A class action lawsuit filed against the Virgin Islands Bureau of Internal Revenue is demanding that people incarcerated during the pandemic receive federal stimulus payments, according to documents filed in U.S. District Court.
Filed by attorney Joseph DiRuzzo III on behalf of inmate Jamal Morton and all others who’ve been incarcerated after Congress passed the Coronavirus Aid, Relief, and Economic Security, or “CARES” Act on March 27, the case echoes another complaint filed on Aug. 8 in California.
That case, Scholl v. Mnuchin, resulted in a permanent injunction on Oct. 14 ordering the federal government to stop withholding stimulus funds from people who are incarcerated.
The CARES Act created a 2020 tax-year “credit” of $1,200 for an eligible individual, or $2,400 for eligible individuals filing a joint return, plus $500 per qualifying child.
The federal government appealed the Scholl case to the Ninth Circuit and asked for an order staying the District Court’s decision pending appeal.
“The Ninth Circuit denied the motion to stay concluding that the Federal Government has not ‘demonstrated a sufficient likelihood of success on appeal to warrant a stay,’” according to DiRuzzo’s complaint.
But the order does not apply to the U.S. Virgin Islands, which has its own tax system under Bureau of Internal Revenue, and DiRuzzo’s complaint seeks to make sure that Virgin Islanders are not denied the same benefits.
DiRuzzo sent BIR Director Joel Lee a letter on Oct. 27 “seeking clarification as to whether the BIR shares the same view as the IRS regarding the CARES Act in general,” and the Economic Impact Payments in particular, “applied to incarcerated individuals,” according to the complaint. “To date, counsel for the Plaintiff has received no response to his October 27th correspondence. Plaintiff concludes that the Defendants take the same position as the Federal Government as to the EIP for incarcerated individuals, i.e., they are not eligible.”
Incarcerated people “are disproportionately among the most economically disadvantaged in our society, with few to no opportunities for gainful income. Many incarcerated people also rely on the assistance of friends and family on the outside to cover the gap between necessary expenses and low incomes. In this context, Defendants’ withholding of CARES Act assistance from incarcerated people has impaired their ability to communicate with loved ones and/or counsel; purchase basic hygiene and food necessities; and prepare for reentry into society,” according to the complaint.
Because of the BIR’s policy, Morton and other inmates who did not receive automatic stimulus benefits “are unsure whether filing a request for the EIP will result in an accusation of filing a fraudulent claim with the potential to result in new criminal charges, enhanced sentences, denial and/or revocation of parole, or other adverse consequences for currently or formerly incarcerated people,” DiRuzzo wrote. The Bureau of Corrections has records that show “all the information needed for the BIR to determine whether any particular incarcerated individual is entitled to the EIP,” and the government has all of the information necessary for the Finance Department to issue checks transmitting stimulus payments to prisoners.”
CARES Act payments must be made no later than Dec. 31, and DiRuzzo has filed a motion to expedite the case to make sure a decision is made before that deadline.
According to the complaint, “if this case is not expedited the Plaintiff is concerned that the Defendants will argue that they are statutorily prohibited from providing the relief that the Plaintiff seeks. Additionally, as this case tracks the Scholl case, the legal issues present are straightforward and are amenable to quick resolution.”
DiRuzzo filed the complaint on Nov. 3, and the Virgin Islands government has not yet responded, according to publicly available court records.