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Court Asked to Ensure Benefit Recipients Get Full Virus Payments (1)

July 31, 2020, 10:40 PMUpdated: Aug. 3, 2020, 1:53 PM

A federal district court was asked to order the IRS and Treasury Department to ensure that recipients of disability, Social Security, and other federal benefits quickly receive a $500 virus relief payment for dependent children.

A coalition of plaintiffs represented by the Villanova Federal Tax Clinic, Community Legal Services, and law firm Berger Montague are challenging the federal government’s handling of economic impact payments authorized under the CARES Act (Public Law 116-136). The March coronavirus response law included payments of up to $1,200 per individual and $2,400 per married couple, plus a $500 supplemental payment for dependents.

The plaintiffs in a motion filed Friday in the U.S. District Court for the Eastern District of Pennsylvania, argued that the federal government gave benefits recipients who don’t usually file tax returns a much shorter window to register their dependents than others got.

Non-filers receiving Social Security, survivor or disability and Railroad Retirement benefits, only had 40 hours to register their dependents using an online portal, according to the court document. Recipients of Supplemental Security Income and veteran benefits had less than 11 days to alert the IRS. In comparison, non-filers who don’t receive federal benefits have until Oct. 15 to contact the IRS about their CARES Act payment.

People who missed those “unreasonably set deadlines” should get the opportunity to alert the IRS about their dependents and receive the supplemental $500 payments quickly, rather than wait for the issue to be fixed by filing a 2020 tax return next year, the plaintiffs argued in their motion. The CARES Act payments are structured as an advance on a 2020 tax credit.

“The need for this relief is both immediate and urgent,” the plaintiffs said in a brief accompanying the motion. “The dependent child payments were designed to alleviate serious economic hardships that poor people with children, like Plaintiffs, face as a result of the pandemic, including food and housing insecurity resulting from markedly increased pandemic prices.”

Ellen T. Noteware, a shareholder with Berger Montague representing the plaintiffs, and the Treasury, were not immediately available for comment.

The case is McGruder v. Mnuchin, E.D. Pa., No. 2:20-cv-03590, motion filed 7/31/20.

(Updates July 31 story to include Community Legal Services in second paragraph.)

To contact the reporter on this story: Jeffery Leon in Washington at jleon@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Yuri Nagano at ynagano@bloombergtax.com

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