Judge orders IRS to pay coronavirus stimulus checks to incarcerated people

The IRS earlier said that imprisoned Americans were not eligible for the stimulus checks. Thus, it started forfeiting or withholding checks of incarcerated individuals. However, the IRS and the Treasury Department have now been ordered to pay about $100 million in coronavirus stimulus checks to the incarcerated individuals.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2020 hedge fund letters, conferences and more

Incarcerated individuals eligible for coronavirus stimulus checks

On September 24, U.S. District Court Judge Phyllis Hamilton issued an order to send the payment to incarcerated individuals in the next 30 days. Also, the IRS and the Treasury have 45 days to give the proof that it has sent the payments.

This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery

D1 CapitalThe first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More


In May, the Treasury Department noted that at least 80,000 incarcerated people were eligible for the stimulus checks. Now, along with these, imprisoned people who have not yet claimed their stimulus check can do so.

On May 6, the IRS first updated its "Frequently Asked Questions" page with the information for imprisoned people. The agency cleared at the time that incarcerated individuals are not eligible for the payment. After this, there have been several instances where incarcerated people, who got the stimulus checks, had to return it or prison authorities intercepted the payment.

At that point, the case was sent to Judge Phyllis Hamilton as the legal experts were not sure if the IRS has the authority to do so. The CARES Act did not specifically block incarcerated individuals from the stimulus payments.

Those against the IRS’s decision argued that the agency made the rule up by itself. In 2009, Congress specifically excluded incarcerated people from getting stimulus checks. The argument put forward is that if Congress wanted to do the same this time as well, it would have mentioned the same in the CARES Act.

"There is nothing in the CARES Act that gives the IRS authority to decide that incarcerated people are ineligible to receive stimulus checks," Sen. Sherrod Brown, a Democrat from Ohio, told The Appeal in July.

What do incarcerated people need to do to claim check?

Hamilton, in the preliminary injunction, noted that the “statute mandates distribution of the advance refund to eligible individuals." Further, the Judge noted that the IRS’s decision to block incarcerated people “from advance refund payments is likely contrary to law." As per the lawsuit, more than 1.4 million people may have been affected by the IRS’s decision to deny payment to incarcerated individuals.

If an incarcerated individual filed a 2018 or 2019 tax return or made a non-filer claim, then they don’t have to do anything else to get the payment. In case the incarcerated individual did none of the above then they need to submit a filer claim. For details on how to claim the payment, visit the IRS website.

Judge Hamilton’s decision is expected to bring relief “to the people and families most harmed by COVID-19 and over-incarceration — Black, Latinx and Native people and people with lower incomes,” an attorney for the plaintiffs, Mona Tawatao of the Equal Justice Society said.