Tag Archives: irs

We’ve Got The Shorts – Update for April 30, 2021

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We post news and comment on federal criminal justice issues, focused primarily on trial and post-conviction matters, legislative initiatives, and sentencing issues.

Today, this being the end of the month, we’re cleaning off our desktop…

SOME ODDS AND ENDS FROM LAST WEEK

Banned in Moscow: In response to President Biden’s expulsion of Russian diplomats because of the massive Solar Winds computer hack discovered last December, Vladimir Putin last week banned eight US officials from entering Russia.

The excluded government honcho include current top intelligence officials, former National Security Advisor John Bolton, FBI Director Christopher Wray, and… BOP Director Michael Carvajal.

carvajal210430Huh? The media covering the story have explained the reasons for all of the expulsions except for Carvajal’s, which is usually noted as an afterthought.

Putin knows why Carvajal is on the list. Carvajal maybe knows. But no one else seems to have any idea.

The Hill, Russia blocks key Biden Cabinet officials from entering in retaliation for sanctions (April 16, 2021)


FMC Carswell Catching Heat for Inmate Death: The Ft Worth, Texas Star-Telegram reported last week on the death of Martha Evanoff at FMC Carswell.  The paper said that Evanoff “begged for medical attention for months, fellow inmates say, but was denied help until she died” on April 12.

Evanoff had surgery last November, but, according to a fellow inmate as well as Evanoff’s own emails to me, her intestines protruded through the surgical incision into her abdominal wall that had opened up. Ultimately the protrusion pinched the intestines shut, blocking them completely.

medmal170127“It was totally unnecessary. They could have done something to help her,” an inmate told the paper. “She is not the first person to die here from intestinal blockage.”

Another inmate reportedly said that Evanoff begged for help about the pain she was in, and “this place did nothing. Medical indifference = murder,” the inmate wrote. “And it is just as bad as having a knee on your neck…”

In an email Evanoff wrote to me in early February, she said, “I have been extremely ill — mainly bedridden with only bathroom trips. Visibly, I have these ENORMOUS, HARD TO MISS – Incision hernias all over my abdominal area… makes it impossible for me to do anything… One in particular sticks way out like I am pregnant with 8 children… Please help me out of here BEFORE I die here…”

A suit against FMC Carswell brought by over 70 named inmates alleging negligent medical care is pending in the US District Court for the Northern District of Texas.

Ft Worth Star-Telegram: Woman at Fort Worth medical prison died after staff ignored cries for help, women say (April 20, 2021)

Blake v. Carr, Case No 4:20cv807 (N.D. Texas)
Cohen Court Nixes Earned Time Credits: Former Trump lawyer Michael Cohen, on CARES Act home confinement until his sentence ends in November, brought a habeas corpus action to win earned time credits for programs he took while still locked up.

cohen200730Last week, Mike’s judge turned him down. “The statute clearly envisions that the program will be gradually implemented during the phase-in period. During this period, the [First Step] Act requires the BOP to provide evidence-based recidivism reduction activities for all prisoners before the two-year anniversary of the date that the BOP completes a risk and needs assessment for each prisoner, namely by January 15, 2022. The statute also requires the BOP during the phase-in period to develop and validate the risk and needs assessment to be used in the reassessments of risk of recidivism, while prisoners are participating in and completing evidence-based recidivism programs. But the statute does not require the BOP to begin awarding Earned Time Credits during the phase-in period. Indeed, the statute specifically leaves to the discretion of the BOP whether to expand existing programs and whether to offer to prisoners who successfully participate in such programs incentives and rewards.”

