BY ALAN D. VIARD
In previous posts (here and here), I discussed the IRS’s lawless decision to deny rebate payments to certain groups that the agency loosely refers to as “incarcerated” — convicts serving their sentences, defendants institutionalized because they were found incompetent to stand trial or insane, persons detained under sexual-predator laws, fugitives from justice, and probation and parole violators.
The IRS adopted this policy even though these groups are unequivocally eligible for the rebates under the law establishing the payments. An IRS spokesman even admitted to the media that he could not give the legal basis for the policy. Fortunately, a federal judge has now ruled that the IRS must obey the law.
Prisoners represented by Lieff Cabraser Heimann & Bernstein and the Equal Justice Society filed a lawsuit challenging the IRS policy in the US District Court for Northern California on August 1. On September 24, Judge Phyllis J. Hamilton concluded that the policy was likely illegal and that prisoners would suffer irreparable harm if the policy was allowed to continue. She therefore issued a nationwide preliminary injunction halting the policy, pending a final ruling on the case. The injunction prohibits the IRS from withholding payments based on incarceration and requires the agency to reconsider claims previously denied on that basis. Lieff Cabraser Heimann & Bernstein has established a webpage to offer prisoners and their loved ones information about how to obtain payments pursuant to the injunction.
The issue in this case is not whether it is desirable policy for prisoners to receive rebate payments, but whether the IRS can override the laws passed by the people’s elected representatives. By striking down the IRS’s policy, Judge Hamilton has upheld the Constitution’s separation of powers and the rule of law.
Learn more: The IRS ‘can’t give you the legal basis’ for its denial of rebates to prisoners | IRS has no authority to deny rebates to the incarcerated and the recently deceased | Businesses balk at payroll tax deferral
Alan D. Viard is a resident scholar at the American Enterprise Institute.