Disabled Nonfilers Sue IRS Over Virus Payment Deadline

By Dylan Moroses
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Law360 (July 23, 2020, 1:43 PM EDT) -- A group of disabled federal beneficiaries who didn't receive their full COVID-19 economic impact payments from the IRS sued the federal government in a Pennsylvania federal court, contending the deadline to use an online tool for nonfilers was unconstitutional.

Willard McGruder and several other disabled citizens with qualifying dependents sued the U.S. Department of the Treasury and Internal Revenue Service on Wednesday. They claimed the government failed to allow Americans who don't file taxes and couldn't meet an April deadline to notify the IRS of their dependent children to receive additional virus relief payments of $500.

McGruder and the others asked the court to order the IRS to allow them to apply for the qualifying dependent children payments before the 2021 filing season, either online or through other means, and issue the payments to them before the end of the year, according to the complaint.

The U.S. government violated the Administrative Procedure Act and the Fifth Amendment of the U.S. Constitution when it failed to provide federal beneficiary recipients who don't file tax returns with another opportunity to receive their qualifying dependent payments before the 2021 filing season, McGruder said in the complaint.

"Forcing federal benefits recipients to wait until spring 2021 to receive [economic impact payments] for eligible dependent children will exacerbate food and housing insecurity and other economic hardship, causing irreparable harm," the complaint said. 

The $1,200 economic impact payments were established in March when President Donald Trump signed the Coronavirus Aid, Relief and Economic Security Act , $2.3 trillion legislation to help businesses and families endure the economic crisis caused by the novel coronavirus pandemic. The virus causes COVID-19, a respiratory illness. Those payments, available to individuals earning $75,000 or less, or to couples that file jointly earning up to $150,000, included an additional $500 for each qualifying child.

In April, the IRS announced that nonfilers receiving Social Security retirement, survivor or disability benefits, railroad retirement benefits, Supplemental Security Income benefits and Veterans Affairs benefits would have to notify the agency of any qualifying dependents who could entitle them to an additional $500 using the online tool before a deadline passed.

House and Senate Democratic lawmakers sent letters before the April 22 deadline, urging the IRS to give people not usually required to file tax returns and who receive benefits from certain federal programs more time to register their children with the IRS indicating their eligibility for the dependent payments.

Many disabled and elderly nonfilers were unable to access the online-only form and meet the April deadline to notify the agency whether they would qualify for the additional $500 payments, according to the complaint.

The U.S. government provided no reason or justification why the April deadline was imposed on this particular set of nonfilers who receive federal benefits. Other nonfilers were afforded an extended period of time to notify the agency of their qualifying children so they could receive the additional $500 payments, according to the complaint. 

Federal beneficiaries who don't file taxes had only until the April 22 deadline to use the online portal and notify the IRS of any qualifying dependents that could entitle them to additional $500 payments under the coronavirus aid bill, the complaint said. Nonfilers who don't receive benefits from the federal government have until Oct. 15, according to the complaint.

Additionally, those who sought assistance to access the online nonfiler tool before the deadline were often unable to receive any help while the IRS customer service phone lines were unavailable during the agency's shutdown to mitigate the health effects of the pandemic, McGruder said. Low-income taxpayer assistance centers and libraries where nonfilers might receive help and access to the portal were also shuttered before the April deadline, according to the complaint.

Furthermore, the government gave nonfilers too little time to access the online tool and provide the IRS with dependent information, the complaint said.

McGruder's attorney, Ellen T. Noteware of Berger Montague PC, told Law360 that her clients have already been waiting too long for their full economic impact payments, so she doesn't expect them to seek class certification, a process that she said could become tenuous.

"Accordingly, we have not, at this time, filed our case as a class action because our clients, parents and grandparents with disabilities, need relief immediately, this year," Noteware said. "We intend to focus our efforts on securing injunctive relief for our clients as soon as possible."

The U.S. Department of Justice declined to comment.

McGruder is represented by Ellen T. Noteware, Caitlin G. Coslett, Phyllis M. Parker and Nicholas Urban of Berger Montague PC, Jennifer Burdick and Kristen Dama of Community Legal Services Inc., and Christine Speidel and Leslie Book of Villanova Law School's Federal Tax Clinic.

Counsel information for Treasury Secretary Steve Mnuchin, IRS Commissioner Chuck Rettig, the U.S. Department of the Treasury and the IRS wasn't immediately available. 

The case is Willard McGruder et al. v. Steven Mnuchin et al., case number 2:20-cv-03590-CFK, in the U.S. District Court for the Eastern District of Pennsylvania.

--Editing by Neil Cohen.

Update: This article has been updated to include additional counsel information for the plaintiffs and Noteware's comment.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

MCGRUDER et al v. MNUCHIN et al

Case Number



Pennsylvania Eastern

Nature of Suit

Other Statutes: Administrative Procedures Act/Review or Appeal of Agency Decision



Date Filed

July 22, 2020

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