IRS Ordered to Extend Deadline After Barring Incarcerated People From Collecting Stimulus Payments

Nicole Rojas
Oct 13, 2020 - 11:24

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The Internal Revenue Service (IRS) cannot exclude incarcerated people from receiving federal coronavirus stimulus checks, a U.S. judge in California ruled. Months after the IRS sent conflicting information to incarcerated people about the stimulus funds, the agency must set a new Oct. 30 deadline that allows incarcerated individuals to claim their stimulus checks. 

In a preliminary injunction on Sept. 24, U.S. District Judge Phyllis Hamilton ruled that the IRS’ decision to exclude incarcerated individuals from the $1,200 checks was “arbitrary and capricious,” The Los Angeles Times reported. Hamilton ruled in favor of two Californians who filed a class action lawsuit on behalf of 1.5 million incarcerated people nationwide. 

A June report by the Treasury Inspector General for Tax Administration (TIGTA) revealed that the IRS initially sent $100 million in payments to nearly 85,000 incarcerated individuals. TIGTA raised issues with the payments, prompting the IRS to reverse its decision and claim that the payments to incarcerated people were not allowed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The judge said that nothing in the CARES Act barred those incarcerated from receiving the stimulus funds.  

“The statute mandates distribution of the advance refund to eligible individuals. Incarcerated persons who otherwise qualify for an advance refund are not excluded as an ‘eligible individual.’ The IRS’s decision to exclude incarcerated persons from advance refund payments is likely contrary to law,” Hamilton wrote in her ruling. 

The CARES Act does, however, exclude non-resident immigrants, an estate or trust and people who are dependents on someone else’s tax return, according to The Washington Post

“The Treasury Department’s theft of the CARES Act supplements that Congress intended get to people in need right away is not only illegal, but cruel to the people and families most harmed by COVID-19 and over-incarceration—Black, Latinx and Native people and people with lower incomes,” Equal Justice Society attorney Mona Tawatao said in a statement. “The court’s order will bring them critical relief and some measure of justice.” 

Hamilton initially ordered the IRS to resume payments for incarcerated people within 30 days and asked the government and the plaintiffs to figure out how to move forward. According to The Los Angeles Times, both parties could not agree on terms, prompting Hamilton to give the IRS further instructions regarding its website and a new filing deadline. 

Under Hamilton’s order, the IRS must extend the deadline to Oct. 30 for incarcerated persons to file paper returns to get their checks before the end of the year.

The IRS was also ordered to send a memo to staff informing them they must stop telling people that incarcerated individuals are not eligible for a stimulus payment. The agency must also send letters to correctional facilities retracting its order that stimulus payments need to be intercepted and returned. 

A notice on the IRS’ website states that the deadline to request an economic impact payment has been moved to November 21. 

About the Author

Nicole Rojas is a senior writer for The North Star. She has published in various publications, including Newsweek, GlobalPost, IHS Jane’s Defence Weekly, and the Long Island Post. Nicole graduated from Boston University in 2012 with a degree in print journalism. She is an avid world traveler who recently explored Europe, Asia, Australia and the Americas.

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