The IRS ‘can’t give you the legal basis’ for its denial of rebates to prisoners

Last month, the IRS declared that prisoners are ineligible for the stimulus rebates provided under the CARES Act and modified its list of frequently asked questions to instruct prisoners to return any rebate payments that they may have received. As I and others have pointed out, however, this IRS policy is lawless because nothing in the text of the CARES Act remotely suggests that prisoners are ineligible for the rebates.

A recent Associated Press story reports a refreshingly candid admission by the IRS. When asked about the policy’s legal foundation, IRS spokesman Eric Smith said, “I can’t give you the legal basis. All I can tell you is the language the Treasury and ourselves have been using. It’s just the same list as in the Social Security Act.” Smith was unable to provide the legal basis for the policy because there is none.

U.S. President Trump hosts coronavirus aid bill signing ceremony at the White House in Washington
U.S. President Trump hosts coronavirus aid bill signing ceremony at the White House in Washington. March 22, 2020. Via Reuters

As Smith mentioned, the IRS is denying rebates to the same groups that Congress has disqualified from receiving Social Security benefits — 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 disqualification provision in the Social Security Act is unrelated to eligibility for the rebates, however. Congress easily could have copied that provision when it wrote the CARES Act, but it did not do so.

“It appears that the IRS is just making this up,” Wanda
Bertram, a spokesman for the Prison Policy Initiative, told the AP. As tax
attorney Kelly Erb pointed out, “It’s not a rule just because the IRS puts it
on the website.”

It may seem inappropriate to give rebates to prisoners
whose basic living expenses are already paid by the government, particularly those
being punished for their crimes. It is possible that Congress simply did not
think about whether prisoners should get rebates and would have disqualified
them if it had considered the question. Nevertheless, the IRS must follow the
law that Congress actually passed, not speculate about laws that it could have
passed. If Congress made a mistake, Congress can fix it by changing the law.

The Supreme Court firmly rejected a non-textual prisoner exception in a 1988 decision written by the late Antonin Scalia. The Court unanimously ruled that prisoners who had been denied admission to prison rehabilitative programs on the basis of disability could obtain relief under the “unambiguous statutory text” of the Americans with Disabilities Act, even though Congress might not have “expressly anticipated” that the ADA would apply in that situation.

That principle is also applicable to the CARES Act. Until Congress says otherwise, prisoners are entitled to rebate payments.