By Dylan Moroses

Law360 (August 6, 2020, 2:13 PM EDT) -- The IRS and U.S. Treasury Department must face a suit brought by Americans who lost out on their federal stimulus checks because they are married to immigrants without Social Security numbers, a Maryland federal court said.

The court denied the government's motion to toss the suit, saying in its Wednesday memorandum opinion that the Americans who didn't receive their stimulus check because their spouses lack Social Security numbers have valid claims to challenge the government's actions under the U.S. Constitution. Forcing the couples to bring a tax refund action against the IRS — as sought by the government — would prove tenuous and contradictory to their suit requesting immediate relief, the court said.

"Requiring plaintiffs to seek judicial relief through a tax refund action would erect unnecessarily onerous and costly barriers to plaintiffs' suit," U.S. District Judge Ellen L. Hollander said in the opinion.

Congress authorized the stimulus checks, aimed to help Americans reeling from the economic downturn caused by the novel coronavirus pandemic, when it passed the Coronavirus Aid, Relief and Economic Security Act in March. But with the exception of military families, under Internal Revenue Code Section 6428(g)(1)(B) , the act required both spouses to have Social Security numbers, which are given to U.S. citizens and foreigners with work authorization. 

As a result, people with tax processing numbers known as Individual Taxpayer Identification Numbers — which could include foreign residents here without authorization as well as foreigners living here legally who don't have permission to work — and their otherwise eligible American spouses were excluded from the relief.

Citing a statute in the Administrative Procedure Act, the court found that the group's suit is valid because it only seeks injunctive and declaratory relief rather than both those and damages, according to the opinion. Furthermore, the married couples have suffered a legitimate injury under Article III of the Constitution by not receiving the stimulus checks.

"This pocketbook injury is the textbook example of injury in fact," Judge Hollander said in the opinion.

The court also found the group's suit sufficiently stated claims under the First and Fifth Amendments of the Constitution, arguing that the CARES Act language limiting the distribution of stimulus checks infringes on the couples' rights to marriage and the benefits associated with that union, such as receiving tax benefits.

"Accordingly, plaintiffs have adequately alleged that § 6428(g)(1)(B) imposes a discriminatory burden on the fundamental right of marriage," Judge Hollander said.

The group, represented by the Mexican American Legal Defense and Educational Fund, or MALDEF, brought the suit against the federal government in April, arguing that by denying stimulus checks to these U.S. citizens, the federal government violated their constitutional rights to due process and free speech by penalizing them for marrying people with Social Security numbers and then "expressing" that marriage by filing taxes jointly.

The Internal Revenue Service and Treasury argued that the suit should be dismissed because the government didn't waive its sovereign immunity, which protects it from suits. The government also said the injuries claimed by the group of Americans are too speculative to state an Article III claim under the U.S. Constitution, according to court documents.

MALDEF's suit is at least the third proposed class action levied against the Trump administration for withholding stimulus checks from mixed-status couples and their children. Under the CARES Act, taxpayers with qualifying income can receive $1,200 from the federal government, and married couples who file their taxes jointly are entitled to $2,400, plus $500 per child.

In June, the same Maryland federal court rejected the government's motion to dismiss a separate suit alleging that the U.S. citizen children of unauthorized immigrant parents have been improperly denied coronavirus relief payments.

And also in April, an American citizen sued the federal government in Illinois federal court, claiming that withholding his stimulus check violated his constitutional rights. Like the Americans in MALDEF's suit, he filed jointly with his wife, who uses an ITIN.

Legal representatives for the group and government didn't immediately respond to requests for comment.

The proposed class is represented by Robert P. Newman of the Law Office of Robert P. Newman PC, and Thomas A. Saenz, Belinda Escobosa Helzer, Andres Holguin-Flores, Nina Perales, Fátima Menéndez, Samantha Serna and Andrea Senteno of the Mexican American Legal Defense and Educational Fund.

The government is represented by Christopher James Williamson, Jordan A Konig and Nishant Kumar of the U.S. Department of Justice's Tax Division.

The case is Ivania Amador et al. v. Steven Mnuchin et al., case number 1:20-cv-01102, in the U.S. District Court for the District of Maryland.

--Additional reporting by Suzanne Monyak, Stephen Cooper and Hannah Albarazi. Editing by Joyce Laskowski. 

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