Wheat v. Mnuchin

• Court: District Court, E.D. Missouri
• Decided: May 4, 2021
• Docket: 2:21-cv-00005
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI NORTHERN DIVISION JASON WHEAT, ) Plaintiff, v. No. 2:21-CV-5 ACL STEVE MNUCHIN, et al., Defendants. MEMORANDUM AND ORDER This matter is before the Court upon the motion of plaintiff Jason Wheat (registration no. 175252), an inmate at Moberly Correctional Center, for leave to commence this action without payment of the required filing fee. For the reasons stated below, the Court finds that plaintiff does not have sufficient funds to pay the entire filing fee and will assess an initial partial filing fee of $3.75. See 28 U.S.C. § 1915(b)(1). Furthermore, based upon a review of the complaint, the Court finds that the complaint should be dismissed pursuant to 28 U.S.C. § 1915(e)(2)(B). 28 U.S.C. § 1915(b)(1) Pursuant to 28 U.S.C. § 1915(b)(1), a prisoner bringing a civil action in forma pauperis is required to pay the full amount of the filing fee. If the prisoner has insufficient funds in his or her prison account to pay the entire fee, the Court must assess and, when funds exist, collect an initial partial filing fee of 20 percent of the greater of (1) the average monthly deposits in the prisoner's account, or (2) the average monthly balance in the prisoner's account for the prior six-month period. After payment of the initial partial filing fee, the prisoner is required to make monthly payments of 20 percent of the preceding month's income credited to the prisoner's account. 28 U.S.C. § 1915(b)(2). The agency having custody of the prisoner will forward these monthly

payments to the Clerk of Court each time the amount in the prisoner's account exceeds $10, until the filing fee is fully paid. Jd. Plaintiff has submitted an affidavit and a certified copy of his prison account statement for the six-month period immediately preceding the submission of his complaint. A review of plaintiff's account indicates an average monthly deposit of $18.25. Plaintiff has insufficient funds to pay the entire filing fee. Accordingly, the Court will assess an initial partial filing fee of $3.65. 28 U.S.C. § 1915(e) Pursuant to 28 U.S.C. § 1915(e)(2)(B), the Court may dismiss a complaint filed in forma pauperis if the action is frivolous, malicious, fails to state a claim upon which relief can be granted, or seeks monetary relief against a defendant who is immune from such relief. An action is frivolous if “it lacks an arguable basis in either law or in fact.” Neitzke v. Williams, 490 U.S. 319, 328 (1989). An action is malicious when it is undertaken for the purpose of harassing litigants and not for the purpose of vindicating a cognizable right. Spencer v. Rhodes, 656 F. Supp. 458, 461-63 (E.D.N.C. 1987), aff'd 826 F.2d 1059 (4th Cir. 1987). To determine whether an action fails to state a claim upon which relief can be granted, the Court must engage in a two-step inquiry. First, the Court must identify the allegations in the complaint that are not entitled to the assumption of truth. Ashcroft v. Igbal, 129 S. Ct. 1937, 1950- 51 (2009). These include “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action [that are] supported by mere conclusory statements.” Jd. at 1949. Second, the Court must determine whether the complaint states a plausible claim for relief. Jd. at 1950-51. This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Jd. at 1950. The plaintiff is required to plead facts that show more than the “mere possibility of misconduct.” Jd. The Court must review the factual allegations in the complaint “to determine if they plausibly suggest an entitlement to relief.” Jd. at 1951. When faced with

