Thanks to CAUTIONCLICK and Bill Dobbs for making sure we knew about this:
On September 24, 2020, Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California issued an Order certifying a nationwide class of people incarcerated in state and federal prisons, and granting the plaintiffs’ motion for preliminary injunction requiring the U.S. Department of Treasury, the U.S. Internal Revenue Service, and the United States of America to stop withholding CARES Act stimulus funds from plaintiffs or any class member on the sole basis of their incarcerated status.
The link to the Law Firm who handled the suit is below, you can follow this link to their web site where you will find FAQ’s and the form to receive free legal advice on filing for the $. It is possible to submit a printed form and receive a check rather than filling out the on-line form and having the money deposited to a bank account. There are some instructions with the forms. You need to submit the form if you have not yet received $1,200 by October 30, 2020.
Additionally here is the direct link to file the form online: https://www.irs.gov/coronavirus/get-my-payment
We have obtained some information from tax attorneys about the CARES Act that may be of interest to incarcerated people who have not received their payment.
When the CARES Act was passed earlier in 2020, it included $1200 (or more depending on family status) tax refunds (sometimes they are called “stimulus” but the payment mechanism in the federal law is a tax refund) for all otherwise eligible (must be a US citizen or Lawful Permanent Resident, financially qualify, etc.) individuals including people in custody. Unfortunately, the IRS issued inaccurate FAQ’s which wrongly stated that incarcerated people were not eligible for this money. IRS also contacted correctional institutions including the Colorado DOC, jails, and some state hospitals, and inaccurately told them it was automatically fraud for incarcerated people to accept this money. In response to these IRS representations and on the advice of the AG, DOC returned the checks that had already issued to people in their custody.
Lawsuits were filed to address this wrong and, in late September, a Federal District Court Judge in California issued an order in favor of one class of incarcerated people in federal and state prisons. As part of the District Court order, the IRS has recently modified its FAQ and contacted federal and state correctional institutions (including CDOC yesterday) with revised information clarifying that people may apply for the $1200 check. Notably, although the IRS complied with the District Court’s order to update their FAQs, the IRS’ new language does not say incarcerated individuals are eligible, but rather that it is complying with the court’s order and incarcerated persons can file returns.
The judge also ordered the IRS to reconsider the claims of people who previously applied for the money and to send individualized notices to any such incarcerated persons on the basis of the list it used to stop the payments issued. The government has filed a notice of appeal, but the judge should be deciding the plaintiff’s summary judgment motion any day now.
Yesterday, after being contacted by the IRS, DOC sent this message to everyone in their custody: “Offenders – If you wish to file a claim for a CARES act stimulus check AND you DID NOT file a tax return in 2018 or 2019, you must submit a paper simplified 1040 to the IRS by October 30, 2020. If you filed a 2018 or 2019 tax return OR you received Social Security Benefits OR Railroad Retirement Board Benefits, you DO NOT have to file a claim.”
DOC is providing people in custody with the simplified 1040 form. DOC’s Office of Legal Services has advised all wardens that indigent people should be given a stamp and envelope to send the form. For IRS purposes, the postmark controls the timeliness of the submission. For anyone with this status who is no longer in custody, has not received their check, and has access to a computer, they may want to submit the electronic version as there have been reports already of the IRS losing some of the paper forms and, of course, reports of postal services delays nationwide (not to mention possible delays in DOC’s processing of clients’ outgoing mail). Moreover, apparently, checks have issued more quickly to people using the electronic forms. On October 5, 2020, the IRS announced it was extending the deadline for filing online claims to November 21, 2020.
Finally, even if someone does not submit a paper form postmarked by the October 30, 2020 paper claim deadline, assuming the IRS does not ultimately prevail in this litigation, eligible people can still claim this refund by submitting a 2020 tax return by April 15, 2021.
DOC will deposit any checks received from the IRS to “offender accounts.” Like all other incoming funds, these checks will be subject to 20% withholding for restitution, child support, etc., if applicable. We are awaiting additional information from DOC about how they will handle a situation where the client is listed under a different name at DOC compared to their federal documents so feel free to follow up with me if you know someone with this issue.
Additional information (including more detailed criteria describing who is eligible for this money) is available here from the law firm handling the federal class action lawsuit: https://www.lieffcabraser.com/cares-act-relief/?fbclid=IwAR1O-hpNEDBs9rWPBfLNGcsdbG9ksf4X8pCnkn_J9D5Jy2CfOpBSL6Eymww
They have provided a sample of how to complete the form here: https://www.lieffcabraser.com/pdf/updated_1040.pdf
And a blank form here: https://www.lieffcabraser.com/pdf/EIP_Form_1040.pdf
Importantly, because this lawsuit only pertained to people in prison, it does not explicitly address the status of people in county jails or DHS/CMHI custody. If they believe they have been wrongly denied this money (or you learn your client is housed in a facility that also returned IRS checks earlier this year), since they have until April 2021 to file a return, they may want to wait for the litigation to resolve rather than submit something right now only to have it erroneously denied and then have to deal with pursuing a remedy themselves. Obviously clients who want immediate legal advice concerning this situation should consult an accountant or tax attorney. Among other information, the class action website linked above includes caveats about how it is unlikely that another person can successfully submit this documentation on behalf of the incarcerated person. If an indigent person is ultimately denied this money by the IRS, they may seek free legal representation in tax court through the tax clinic at the University of Denver School of Law.
Laurie Rose Kepros
Attorney at Law
Director of Sexual Litigation
Office of the State Public Defende