as about 48 hours to claim their payments through the online portal. Those who missed the deadline would be forced to wait until 2021 to receive their checks.
That quick window challenged a vulnerable population that inherently struggles with using computers and filling out government forms, Ms. Burdick said. “We were horrified” by the deadline, which came and went at a time social service agencies had closed and the IRS’ customer service was unavailable, she said.
Anywhere from 250,000 to 450,000 people missed the deadline or encountered unresolvable problems on the portal, according to an estimate last month from New America, a left-leaning research organization in Washington.
Even those who used the portal encountered a massive glitch that blocked payments.
A Government Accountability Office report released June 25 found up to 450,000 low-income people did not receive the checks for dependent children. On June 30, IRS Commissioner Charles Rettig testified to the Senate Finance Committee roughly 365,000 people did not receive the checks for dependents.
A spokesperson for the Treasury Department did not respond Monday to a request for comment about the lawsuit or status of payments.
The lawsuit comes as federal emergency checks, called Economic Impact Payments, have hit snags across the country.
Two weeks ago, Rep. Conor Lamb, D-Mt. Lebanon, and Mike Doyle, D-Forest Hills, joined a letter to demand the Trump administration resolve payment issues. The lawmakers, who joined five other Pennsylvania lawmakers, wrote their offices had fielded complaints from constituents regarding technical glitches and delays in processing tax returns that would allow the payments to be issued.
Mr. Lamb, in an interview last week, said his offices had received about 1,000 calls about the checks, a volume he characterized as “kind of a lot.”
“The most common situation was Social Security recipients who do not have to file income tax returns,” Mr. Lamb said.
“They were going to be a difficult population for the IRS to reach — I understand that — because they were trying to go through the tax filing system,” he said. “But our point was: It’s almost August, and this has been going on for a long time, and this is way too long for people to go without getting their check.”
The administration has not responded to the letter, Mr. Lamb said.
The suit argues the Trump administration violated the intent of the CARES Act, which directed distribution of these payments as “rapidly as possible,” while denying due process because a press release giving struggling Americans 10 days to navigate an online portal is not sufficient notice.
The suit pointed out the IRS granted non-filers who do not receive federal benefits until Oct. 15, 2020 — a period of more than six months — to access the same online portal.
Ms. Burdick said the request for a preliminary injunction requests people on Social Security and other benefits be treated like anyone else who doesn’t file taxes.
“They haven’t given us a real reason for distinguishing non-filers in this way,” Ms. Burdick said. “Just open up the portal to them.”
One of the plaintiffs, Willard McGruder, receives a total of about $1,500 a month from Social Security Disability Insurance and a small SNAP [food stamps] grant. During the pandemic, he has been struggling to provide for his two grandchildren, ages 2 and 7 years old, who rely on him completely for support, including food, shelter and other life necessities.
Mr. McGruder, who is nearly illiterate and does not own a computer, talked to a social worker who connected him with Ms. Burdick. But he ultimately missed the deadline and is owed $1,000 for his two dependents.