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1 1 (March 26, 2021)

handle is hein.crs/govecuo0001 and id is 1 raw text is: Congressional ______ A Research Service inforng the legist ive debate since 1914____________________ Scholl v. Mnuchin and Economic Impact Payments March 26, 2021 Congress established a new temporary refundable tax credit in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No. 116-136, codified in Internal Revenue Code (IRC) Section 6428. The CARES Act credit for each eligible individual equals up to $1,200, plus an additional $500 per qualifying child. The CARES Act authorized the Treasury Secretary to disburse advance refund payments in 2020 to eligible individuals in the amount of the credit allowable on the individual's 2020 tax return. These direct payments are commonly referred to as the first round of Economic Impact Payments (EIPs). Initially, the Internal Revenue Service (IRS) disbursed EIPs to incarcerated individuals. However, the IRS later reversed its position. On August 1, 2020, in Scholl v. Mnuchin, a group of incarcerated individuals and formerly incarcerated individuals who did not receive EIPs (Plaintiffs) filed a lawsuit in the U.S. District Court for the Northern District of California. The Plaintiffs alleged that the Treasury Secretary, the IRS Commissioner, the Treasury Department, the IRS, and the United States (Defendants) failed to comply with the CARES Act when they declared incarcerated individuals ineligible for EIPs and declined to issue EIPs to them. The Plaintiffs' asserted that: (1) Defendants unlawfully withheld EIPs in violation of Section 706(1) of the Administrative Procedure Act (APA); (2) Defendants' denial of EIPs to Plaintiffs was contrary to law, in excess of statutory authority, and arbitrary and capricious under APA Sections 702 and 706(2); and (3) federal courts had jurisdiction to hear Plaintiffs' civil claims against the United States pursuant to the Little Tucker Act, 28 U.S.C. @ 1346(a)(2) because Defendants denied payments authorized by the CARES Act. The Plaintiffs sought to certify a nationwide plaintiff class comprised of individuals who met the CARES Act criteria for receipt of EIPs but were denied the payments based solely on their incarcerated status. As relief, the Plaintiffs sought a declaratory judgment that Defendants lacked statutory authority to deny EIPs based solely on incarcerated status and an injunction barring the Defendants from continuing to deny EIPs based solely on incarcerated status. On September 24, 2020, the district court issued an order that provisionally certified the plaintiff class and granted a preliminary injunction enjoining the Defendants from withholding EIPs based solely on an individual's incarcerated status. On October 14, 2020, the court issued an order certifying the plaintiff class and granting Plaintiffs' motion for summary judgment on their claim alleging that the Defendants' action violated the APA because it was contrary to law, in excess of statutory authority, and arbitrary and capricious. The court therefore converted its preliminary injunction into a permanent injunction, ordering Congressional Research Service https://crsreports.congress.gov LSB10586 CRS Legal Sidebar Prepared for Members and Committees of Congress