1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ALEX SANCHEZ, Case No. 21-cv-05267-PJH

8 Plaintiff, ORDER OF DISMISSAL v. 9

10 DEPARTMENT OF THE TREASURY IRS, 11 Defendant.

12

13 Plaintiff, a state prisoner in Texas, proceeds with a pro se civil action against a 14 governmental entity. He has been granted leave to proceed in forma pauperis. 15 DISCUSSION 16 STANDARD OF REVIEW 17 Federal courts must engage in a preliminary screening of cases in which prisoners 18 seek redress from a governmental entity or officer or employee of a governmental entity. 19 28 U.S.C. § 1915A(a). In its review the court must identify any cognizable claims, and 20 dismiss any claims which are frivolous, malicious, fail to state a claim upon which relief 21 may be granted, or seek monetary relief from a defendant who is immune from such 22 relief. Id. at 1915A(b)(1),(2). Pro se pleadings must be liberally construed. Balistreri v. 23 Pacifica Police Dep't,

(9th Cir. 1990). 24 Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement 25 of the claim showing that the pleader is entitled to relief." "Specific facts are not 26 necessary; the statement need only '"give the defendant fair notice of what the . . . . claim 27 is and the grounds upon which it rests."'" Erickson v. Pardus,

(2007) 1 (citations omitted). Although in order to state a claim a complaint “does not need detailed 2 factual allegations, . . . a plaintiff's obligation to provide the 'grounds’ of his 'entitle[ment] 3 to relief' requires more than labels and conclusions, and a formulaic recitation of the 4 elements of a cause of action will not do. . . . Factual allegations must be enough to 5 raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550

, 555 (2007) (citations omitted). A complaint must proffer "enough facts to state 7 a claim to relief that is plausible on its face."

. The United States Supreme 8 Court has recently explained the “plausible on its face” standard of Twombly: “While legal 9 conclusions can provide the framework of a complaint, they must be supported by factual 10 allegations. When there are well-pleaded factual allegations, a court should assume their 11 veracity and then determine whether they plausibly give rise to an entitlement to relief.” 12 Ashcroft v. Iqbal,

(2009). 13 LEGAL CLAIMS 14 Plaintiff seeks court intervention in obtaining his economic impact payment (“EIP”) 15 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”), 16

Stat. 281 (2020). 17 Background 18 In Scholl v. Mnuchin,

(N.D. Cal. 2020) (Scholl II), the court 19 summarized the underlying issue that is central to plaintiff’s complaint:

20 The CARES Act, codified in part at section 6428 of the Internal Revenue Code,

, establishes a tax credit for 21 eligible individuals in the amount of $1,200 ($2,400 if filing a joint return), plus $500 multiplied by the number of qualifying 22 children.

(a). For purposes of the Act, an eligible individual is defined as “any individual” other than (1) 23 any nonresident alien individual, (2) any individual who is allowed as a dependent deduction on another taxpayer's 24 return, and (3) an estate or trust. § 6428(d). The EIP is an advance refund of the subsection (a) tax credit and subsection 25 (f) describes the mechanism for implementing the advance refund. Paragraph (1) of subsection (f) provides that “each 26 individual who was an eligible individual for such individual's first taxable year beginning in 2019 shall be treated as having 27 made a payment against the tax imposed by chapter 1 for such 1 Paragraph (3) of subsection (f) requires the IRS to “refund or credit any overpayment attributable to this section as rapidly as 2 possible.” § 6428(f)(3). Additionally, Congress provided that “[n]o refund or credit shall be made or allowed under this 3 subsection after December 31, 2020.” Id. The CARES Act also has a reconciliation provision between the advance refund and 4 the tax credit such that if a taxpayer receives an advance refund of the tax credit then the amount of the credit is reduced by the 5 aggregate amount of the refund. § 6428(e).

6 Three days after the President signed the CARES Act, the IRS issued a news release explaining that the agency would 7 calculate and automatically issue an EIP to eligible individuals. Declaration of Yaman Salahi (“Salahi Decl.”), Dkt. 55, Ex. 1 at 8 1. Though not required to do so by the Act, the IRS established an online portal for individuals who are not typically required to 9 file federal income tax returns (e.g., because an individual's income is less than $12,200), which allows those non-filers to 10 enter their information to receive an EIP. Id., Ex. 2. Individuals who use the non-filer online portal have until October 15, 2020 11 to register in order to receive the EIP by the December 31, 2020 deadline imposed by the CARES Act. Id., Ex. 3. 12 On May 6, 2020, the IRS published responses to “Frequently 13 Asked Questions” (“FAQ”) on the IRS.gov website. Id., Ex. 4. Question 15 asked “Does someone who is incarcerated qualify 14 for the Payment [i.e., an EIP]?” The IRS responded:

15 A15. No. A Payment made to someone who is incarcerated should be returned to the IRS by following 16 the instructions about repayments. A person is incarcerated if he or she is described in one or more of 17 clauses (i) through (v) of Section 202(x)(1)(A) of the Social Security Act (