Cohen v. United States, Case No 20-CV-10833, 2021 US Dist LEXIS 75852 (S.D.N.Y. April 20, 2021)

Law and Crime, Federal Judge Denies Michael Cohen’s Petition to Cut His Sentence Under Trump’s First Step Act (April 20, 2021)

I’ll Be Watching You: In a report released last week, the Treasury Inspector General for Tax Administration said the IRS identified more than 4,500 fraudulent tax returns using a prisoner’s social security number in 2019, claiming refunds totaling over $14 million.

watching210430The amounts could have been higher, but since 2017, the IRS has set up processes to stop tax refunds from being issued to prisoners and people who steal prisoners’ SSNs. One of them involves the BOP and state departments of corrections complying with a requirement to provide the IRS with an annual list of all prisoners incarcerated within their prison system. Another program, which the Inspector General said should be expanded, is the Blue Bag Program, in which the IRS partners with the BOP and state corrections departments to identify potentially fraudulent tax returns and refunds. The IRS program automatically pulls prisoner tax returns for fraud analysis.

Accounting Today, IRS cracks down on prisoner tax fraud and identity theft (April 19, 2021)

– Thomas L. Root

Something My Wife Never Says… – Update for October 8, 2020

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We post news and comment on federal criminal justice issues, focused primarily on trial and post-conviction matters, legislative initiatives, and sentencing issues.

IRS WAS WRONG, I WAS RIGHT

b1fI think I will savor those few words. “I was right.” It is something my bride of 41 years has never told me. Really, it happens as often as this month’s blue moon. But I can crow about this: When I advised federal inmates last April that the CARES Act had been so shoddily and quickly written that it qualified them for the $1,200 stimulus payment, I was right. Right. Right. Bloody well right.

There were plenty of doubters. In early May, the IRS posted guidance that inmates were not eligible for stimulus payments. Arguments went back and forth about this all summer.  The Senate even proposed a change in the law that would deny prisoners stimulus checks, and making it retroactive to March’s CARES Act. (It’s a shame the Senate isn’t as handy with the “retroactive” bit when it comes to criminal justice legislation, but that’s another story).

The problem was this: Nothing in the CARES Act authorized the IRS to write inmates out of the stimulus payment. The best excuse the IRS could come up with was that prisoners cannot get social security benefits Out in California, a couple of incarcerated people did something about it. They sued the IRS, and a few weeks ago, U.S. District Judge Phyllis Hamilton issued a 45-page preliminary injunction against the IRS, preventing it from deny stimulus payments to people because they were locked up.

nothing170127A preliminary injunction does not mean the plaintiffs won, but it does mean that the Court believes that the plaintiffs are likely to prevail on the merits. Although much of the Order relates to procedural and collateral issues, such as standing, ripeness and sovereign immunity, the meat of the holding – the strength of the IRS’s position – was pretty straightforward:

The… inquiry is whether incarcerated persons are eligible individuals.  On this question, the statute is brief and to the point.  Section 6428(d) states:

For purposes of this section, the term “eligible individual” means any individual other than (1) any nonresident alien individual, (2) any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, and (3) an estate or trust.

§ 6428(d).  There is no indication that Congress left the definition of “eligible individual” open-ended or otherwise up to the Secretary’s discretion to change.  See Jimenez v. Quarterman, 555 U.S. 113, 118 (2009) (“It is well established that, when the statutory language is plain, we must enforce it according to its terms.”).

The court also finds persuasive the fact that the IRS has asserted three different interpretations of the term “eligible individual” since the enactment of the Act, barely six months ago. Initially, the IRS disbursed nearly 85,000 EIPs to incarcerated persons and, when the Treasury Inspector General for Tax Administration (“TIGTA”) questioned IRS management about this decision, the IRS “noted that payments to these populations were allowed because the CARES Act does not prohibit them from receiving a payment.” Then, as reflected in the FAQ, the IRS’s internal procedure manual, and the TIGTA report, the IRS decided that incarcerated individuals are not eligible. Now, the IRS takes the position in this litigation that, subject to generally applicable administrative and judicial rules, the IRS plans to allow otherwise eligible individuals who were only incarcerated for a portion of tax year 2020 to claim a CARES Act tax credit. The shifting interpretation demonstrates that the IRS “went well beyond the ‘bounds of its statutory authority.’”

shocked180619What? The IRS just made stuff up to stick it to inmates? I’m sure we’re all shocked.

