The opinion
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 JOSEPH ARUANNO, Case No. 25-cv-03073-PJH
8 Plaintiff,
ORDER OF DISMISSAL
v.
9
Re: Dkt. No. 5
10 INTERNAL REVENUE SERVICE,
Defendant.
11
12
13 Plaintiff, a civilly committed detainee in New Jersey, proceeds with a pro se civil
14 action against a governmental entity. He has been granted leave to proceed in forma
15 pauperis.
16 DISCUSSION
17 STANDARD OF REVIEW
18 Federal courts must engage in a preliminary screening of cases in which prisoners
19 seek redress from a governmental entity or officer or employee of a governmental entity.
20 28 U.S.C. § 1915A(a). In its review the court must identify any cognizable claims, and
21 dismiss any claims which are frivolous, malicious, fail to state a claim upon which relief
22 may be granted, or seek monetary relief from a defendant who is immune from such
23 relief. Id. at 1915A(b)(1),(2). Pro se pleadings must be liberally construed. Balistreri v.
24 Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
25 Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement
26 of the claim showing that the pleader is entitled to relief." "Specific facts are not
27 necessary; the statement need only '"give the defendant fair notice of what the . . . . claim
1 (citations omitted). Although in order to state a claim a complaint “does not need detailed
2 factual allegations, . . . a plaintiff's obligation to provide the 'grounds’ of his 'entitle[ment]
3 to relief' requires more than labels and conclusions, and a formulaic recitation of the
4 elements of a cause of action will not do. . . . Factual allegations must be enough to
5 raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550
6 U.S. 544, 555 (2007) (citations omitted). A complaint must proffer "enough facts to state
7 a claim to relief that is plausible on its face." Id. at 570. The United States Supreme
8 Court has recently explained the “plausible on its face” standard of Twombly: “While legal
9 conclusions can provide the framework of a complaint, they must be supported by factual
10 allegations. When there are well-pleaded factual allegations, a court should assume their
11 veracity and then determine whether they plausibly give rise to an entitlement to relief.”
12 Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
13 LEGAL CLAIMS
14 Plaintiff seeks court intervention in obtaining his economic impact payment (“EIP”)
15 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”),
16 Pub. L. No. 116-136, 134 Stat. 281 (2020).
17 Background
18 In Scholl v. Mnuchin, 494 F. Supp. 3d 661 (N.D. Cal. 2020) (Scholl II), the court
19 summarized the underlying issue that is central to plaintiff’s complaint:
20 The CARES Act, codified in part at section 6428 of the Internal
Revenue Code, 26 U.S.C. § 6428, establishes a tax credit for
21 eligible individuals in the amount of $1,200 ($2,400 if filing a
joint return), plus $500 multiplied by the number of qualifying
22 children. 26 U.S.C. § 6428(a). For purposes of the Act, an
eligible individual is defined as “any individual” other than (1)
23 any nonresident alien individual, (2) any individual who is
allowed as a dependent deduction on another taxpayer's
24 return, and (3) an estate or trust. § 6428(d). The EIP is an
advance refund of the subsection (a) tax credit and subsection
25 (f) describes the mechanism for implementing the advance
refund. Paragraph (1) of subsection (f) provides that “each
26 individual who was an eligible individual for such individual's
first taxable year beginning in 2019 shall be treated as having
27 made a payment against the tax imposed by chapter 1 for such
1
Paragraph (3) of subsection (f) requires the IRS to “refund or
2 credit any overpayment attributable to this section as rapidly as
possible.” § 6428(f)(3). Additionally, Congress provided that
3 “[n]o refund or credit shall be made or allowed under this
subsection after December 31, 2020.” Id. The CARES Act also
4 has a reconciliation provision between the advance refund and
the tax credit such that if a taxpayer receives an advance refund
5 of the tax credit then the amount of the credit is reduced by the
aggregate amount of the refund. § 6428(e).
6
Three days after the President signed the CARES Act, the IRS
7 issued a news release explaining that the agency would
calculate and automatically issue an EIP to eligible individuals.
8 Declaration of Yaman Salahi (“Salahi Decl.”), Dkt. 55, Ex. 1 at
1. Though not required to do so by the Act, the IRS established
9 an online portal for individuals who are not typically required to
file federal income tax returns (e.g., because an individual's
10 income is less than $12,200), which allows those non-filers to
enter their information to receive an EIP. Id., Ex. 2. Individuals
11 who use the non-filer online portal have until October 15, 2020
to register in order to receive the EIP by the December 31, 2020
12 deadline imposed by the CARES Act. Id., Ex. 3.
13 On May 6, 2020, the IRS published responses to “Frequently
Asked Questions” (“FAQ”) on the IRS.gov website. Id., Ex. 4.