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alternative explanations for the alleged misconduct, the Court may exercise its judgment in determining whether plaintiff's proffered conclusion is the most plausible or whether it is more likely that no misconduct occurred. Jd. at 1950, 1951-52. The Complaint Plaintiff seeks court intervention in obtaining his economic impact payment (“EIP”) pursuant to the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”), Pub. L. No. 116-136, 134 Stat. 281 (2020). Discussion In Scholl v. Mnuchin, No. 20-cv-5309 PJH, 2020 WL 6065059 (N.D. Cal. Oct. 14, 2020) (Scholl II), the court summarized the underlying issue that is central to plaintiff's complaint: The CARES Act, codified in part at section 6428 of the Internal Revenue Code, 26 U.S.C. § 6428, establishes a tax credit for eligible individuals in the amount of $1,200 ($2,400 if filing a joint return), plus $500 multiplied by the number of qualifying children. 26 U.S.C. § 6428(a). For purposes of the Act, an eligible individual is defined as “any individual” other than (1) any nonresident alien individual, (2) any individual who is allowed as a dependent deduction on another taxpayer’s return, and (3) an estate or trust. § 6428(d). The EIP is an advance refund of the subsection (a) tax credit and subsection (f) describes the mechanism for implementing the advance refund. Paragraph (1) of subsection (f) provides that “each individual who was an eligible individual for such individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.” § 6428(f)(1). Paragraph (3) of subsection (f) requires the IRS to “refund or credit any overpayment attributable to this section as rapidly as possible.” § 6428(f)(3). Additionally, Congress provided that “[nJo refund or credit shall be made or allowed under this subsection after December 31, 2020.” Id. The CARES Act also has a reconciliation provision between the advance refund and 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 aggregate amount of the refund. § 6428(e).

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Three days after the President signed the CARES Act, the IRS issued a news release explaining that the agency would calculate and automatically issue an EIP to eligible individuals. Scholl I. Though not required to do so by the Act, the IRS established an online portal for individuals who are not typically required to file federal income tax returns (e.g., because an individual’s income is less than $12,200), which allows those non-filers to enter their information to receive an EIP. Jd. Individuals who use the non-filer online portal had until October 15, 2020 to register in order to receive the EIP by the December 31, 2020 deadline imposed by the CARES Act. Id. On May 6, 2020, the IRS published responses to “Frequently Asked Questions” (“FAQ”) on the IRS.gov website. Jd., Ex. 4. Question 15 asked “Does someone who is incarcerated qualify for the Payment [i.e., an EIP]?” The IRS responded: A15. No. A Payment made to someone who is incarcerated should be returned to the IRS by following the instructions about repayments. A person is incarcerated if he or she is described in one or more of clauses (i) through (v) of Section 202(x)(1)(A) of the Social Security Act (42 U.S.C. § 402 (x)(1)(A)(i) through (v)). For a Payment made with respect to a joint return where only one spouse is incarcerated, you only need to return the portion of the Payment made on account of the incarcerated spouse. This amount will be $1,200 unless adjusted gross income exceeded $150,000. Id. 2020 WL 6065059 at *1-2 (footnotes omitted). In Scholl v. Mnuchin, No. 20-cv-5309 PJH, 2020 WL 5702129 (N.D. Cal. Sept. 24, 2020) (Scholl I), the court preliminarily certified the following class: All United States citizens and legal permanent residents who: (a) are or were incarcerated (i.e., confined in a jail, prison, or other penal institution or correctional facility pursuant to their conviction of a criminal offense) in the United States, or have been held to have violated a condition of parole or probation imposed under federal or state law, at any time from March 27, 2020 to the present; (b) filed a tax return in 2018 or 2019, or were exempt from a filing obligation because they earned an income below $12,000 (or $24,400 if filing jointly) in the respective tax year; (c) were not claimed as a dependent on another person’s tax return; and

