Federal judge: IRS can’t keep coronavirus money from inmates

BOISE, IDAHO >> A U.S. judge says the IRS can’t keep withholding coronavirus relief payments from incarcerated people, potentially clearing the way for at least 80,000 checks totaling more than $100 million to be sent to people behind bars across the United States.

The ruling from U.S. District Judge Phyllis J. Hamilton late last month gives the IRS until Oct. 24 to reconsider the payments for those who were denied or had their money intercepted solely because of their incarceration. But for those behind bars who didn’t file a tax return in 2018 or 2019, another deadline is looming — they have until Oct. 15 to send a written application for the relief checks, or they may not receive them at all.

The federal agencies have filed a “protective appeal” to the 9th U. S. Circuit — which appears to be a placeholder of sorts designed to give officials time to decide if they’ll fight the ruling.

“The decision whether to proceed with the appeal will be made by the acting solicitor general, who has not yet made a decision,” U.S. Department of Justice tax attorney Julie Ciamporcero Avetta wrote in a court filing on Monday.

The legislation passed in March that authorized the payments of up to $1,200 per person during the pandemic doesn’t specifically exclude jail or prison inmates. Still, that’s exactly the claim that the IRS made a couple of weeks after the coronavirus rescue package passed.

On its website, the federal tax agency added a section that cited the unrelated Social Security Act in claiming that incarcerated people were not entitled to the funds. The IRS and U.S. Treasury Department also told corrections officials to intercept any checks that arrived at jails, prisons or detention facilities and return them to the federal government.

IRS spokesman Eric Smith declined to comment on Tuesday, instead referring questions to the Treasury. A Treasury official declined to comment.

In June, Smith was unable to provide the legal basis for the agency’s decision to withhold the funds.

Prison officials across the country followed the IRS instructions, intercepting hundreds of thousands of dollars.

“That was purely an invention of the Treasury and the IRS,” Kelly Dermody, an attorney with Lieff Cabraser Heimann & Bernstein in San Francisco, who is representing the plaintiffs, said Monday. “So the court is looking at the congressional legislation and saying, ‘ You can’t do something different than the legislation.’”