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Federal Judge Rules Prisoners Eligible for $1,200 Stimulus Checks; Must Apply by October 30

by Derek Gilna

In a clear victory for prisoners and their families, a federal judge has ordered the U.S. Treasury Department and the Internal Revenue Service (IRS) to make stimulus payments previously denied to people in prison and jail. Affected individuals must apply no later than October 30, 2020 for non-tax filers.

The September 24, 2020 order by Phyllis J. Hamilton, United States District Judge from the 9th Circuit, certified a nationwide class action of incarcerated individuals denied federal stimulus checks and issued a preliminary injunction requiring the IRS and Treasury to stop blocking such payments and expedite previously denied payments.

Although many federal and state statutes block current prisoners from enjoying certain government benefits, the language of the CARES Act, passed by congress after the COVID-19 pandemic erupted, does not.

The court's order noted that payments made on or around April 10th of 2020 showed that "84,861 payments totaling approximately $100 million (were made) to incarcerated persons." The court noted that the IRS on its own initiative, and without proper authority, said on its website on May 6 that “individuals who received a direct deposit payment in error should repay the advance refund by submitting a personal check or money order to the IRS.” That is no longer necessary. Furthermore, prisoners who did not previously file a claim are now eligible to do so. Eligible individuals can receive up to $1,200 per person, or $2,400 for married couples filing jointly. Only individuals earning less than $75,000 or $112,500 for heads of households or $150,000 for married couples filing jointly, are eligible.

The court further noted that Congress did not specifically exclude prisoners from receiving a stimulus payment, although it had the opportunity to do so. It said that the IRS administrative action blocking the payments did not comply with the language or requirements of the Administrative Procedure Act, by giving the public or affected individuals proper "notice and comment," rendering the agency action unenforceable.

The court noted that the members of the class were likely to prevail at trial.

The ruling said: “Within 30 days, defendants shall reconsider advance refund payments to those who are entitled to such payment based on information available in the IRS’s records (i.e., 2018 or 2019 tax returns), but from whom benefits have thus far been withheld, intercepted, or returned on the sole basis of their incarcerated status. Within 30 days, defendants shall 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...Within 45 days, defendants shall file a declaration confirming these steps have been implemented, including data regarding the number and amount of benefits that have been disbursed."

The national prisoner class is represented by the law firm of Lieff Cabraser. For specific information on how prisoners can get their stimulus check, visit this website: https://www.lieffcabraser.com/cares-act-relief/

See: Scholl v. Mnuchin, Case No. 20-cv-05309-PJH (N.D. Cal. Sep. 24, 2020).

Read the ruling here: Scholl v. Mnuchin, Case No. 20-cv-05309-PJH (N.D. Cal. Sep. 24, 2020)

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Related legal case

Scholl v. Mnuchin