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(d) filed their taxes with a valid Social Security Number, and, if they claimed qualifying children or filed jointly with another person, those individuals also held a valid Social Security Number. Excluded from the class are estates and trusts; defendants; the officers, directors, or employees of any defendant agency; and, any judicial officer presiding over this action and his/her immediate family and judicial staff. Id. 2020 WL 5702129 at *25. In Scholl IT, the court granted final certification of this class and entered the following declaratory relief: [T]he court finds and declares that Title 26 U.S.C. § 6428 does not authorize defendants to withhold advance refunds or credits from class members solely because they are or were incarcerated. The court further finds and declares that defendants’ policy that persons who are or were incarcerated at any time in 2020 were ineligible for advance refunds under the Act is both arbitrary and capricious and not in accordance with law. 2020 WL 6065059, at *21. A permanent injunction was entered and defendants were to reconsider EJPs that were denied solely due to an individual’s incarcerated status. Jd. 2020 WL 6065059 at *22. With respect to specific payments the court stated: The court takes no position on whether plaintiffs or class members are in fact owed advance refund payments or the amount of those payments. Indeed, the court’s Rule 23(b)(2) finding was premised on the “indivisible nature of the injunctive or declaratory remedy warranted” but not “an individualized award of monetary damages.” Dkt. 50 at 42 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 360-61, 131 S.Ct. 2541, 180 L.Ed. 2d 374 (2011)). The court’s determination in this order is that the IRS’s action was “arbitrary, capricious, ... or otherwise not in accordance with law” and the appropriate remedy is to “hold unlawful and set aside” that agency action. 5 U.S.C. § 706(2). It is incumbent on the IRS, as the agency charged by Congress, to make individual determinations whether an individual is an “eligible individual” and meets the various criteria delineated in the Act. Id. 2020 WL 6065059 at *20.

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Discussion Plaintiff is incarcerated and part of the Scholl class. He filed this case on January 19, 2021. Plaintiff states that he sent in his paperwork to the IRS but has not received his EJP. For relief he requests the court to investigate what occurred and have his EIP forwarded to him. To the extent plaintiff argues that his EIP was denied due to his incarcerated status, he is already a member of the Scholl class; therefore, he is not entitled to separate individual relief. An individual suit for injunctive and equitable relief may be dismissed when it duplicates an existing class action’s allegations and prayer for relief. See Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013); Gillespie v. Crawford, 858 F.2d 1101, 1103 (Sth Cir. 1988) (en banc) (“Individual members of the class and other prisoners may assert any equitable or declaratory claims they have, but they must do so by urging further actions through the class representative and attorney, including contempt proceedings, or by intervention in the class action.”). Nor is plaintiff entitled to relief to the extent he seeks the court to compel the IRS to provide his EIP pursuant to Scholl or the CARES Act. The court in Scholl found that the EIP could not be denied only because an individual was incarcerated. However, the court was clear that it took no position on whether individual incarcerated plaintiffs were owed the EJP, which is the relief sought in the instant case. That responsibility fell to the IRS to make an individual determination. More importantly, funds cannot now be distributed pursuant to the CARES Act. As noted above, the CARES Act imposed a deadline of December 31, 2020, for EIPs to be made or allowed. That deadline has passed, and no more funds may be issued. Plaintiff cannot obtain the relief he seeks in this case. Prior to the deadline, 385,995 incarcerated individuals were issued the EIP after they were reconsidered despite previously being identified as incarcerated. Scholl v. Mnuchin, No. 20-cv-

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5309 PJH. In addition, 950,000 individuals received the EIP before their accounts were marked as incarcerated. Id. For all these reasons, plaintiff fails to state a claim for relief. The complaint will be dismissed without leave to amend because it is clear that no amount of amendment would cure the deficiencies noted above. Accordingly, IT IS HEREBY ORDERED that plaintiff's motions to proceed in forma pauperis [ECF No, 2 and 6] are GRANTED. □ IT IS FURTHER ORDERED that the plaintiff shall pay an initial filing fee of $3.75 within thirty (30) days of the date of this Order. Plaintiff is instructed to make his remittance payable to “Clerk, United States District Court,” and to include upon it: (1) his name; (2) his prison registration number; (3) the case number; and (4) that the remittance is for an original proceeding. IT IS FURTHER ORDERED that this action is DISMISSED pursuant to 28 U.S.C. § 1915(e)(2)(B).

_ IT IS FURTHER ORDERED that plaintiff's motion for injunctive relief [Doc. #7] is DENIED AS MOOT. An Order of Dismissal will accompany this Memorandum and Order. Dated this day of May, 2021. . . \

STEPHEN N. LIMBAUGH, JR. SENIOR UNITED STATES DISTRICT JUDGE

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