(x)(1)(A)(i) through 18 (v)). For a Payment made with respect to a joint return where only one spouse is incarcerated, you only need to 19 return the portion of the Payment made on account of the incarcerated spouse. This amount will be $1,200 20 unless adjusted gross income exceeded $150,000. 21

(footnotes omitted). 22 In Scholl v. Mnuchin,

(N.D. Cal. 2020) (Scholl I), the court 23 preliminary certified the following class:

24 All United States citizens and legal permanent residents who:

25 (a) are or were incarcerated (i.e., confined in a jail, prison, or other penal institution or correctional facility pursuant to their 26 conviction of a criminal offense) in the United States, or have been held to have violated a condition of parole or probation 27 imposed under federal or state law, at any time from March 27, (b) filed a tax return in 2018 or 2019, or were exempt from a 1 filing obligation because they earned an income below $12,000 (or $24,400 if filing jointly) in the respective tax year; 2 (c) were not claimed as a dependent on another person's tax 3 return; and

4 (d) filed their taxes with a valid Social Security Number, and, if they claimed qualifying children or filed jointly with another 5 person, those individuals also held a valid Social Security Number. 6 Excluded from the class are estates and trusts; defendants; the 7 officers, directors, or employees of any defendant agency; and, any judicial officer presiding over this action and his/her 8 immediate family and judicial staff. 9 Id. at 1047. In Scholl II, the court granted final certification of this class and entered the 10 following declaratory relief:

11 [T]he court finds and declares that title

does not authorize defendants to withhold advance refunds or credits 12 from class members solely because they are or were incarcerated. The court further finds and declares that 13 defendants’ policy that persons who are or were incarcerated at any time in 2020 were ineligible for advance refunds under 14 the Act is both arbitrary and capricious and not in accordance with law. 15 Scholl II at 692. A permanent injunction was entered and defendants were to reconsider 16 EIPs that were denied solely due to an individual’s incarcerated status.

. 17 With respect to specific payments the court stated: 18 The court takes no position on whether plaintiffs or class 19 members are in fact owed advance refund payments or the amount of those payments. Indeed, the court’s Rule 23(b)(2) 20 finding was premised on the “indivisible nature of the injunctive or declaratory remedy warranted” but not “an individualized 21 award of monetary damages.” Dkt. 50 at 42 (quoting Wal-Mart Stores, Inc. v. Dukes,

,

, 22

(2011)). The court’s determination in this order is that the IRS’s action was “arbitrary, capricious, . . . or 23 otherwise not in accordance with law” and the appropriate remedy is to “hold unlawful and set aside” that agency action. 24

(2). It is incumbent on the IRS, as the agency charged by Congress, to make individual determinations 25 whether an individual is an “eligible individual” and meets the various criteria delineated in the Act. 26

. 27 1 Discussion 2 Plaintiff is incarcerated and part of the Scholl class. He filed this case on July 9, 3 2021. Plaintiff states that he has not received his EIPs. Docket No. 1 at 3. For relief it 4 appear he seeks the court to compel the IRS to provide his EIPs. To the extent plaintiff 5 argues that his EIP was denied due to his incarcerated status, he is already a member of 6 the Scholl class; therefore, he is not entitled to separate individual relief. An individual 7 suit for injunctive and equitable relief may be dismissed when it duplicates an existing 8 class action's allegations and prayer for relief. See Pride v. Correa,

, 1133 9 (9th Cir. 2013); Gillespie v. Crawford,

(5th Cir. 1988) (en banc) 10 ("Individual members of the class and other prisoners may assert any equitable or 11 declaratory claims they have, but they must do so by urging further actions through the 12 class representative and attorney, including contempt proceedings, or by intervention in 13 the class action."). 14 Nor is plaintiff entitled to relief to the extent he seeks the court to compel the IRS 15 to provide his EIPs pursuant to Scholl or the CARES Act. The court in Scholl found that 16 the EIP could not be denied only because an individual was incarcerated. However, the 17 court was clear that it took no position on whether individual incarcerated plaintiffs were 18 owed the EIP, which is the relief sought in the instant case. That responsibility fell to the 19 IRS to make an individual determination. More importantly, funds cannot now be 20 distributed pursuant to the CARES Act. As noted above, the CARES Act imposed a 21 deadline of December 31, 2020, for EIPs to be made or allowed. That deadline has 22 passed, and no more funds may be issued.1 Plaintiff cannot obtain the relief he seeks in 23 this case. 24 For all these reasons, plaintiff fails to state a claim for relief. The complaint will be 25 dismissed without leave to amend because it is clear that no amount of amendment 26 1 Prior to the deadline, 385,995 incarcerated individuals were issued the EIP after they 27 were reconsidered despite previously being identified as incarcerated. Scholl v. Mnuchin, 1 would cure the deficiencies noted above. See Lopez v. Smith,

, 1129-30 2 (9th Cir. 2000). 3 CONCLUSION 4 The action is DISMISSED with prejudice. The clerk shall close this case. 5 IT IS SO ORDERED. 6 Dated: August 25, 2021 7 8 /s/ Phyllis J. Hamilton PHYLLIS J. HAMILTON 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27