IRS blocks stimulus tax relief to people in prison; court orders relief

*Update (10/19/20): Per federal court orders, incarcerated individuals may now apply for stimulus payments.  The current deadline to apply is November 4, 2020.  More information is available at this link.

In response to the public health and economic challenges of COVID-19, Congress in March 2020 enacted the CARES Act.  We have written at length about the Small Business Administration’s unfortunate and unauthorized disqualification of small business owners from Paycheck Protection and disaster relief because of their criminal record.  It turns out that the SBA is not the only federal agency discriminating against people with a record in carrying out the CARES Act.  The IRS has also gotten into the act, in what may be an even more lawless fashion.

The CARES Act authorizes stimulus payments in the form of a tax rebate of $1200 per adult and $500 per child for households with incomes below a certain level.  See P.L. 116-136, sec. 2201.  Specific categories of individuals are excluded from receiving these payments (e.g., any “nonresident alien individual” or an estate or trust), but nothing in the CARES Act excludes people who happen to be in prison or jail or any other detention facility.  Likewise, no federal regulation excludes incarcerated individuals from receiving CARES Act tax rebate payments.

That didn’t stop the IRS from taking matters into its own hands, just as it didn’t stop the SBA.

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