14 Question 15 asked “Does someone who is incarcerated qualify
for the Payment [i.e., an EIP]?” The IRS responded:
15
A15. No. A Payment made to someone who is
16 incarcerated should be returned to the IRS by following
the instructions about repayments. A person is
17 incarcerated if he or she is described in one or more of
clauses (i) through (v) of Section 202(x)(1)(A) of the
18 Social Security Act (42 U.S.C. § 402 (x)(1)(A)(i) through
(v)). For a Payment made with respect to a joint return
19 where only one spouse is incarcerated, you only need to
return the portion of the Payment made on account of
20 the incarcerated spouse. This amount will be $1,200
unless adjusted gross income exceeded $150,000.
21
Id. at 670-71 (footnotes omitted).
22
In Scholl v. Mnuchin, 489 F. Supp. 3d 1008 (N.D. Cal. 2020) (Scholl I), the court
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preliminarily certified the following class:
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All United States citizens and legal permanent residents who:
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(a) are or were incarcerated (i.e., confined in a jail, prison, or
26 other penal institution or correctional facility pursuant to their
conviction of a criminal offense) in the United States, or have
27 been held to have violated a condition of parole or probation
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(b) filed a tax return in 2018 or 2019, or were exempt from a
2 filing obligation because they earned an income below $12,000
(or $24,400 if filing jointly) in the respective tax year;
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(c) were not claimed as a dependent on another person's tax
4 return; and
5 (d) filed their taxes with a valid Social Security Number, and, if
they claimed qualifying children or filed jointly with another
6 person, those individuals also held a valid Social Security
Number.
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Excluded from the class are estates and trusts; defendants; the
8 officers, directors, or employees of any defendant agency; and,
any judicial officer presiding over this action and his/her
9 immediate family and judicial staff.
10 Id. at 1047. In Scholl II, the court granted final certification of this class and entered the
11 following declaratory relief:
12 [T]he court finds and declares that title 26 U.S.C. § 6428 does
not authorize defendants to withhold advance refunds or credits
13 from class members solely because they are or were
incarcerated. The court further finds and declares that
14 defendants’ policy that persons who are or were incarcerated
at any time in 2020 were ineligible for advance refunds under
15 the Act is both arbitrary and capricious and not in accordance
with law.
16
Scholl II at 692. A permanent injunction was entered and defendants were to reconsider
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EIPs that were denied solely due to an individual’s incarcerated status. Id. at 692-93.
18
With respect to specific payments the court stated:
19
The court takes no position on whether plaintiffs or class
20 members are in fact owed advance refund payments or the
amount of those payments. Indeed, the court’s Rule 23(b)(2)
21 finding was premised on the “indivisible nature of the injunctive
or declaratory remedy warranted” but not “an individualized
22 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,
23 180 L.Ed. 2d 374 (2011)). The court’s determination in this
order is that the IRS’s action was “arbitrary, capricious, . . . or
24 otherwise not in accordance with law” and the appropriate
remedy is to “hold unlawful and set aside” that agency action.
25 5 U.S.C. § 706(2). It is incumbent on the IRS, as the agency
charged by Congress, to make individual determinations
26 whether an individual is an “eligible individual” and meets the
various criteria delineated in the Act.
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Id. at 691.
1 Discussion
2 Plaintiff seeks the court to compel the IRS to provide an additional EIP. Plaintiff is
3 not entitled to relief. The court in Scholl found that the EIP could not be denied only
4 because an individual was incarcerated. However, the court was clear that it took no
5 position on whether individual incarcerated plaintiffs were owed the EIP, which is the
6 relief sought in the instant case. That responsibility fell to the IRS to make an individual
7 determination. More importantly, funds cannot now be distributed pursuant to the
8 CARES Act. As noted above, the CARES Act imposed a deadline of December 31,
9 2020, for EIPs to be made or allowed. That deadline has passed, and no more funds
10 may be issued.1 Plaintiff cannot obtain the relief he seeks in this case.
11 For all these reasons, plaintiff fails to state a claim for relief. The complaint will be
12 dismissed without leave to amend because it is clear that no amount of amendment
13 would cure the deficiencies noted above. See Lopez v. Smith, 203 F.3d 1122, 1129-30
14 (9th Cir. 2000).
15 CONCLUSION
16 The motion to proceed in forma pauperis (Docket No. 5) is GRANTED. This
17 action is DISMISSED without leave to amend. The clerk shall close this case. To the
18 extent plaintiff argues that officials at his New Jersey facility stole his EIP, he may seek
19 relief in the District of New Jersey against those defendants.
20 IT IS SO ORDERED.
21 Dated: May 28, 2025
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23 /s/ Phyllis J. Hamilton
PHYLLIS J. HAMILTON
24 United States District Judge
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1 Prior to the deadline, 385,995 incarcerated individuals were issued the EIP after they
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were reconsidered despite previously being identified as incarcerated. Scholl v. Mnuchin,