July 31, 2020 News

Berger Montague Seeks Preliminary Relief on Behalf of Individuals Who Did Not Receive Federal Coronavirus Relief Payments for Their Dependent Children and Have Urgent Need

PHILADELPHIA, July 31, 2020 – National plaintiffs’ class action and complex litigation law firm Berger Montague filed a preliminary injunction motion today with Community Legal Services and Villanova Federal Tax Clinic against the Internal Revenue Service (“IRS”) and United States Treasury Department over their failure to rapidly and effectively distribute economic impact payments during the COVID-19 pandemic to the eligible children of parents and caretakers who do not file federal income tax returns. The lawsuit is Willard McGruder, et al. v. Steven Mnuchin, et al., pending in the U.S. District Court for the Eastern District of Pennsylvania.

The suit alleges that the IRS and Treasury Department have refused to issue economic impact payments (“EIPs”) in a timely manner to federal benefits recipients with eligible dependent children, as Congress directed in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

In response to the unprecedented economic disruption wreaked by the COVID-19 pandemic, Congress authorized EIPs of up to $1,200 per adult and $500 per dependent child under age 17 to millions of American households via the CARES Act. The CARES Act uses the federal tax infrastructure to distribute the EIPs as quickly and efficiently as possible. However, this is not an effective method for distributing EIPs to “non-filers”: individuals who are not required to file tax returns, mostly due to having severe disabilities.

In April 2020, after considerable Congressional and public pressure, the IRS and Treasury Department announced that they would automatically send EIPs to non-filer adults who are “known” to the federal government because they are receiving Social Security retirement, Social Security disability, Railroad Retirement Board (“RRB”), Veteran Affairs (“VA”) or Supplemental Security Income (“SSI”) benefits. However, the IRS and Treasury Department later stated that they would not make automatic payments to eligible dependents of federal benefits recipients. Instead, the IRS and Treasury Department announced that non-filers who receive Social Security retirement, disability, and RRB benefits had less than 48 hours to add their dependents to their EIPs via a non-filer online portal. VA and SSI benefits recipients were provided ten days to use the non-filer portal. In sharp contrast to these tight deadlines, non-filers who do not receive federal benefits have until October 15, 2020, to access the same portal.

Unsurprisingly, many non-filer federal beneficiaries with dependents were unable to meet the very short deadlines set by the IRS and Treasury Department: many did not learn of the IRS announcements, some encountered technical issues with the portal, and others have disabilities that prevented them from using the portal without reasonable accommodations, which were not provided during the applicable window to add dependents.

Despite these difficulties and the Congressional mandate to provide payment rapidly, the IRS and Treasury Department have decided that non-filer federal benefits recipients who missed the deadlines to receive dependent EIPs must wait to receive their payments until the spring of 2021, after they file 2020 federal income tax returns (and, in order to receive dependent EIPs, they must file 2020 federal tax returns even if they would not otherwise be required to do so).

Federal benefits recipients who did not receive $500 payments for their eligible dependent children because they were unable to meet their deadline to use the non-filer portal are encouraged to reach out. Please share your story with us online at: https://clsphila.org/coronavirus/share-your-portal-story/ or contact Berger Montague’s case team: https://bergermontague.com/coronavirus-eips. Berger Montague has assembled a task force of dedicated attorneys and staff who will respond promptly.

Berger Montague is a national plaintiffs’ class action and complex litigation law firm headquartered in Philadelphia with offices in Minneapolis, San Diego, and Washington, D.C. Berger Montague litigates complex civil cases and class actions in federal and state courts throughout the United States. In its 50 years of operation, the Firm has pioneered the use of class actions in America and recovered well over $36 billion for its clients and the class members it has represented.

Founded in 1966 by the Philadelphia Bar Association, Community Legal Services (“CLS”) has provided free civil legal assistance to more than one million low-income Philadelphians. Approximately 10,000 clients were represented by CLS in the past year. CLS assists clients when they face the threat of losing their homes, incomes, healthcare, and even their families. CLS attorneys and other staff provide a full range of legal services, from individual representation to administrative advocacy to class action litigation, as well as community education and social work. CLS is nationally recognized as a model legal services program.

The Federal Tax Clinic at Villanova University’s Charles Widger School of Law melds Villanova Law’s dedication to public service with hands-on learning. For over 20 years, the Federal Tax Clinic has sought to protect taxpayer rights and ensure the fairness and integrity of the tax system by providing representation, education, and systemic advocacy for low-income individuals on federal tax matters.

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