US inmates got virus relief checks, and IRS wants them back

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FILE - In this April 23, 2020, file photo, President Donald Trump's name is seen on a stimulus check issued by the IRS to help combat the adverse economic effects of the COVID-19 outbreak, in San Antonio. Hundreds of thousands of dollars in coronavirus relief payments have been sent to people behind bars across the United States, and now the IRS is asking state officials to help claw back the cash that the federal tax agency says was mistakenly sent. (AP Photo/Eric Gay, File)

BOISE, Idaho – Hundreds of thousands of dollars in coronavirus relief payments have been sent to people behind bars across the United States, and now the IRS is asking state officials to help claw back the cash that the federal tax agency says was mistakenly sent.

The legislation authorizing the payments during the pandemic doesn’t specifically exclude jail or prison inmates, and the IRS has refused to say exactly what legal authority it has to retrieve the money. On its website, it points to the unrelated Social Security Act, which bars incarcerated people from receiving some types of old-age and survivor insurance 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, who's written about the issue on her website, says there's no legal basis for asking 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 Congress passed the $2.2 trillion coronavirus rescue package in March, checks of up to $1,200 were automatically sent in most cases to people who filed income tax returns for 2018 or 2019, including some who are incarcerated. A couple of weeks later, the IRS directed state correction departments to intercept payments to prisoners and return them.

The IRS doesn’t yet have numbers on how many payments went to prisoners, Smith said. But initial data from some states suggest the numbers are huge: The Kansas Department of Correction alone intercepted more than $200,000 in checks by early June. Idaho and Montana combined had seized over $90,000.

Washington state, meanwhile, had only intercepted about $23,000 by early June. Some states, like Nevada, have refused to release the numbers, citing an IRS request for confidentiality.