The biggest immediate problem facing the Court was to get all of the eligible inmates who were either denied, had payments returned by prison staff who believed the IRS malarkey, or were deterred from filing by the claptrap on the IRS website, signed up. The deadline for filing the IRS non-filer statement – which can be done from the website or on a Form 1040 – had been October 15. The Court concluded it lacked the power to force the agency to move the date, but it strongly urged the parties to agree to something later.

Yesterday, the agency caved, and announced that the deadline for filing non-filer statements is now November 21, 2020.

It appears that the non-filer tool on the Web does nothing more than complete a Form 1040 reporting filing status and lack of income. For inmates without Internet access (which would be close to 100%), the standard 1040 can be completed and mailed.

money160818Meanwhile, the IRS has filed a “protective appeal” to the Ninth Circuit — which appears to be a placeholder of sorts designed to give officials time to decide if the agency will fight the ruling. “The decision whether to proceed with the appeal will be made by the acting solicitor general, who has not yet made a decision,” the IRS said in a court filing on Monday.

Order Granting Motion for Prliminary Injunction and Motion for Class Certification, Scholl v. Mnuchin, Case No. 20-cv-05309, 2020 U.S. Dist. LEXIS 176870 (N.D.Cal. September 24, 2020)

IRS.gov, Economic Impact Payment Information Center — Topic A: EIP Eligibility and General Information (June 5, 2020)

KPIX-TV, IRS Tries To Claw Back COVID-19 Stimulus Checks Sent To Prison Inmates (June 24, 2020)

Forbes, IRS Must Pay $100 Million Worth Of $1,200 Stimulus Checks, Judge Orders In Prisoners’ Lawsuit (October 6, 2020)

CBS News, IRS extends deadline for 9 million people to register to get a stimulus check (October 7, 2020)

The Independent, US judge: IRS can’t keep coronavirus money from inmates (October 7, 2020)

– Thomas L. Root

HEALS Act Proposes Financial Pain For Inmates – Update for August 5, 2020

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We post news and comment on federal criminal justice issues, focused primarily on trial and post-conviction matters, legislative initiatives, and sentencing issues.

SENATE STIMULUS PROPOSAL EXCLUDES PAYMENTS TO MOST INMATES

I reported back in April that the CARES Act did not exclude inmates from collecting the $1,200 stimulus check. Since then, the IRS has tried to say otherwise, but it has met a lot of pushback.

nothing170125The House and Senate are still far apart on a second stimulus bill, which everyone hoped would be in place by last Friday. One provision in the Senate version tacitly admits that nothing in the CARES Act kept inmates from collecting stimulus checks. The House version has no such limitation.

Newsweek reported last Friday that the Senate’s outline for stimulus checks, contained in the so-called HEALS Act, revises the eligibility to exclude prisoners in this round. Forbes reported that “under the Senate proposal, any decedent who died before January 1, 2020, any person in jail at the time Treasury processes the check or any individual in prison for all of 2020, may not receive a check. This language is also retroactive to the CARES Act checks.”

At this time, no one knows what provisions – the House’s or the Senate’s – will be included in the final package (or even whether there will be a final package).

Any interesting thought, however: The very fact that the Senate version specifically excludes those in jail or prison permits the reasonable inference that – contrary to what the IRS has argued – the CARES Act as written last March did not do so.

Newsweek, Should Prisoners Get Stimulus Checks? Their Innocent Families Suffer If Not (July 31)

Forbes, Senate CARES Act 2.0 Includes More Stimulus Checks, Unemployment Benefits (July 27)

Kiplinger, Second Stimulus Check Update: HEALS Act vs. CARES Act (July 29)

– Thomas L. Root