CARES Act Stimulus Checks Ordered For Inmates In Judge’s Ruling

A federal judge has ruled prisoners serving time are eligible for a Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus check and has ordered the Internal Revenue Service (IRS) to allow inmates more time to file for the benefit.

With an order filed Oct. 16, Judge Phyllis Hamilton is requiring the IRS to compile and send a packet with all needed tax forms and a cover letter explaining its purpose to inmates no later than Oct. 28. 

Those inmates will now have until Nov. 4 to apply for the CARES Act stimulus check.

Judge Hamilton is also ordering a status conference following the mailing of the packets. 

The judge’s order denies the IRS’ appeal made last week, and instead enters a final summary judgement in the class action lawsuit brought forth by the inmates.

Legal experts say the speed of Judge Hamilton’s ruling demonstrated how strong the plaintiff’s claim was and the how flawed the IRS policy is, Forbes reported. 

Inmates filed a class action lawsuit in August when they realized the IRS found them ineligible for a CARES Act stimulus check.

Plaintiff Colin School, who is serving time in Salinas Valley Prison, filed a tax return in 2019 and expected the IRS to send him a CARES Act stimulus check. But he was eventually told his incarceration status meant he didn’t qualify. 

The initial complaint, filed in California’s Northern District, says the IRS unlawfully changed who’s eligible for a CARES Act stimulus check after Congress passed the law. Plaintiffs pointed to the original language of the CARES Act and said the IRS switched course on the inmates being eligible five weeks after it was signed.

The change in policy came after an internal auditor noted in May that convicted criminals serving time in prison were getting a CARES Act stimulus check, according to an NBC News report.

The IRS has “unlawfully withheld … [a CARES Act stimulus check] from incarcerated individuals,” the lawsuit said, by making this exception without authority to do so.

The initial lawsuit claims the CARES Act stimulus checks were intended for every U.S. citizen. The filing refers to IRS spokesman Eric Smith being asked about the legality of excluding prisoners.

“I can’t give you the legal basis. All I can tell you is this is the language the Treasury and ourselves have been using,” Smith said, according to the complaint. 

The class action lawsuit even quotes the Treasury Department’s inspector general: “The CARES Act does not prohibit them from receiving a payment. However, the IRS subsequently changed its position, noting that individuals who are prisoners . . . are not entitled to an EIP.”

The plaintiffs further argued the IRS has unlawfully “taken action to intercept” CARES Act stimulus checks intended for inmates.

By June 24, according to an Associated Press report cited in the class action lawsuit, CARES Act stimulus checks were already being mailed out to inmates by the time the IRS found them to be ineligible.

By then, Kansas’ Department of Corrections had taken back more than $200,000 in CARES Act stimulus checks, according to The Associated Press.  

The plaintiffs argued inmates are in need of financial help “just like other members of society” and will be facing the same bleak economy a result of the COVID-19 crisis as everyone else once they’re released. 

The class action lawsuit cites Bureau of Prisons data showing the average sentence is 27 months. Some 28% of inmates are behind bars for seven months.

“The Treasury Department’s unlawful withholding of these allocated funds undermines the health and safety of incarcerated people and the families they support,” plaintiff’s counsel told The Associated Press.

For inmates who’ve already filed a claim before Sept. 24, the IRS must automatically re-process by Oct. 24, according to CARESActPrisonCase.org.

Do you know an incarcerated person needing to file for a CARES Act stimulus check? Let us know in the comments below. 

Counsel representing the plaintiffs in the CARES Act check class action lawsuit are Kelly M. Dermody, Yaman Salahi and Jallé Dafa of Lieff Cabraser Heimann & Bernstein LLP; and Eva Paterson, Mona Tawatao and Christina Alvernaz of Equal Justice Society. 

The Cares Act Stimulus Check class action lawsuit is Scholl, et al. v. Mnuchin, et al., Case No. 20-cv-05309-PJH, in the U.S. District Court for the Northern District of California.  

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