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Confirmed: Inmates Eligible For Cares Act $1,200 Stimulus Checks From IRS; Here’s How To File

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On October 14, a district court for the Northern District of California granted summary judgment in Scholl v Mncuhin, a case that challenged the IRS’s policy of excluding inmates from receiving $1,200 stimulus checks. The court also made permanent the preliminary injunction it had issued earlier this month, which means that the IRS and Treasury Department cannot withhold stimulus checks solely based on an individual’s incarceration status. The government could still appeal the court’s ruling again (it was denied by the 9th Circuit), but the permanent injunction should be cause for celebration for the over two million incarcerated individuals in the U.S. who may now be eligible for an economic impact payment.

Arbitrary And Capricious Policy

The case was initially filed on August 1, 2020 in response to the IRS unilaterally deciding that incarcerated individuals do not qualify for a stimulus check. In an answer to a frequently asked question on its economic impact payment information center, the IRS wrote in May that “payment made to someone who is incarcerated should be returned to the IRS.” Many legal experts challenged the basis for the IRS’s move, arguing that it acted “beyond its authority, perhaps even illegally.” There is no mention of incarcerated individuals in the CARES Act, which some argue makes the IRS position wrong because it “contravenes the clear text” of the Act, according to Patrick Thomas of Notre Dame Law School.

MORE FROM FORBESIRS Must Pay $100 Million Worth Of $1,200 Stimulus Checks, Judge Orders In Prisoners' Lawsuit

The district court agreed, finding the IRS’s policy of withholding stimulus payments “arbitrary and capricious and not in accordance with law.” It ruled that the IRS was not authorized to withhold payment from incarcerated individuals solely because they are or were incarcerated. It converted its preliminary injunction, issued on September 24, 2020, into a permanent injunction and gave the IRS and Treasury Department 30 days from the initial ruling to reconsider stimulus payments for individuals who are entitled to them based on information that the IRS has from 2018 or 2019 tax returns. Furthermore, the court ordered the IRS to reconsider any claim filed through the “non-filer” online portal “or otherwise that was previously denied solely on the basis of the claimant's incarcerated status.”

The rapid pace of the case and summary judgment reflected the strength of the plaintiff’s claim and the inherent flaws in the IRS policy. “For a case initially filed on August 1, 2020, getting summary judgment in 75 days can make your head spin,” wrote Keith Fogg in a blog post on Procedurally Taxing. “Rarely does a case move so fast and so favorably. It helps that the IRS took a position unsupported by the statute and that it inexplicably reached this position after reversing itself,” he added.

How Inmates Should File For Stimulus Checks

Inmates and their loved ones should move quickly, given the impending deadlines to submit a claim and receive a stimulus check in 2020. Here are some useful tips based on information from a dedicated page, www.caresactprisoncase.org, set up by Lieff Cabraser Heimann & Bernstein, LLP and the Equal Justice Society. Impacted individuals will find resources as well as a contact form to reach out to lawyers at Lieff, who are representing the Plaintiffs and the Class. “If you or your loved one is currently serving time in a state or federal facility or was recently released, please contact us for more information about your rights by filling out this form,” the site states. “Your inquiries in pursuit of legal advice are privileged and confidential, and you will not be charged a fee to speak with us.”

If you already filed a claim before September 24: Many inmates filed a claim and were rejected or had their stimulus check intercepted and returned. Based on the court order, the IRS must automatically re-process your claim by October 24, 2020. You can check the status of your payment on the IRS’s portal: www.irs.gov/coronavirus/get-my-payment. If you do not receive payment by November 1 and do not see it scheduled on the Get My Payment portal, Lieff recommends reaching out to one of its lawyers.

If you filed a 2018 or 2019 tax return or if you receive Social Security Benefits or Railroad Retirement Board Benefits: You do not need to file a claim. The court directed the IRS to reconsider stimulus payments if it had information, including from 2018 and 2019 tax returns. The IRS should, therefore, process your payment automatically by October 24, 2020. Similar to the advice above, you should check the status of your payment on the IRS portal and contact a lawyer if you haven’t received payment or seen it scheduled by early November.

If you did NOT file a 2018 or 2019 tax return and your income was below $12,200 as an individual or $24,400 if filing jointly in 2019: You should file a claim, ideally through the IRS’s website utilizing its Non-Filers tool. Alternatively you can file a paper application. Please see this page for instructions from the IRS. Please note that “if you file online, the IRS requires that you answer line 9 of the form, in addition to other required lines (An answer to line 9 is not required for paper submissions.).”

Important Deadlines

If you are filing a paper claim, your claim must be postmarked by November 4, 2020.

If you are filing online through the IRS’s Non-Filer tool, your claim must be filed on or by November 21, 2020.

The Upshot

The speed of the district court’s ruling means that up to two million incarcerated individuals in the United States have a chance to receive their rightful stimulus checks this year. However, they need to act quickly given impending deadlines to file claims. If you are incarcerated or have a loved one who is, help spread the word and ensure eligible individuals receive their stimulus.

Related Reading:

IRS Must Pay $100 Million Worth Of $1,200 Stimulus Checks, Judge Orders In Prisoners’ Lawsuit

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