Federal judge rules against Treasury and IRS again
The incarcerated are entitled to stimulus checks
At first, the IRS said inmates were eligible for stimulus payments up to $1,200.
Then the agency walked back that decision, telling correctional facilities to intercept stimulus checks that the agency had already issued. Spouses of the inmates were told they had to return the part of relief money intended for incarcerated individuals.
The Coronavirus Aid, Relief, and Economic Security (Cares) Act provides economic impact payments or stimulus payments of up to $1,200 for individuals and $2,400 for taxpayers filing a joint tax return. There was nothing in the law prohibiting prisoners from receiving stimulus payments.
A class-action lawsuit was filed on behalf of inmates in local, state and federal facilities, arguing that the IRS actions were unlawful. Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California agreed, saying the decision to withhold the stimulus payments was “arbitrary and capricious.” Hamilton ordered the Treasury Department and the IRS to send the relief money and to do so within certain deadlines.
Still not chastened, the Trump administration appealed. Last week, Hamilton again smacked away efforts by the government to stop the distribution of the payments, entering a final summary judgment. And the judge is making the IRS give inmates additional time to claim their stimulus money, moving an initial Oct. 30 deadline to Nov. 4.
The judge also ordered that the IRS send out a notice that correctional facilities officials should give to prisoners about the court’s decision. The agency would also need to mail blank 1040 forms for inmates and instructions on how to fill out the paper return to ensure that every eligible person in each facility has a packet in time to file a claim, said Kelly Dermody, a partner with San Franciscobased Lieff Cabraser Heimann & Bernstein, one of the law firms representing the plaintiffs and class-action members.
The plaintiffs are also represented by the nonprofit Equal Justice Society, which advocates against inequities in the criminal justice system.
“Hopefully this is the last of it,” Dermody said. “They have already wasted a lot of taxpayer money chasing after checks that