Nidez v. IRS et al

Filing 4

ORDER OF DISMISSAL. Signed by Judge Phyllis J. Hamilton on 3/7/2025. (kc, COURT STAFF) (Filed on 3/7/2025)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MOSES NIDEZ,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 25-cv-00412-PJH
ORDER OF DISMISSAL

v.

Re: Dkt. No. 2

IRS, et al.,
Defendants.

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Plaintiff, a California state prisoner, proceeds with a pro se civil action against a
governmental entity. He paid the filing fee.
DISCUSSION

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STANDARD OF REVIEW

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Federal courts must engage in a preliminary screening of cases in which prisoners

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seek redress from a governmental entity or officer or employee of a governmental entity.

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28 U.S.C. § 1915A(a). In its review the court must identify any cognizable claims, and

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dismiss any claims which are frivolous, malicious, fail to state a claim upon which relief

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may be granted, or seek monetary relief from a defendant who is immune from such

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relief. Id. at 1915A(b)(1),(2). Pro se pleadings must be liberally construed. Balistreri v.

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Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

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Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement

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of the claim showing that the pleader is entitled to relief." "Specific facts are not

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necessary; the statement need only '"give the defendant fair notice of what the . . . . claim

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is and the grounds upon which it rests."'" Erickson v. Pardus, 551 U.S. 89, 93 (2007)

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(citations omitted). Although in order to state a claim a complaint “does not need detailed

United States District Court
Northern District of California

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factual allegations, . . . a plaintiff's obligation to provide the 'grounds’ of his 'entitle[ment]

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to relief' requires more than labels and conclusions, and a formulaic recitation of the

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elements of a cause of action will not do. . . . Factual allegations must be enough to

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raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550

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U.S. 544, 555 (2007) (citations omitted). A complaint must proffer "enough facts to state

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a claim to relief that is plausible on its face." Id. at 570. The United States Supreme

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Court has recently explained the “plausible on its face” standard of Twombly: “While legal

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conclusions can provide the framework of a complaint, they must be supported by factual

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allegations. When there are well-pleaded factual allegations, a court should assume their

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veracity and then determine whether they plausibly give rise to an entitlement to relief.”

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Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

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LEGAL CLAIMS

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Plaintiff seeks court intervention in obtaining his economic impact payment (“EIP”)

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pursuant to the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”),

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Pub. L. No. 116-136, 134 Stat. 281 (2020).

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Background

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In Scholl v. Mnuchin, 494 F. Supp. 3d 661 (N.D. Cal. 2020) (Scholl II), the court

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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).

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United States District Court
Northern District of California

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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
“[n]o 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).
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.
Declaration of Yaman Salahi (“Salahi Decl.”), Dkt. 55, Ex. 1 at
1. 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. Id., Ex. 2. Individuals
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
deadline imposed by the CARES Act. Id., Ex. 3.
On May 6, 2020, the IRS published responses to “Frequently
Asked Questions” (“FAQ”) on the IRS.gov website. Id., 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. at 670-71 (footnotes omitted).
In Scholl v. Mnuchin, 489 F. Supp. 3d 1008 (N.D. Cal. 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;

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(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;

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(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.

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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.

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Id. at 1047. In Scholl II, the court granted final certification of this class and entered the

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following declaratory relief:

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United States District Court
Northern District of California

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[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.

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Scholl II at 692. A permanent injunction was entered and defendants were to reconsider
EIPs that were denied solely due to an individual’s incarcerated status. Id. at 692-93.
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.

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Id. at 691.

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Discussion

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Plaintiff seeks the court to compel the IRS to provide his EIPs. Plaintiff is not

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entitled to relief. The court in Scholl found that the EIP could not be denied only because

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an individual was incarcerated. However, the court was clear that it took no position on

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whether individual incarcerated plaintiffs were owed the EIP, which is the relief sought in

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the instant case. That responsibility fell to the IRS to make an individual determination.

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More importantly, funds cannot now be distributed pursuant to the CARES Act. As noted

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above, the CARES Act imposed a deadline of December 31, 2020, for EIPs to be made

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or allowed. That deadline has passed, and no more funds may be issued.1 Plaintiff

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cannot obtain the relief he seeks in this case.
For all these reasons, plaintiff fails to state a claim for relief. The complaint will be

United States District Court
Northern District of California

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dismissed without leave to amend because it is clear that no amount of amendment

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would cure the deficiencies noted above. See Lopez v. Smith, 203 F.3d 1122, 1129-30

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(9th Cir. 2000).

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CONCLUSION

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The action is DISMISSED without leave to amend and the motion to proceed in

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forma pauperis (Docket No. 2) is DENIED as moot. The clerk shall close this case.
IT IS SO ORDERED.

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Dated: March 7, 2025

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/s/ Phyllis J. Hamilton
PHYLLIS J. HAMILTON
United States District Judge

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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-5309 PJH, Docket No. 178 at 3. In addition, 950,000 individuals received the
EIP before their accounts were marked as incarcerated. Id.
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