IRS Wants Stimulus Checks Back from Inmates

The Internal Revenue Service (IRS) is asking state officials to claw back hundreds of millions of dollars in coronavirus stimulus payments from inmates after the federal tax agency says the payments were sent in error.

The legislation authorizing the stimulus checks during the coronavirus pandemic does not specifically exclude jail or prison inmates, and the IRS is not saying what legal basis it has to reclaim the money.

The IRS website points to the Social Security Act, which bars inmates from receiving some types of pension benefit payments.

“I can’t give you the legal basis. All I can tell you is this is the language the Treasury and ourselves have been using,” IRS spokesman Eric Smith said. “It’s just the same list as in the Social Security Act.”

Tax attorney Kelly Erb says the government has no legal right to ask for the checks back.

“I think it’s really disingenuous of the IRS,” Erb said Tuesday. “It’s not a rule just because the IRS puts it on the website. In fact, the IRS actually says that stuff on its website isn’t legal authority. So there’s no actual rule — it’s just guidance — and that guidance can change at any time.”

After federal lawmakers passed the $2.2 trillion coronavirus relief package in March, checks worth up to $1,200 were sent to people who filed 2018 or 2019 tax returns, including some incarcerated people. A few weeks later, the IRS has asked state corrections officials to intercept the payments and return them to the IRS.

The IRS does not have a dollar amount for how much money went to prisoners, but initial data from some state correctional departments show a lot of cash.

The Kansas Department of Correction seized $200,000 by early June, while Montana and Idaho seized more than $90,000 combined.

Some groups say the inmates really need the money, especially if they have been recently released from their sentences.

“I think somebody has to sue, and you have to have the resources to be able to do that,” Erb said. “I don’t know that there’s anything most people can do besides complain and see if they can attract some attention. You have to have somebody who will step up and be an advocate for that segment of the population.”