Swedlow v. Dep't of the Treasury

• Decision Date: 04 March 2022
• Docket Number: 1:22-cv-00011-JLT-SKO
• Parties: SCOTT PATRICK SWEDLOW, Plaintiff, v. DEPARTMENT OF THE TREASURY and INTERNAL REVENUE SERVICE, Defendants.
• Court: U.S. District Court — Eastern District of California

SCOTT PATRICK SWEDLOW, Plaintiff, v. DEPARTMENT OF THE TREASURY and INTERNAL REVENUE SERVICE, Defendants.

No. 1:22-cv-00011-JLT-SKO

United States District Court, E.D. California

March 4, 2022

SCREENING ORDER GRANTING PLAINTIFF LEAVE TO FILE AMENDED COMPLAINT

(DOC. 1)

SHEILA K. OBERTO, UNITED STATES MAGISTRATE JUDGE

THIRTY DAY DEADLINE

Scott Patrick Swedlow (“Plaintiff”), a state prisoner proceeding pro se and in forma pauperis, filed this action against the Department of Treasury and Internal Revenue Service (“IRS”) on January 3, 2022. (Doc 1.) Upon review, the Court concludes that the complaint fails to state any cognizable claims.

Plaintiff has the following options as to how to proceed. Plaintiff may file an amended complaint, which the Court will screen in due course. Alternatively, Plaintiff may file a statement with the Court stating that he wants to stand on this complaint and have it reviewed by the presiding district judge, in which case the Court will issue findings and recommendations to the district judge consistent with this order. If Plaintiff does not file anything, the Court will recommend that the case be dismissed.

I. SCREENING REQUIREMENT

The Court is required to screen complaints brought by prisoners seeking relief against a governmental entity or officer or employee of a governmental entity. 28 U.S.C. § 1915A(a). The Court must dismiss a complaint or portion thereof if the prisoner has raised claims that are legally “frivolous or malicious, ” that “fail[] to state a claim on which relief may be granted, ” or that “seek[] monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B).

A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief. . . .” Fed.R.Civ.P. 8(a)(2). Detailed factual allegations are not required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Moreover, Plaintiff must demonstrate that each defendant personally participated in the deprivation of Plaintiff s rights. Jones v. Williams, 297 F.3d 930, 934 (9th Cir. 2002).

Prisoners proceeding pro se in civil rights actions are entitled to have their pleadings liberally construed and to have any doubt resolved in their favor. Wilhelm v. Rotman, 680 F.3d 1113, 1121 (9th Cir. 2012) (citations omitted). To survive screening, Plaintiffs claims must be facially plausible, which requires sufficient factual detail to allow the Court to reasonably infer that each named defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678-79; Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). The “sheer possibility that a defendant has acted unlawfully” is not sufficient, and “facts that are ‘merely consistent with' a defendant's liability” falls short of satisfying the plausibility standard. Iqbal, 556 U.S. at 678; Moss, 572 F.3d at 969.

II. SUMMARY OF PLAINTIFF'S COMPLAINT

Plaintiff alleges that as of September 15, 2021, he filed for stimulus payments but has not received any payments. (Doc. 1 at 4.) Plaintiff also alleges that the fact that he receives no pay for his work at the prison violates his “13th Amendment of [sic] slavery” and is an “8th Amendment violation for cruel and unusual punishment, ” and that he is receiving “harsh treatment” due to “basic necessities” being scarce through the prison because of the COVID-19 pandemic. (Id. at 5.) Plaintiff brings this action seeking payment of between $3, 000.00 and $3, 200.00 in stimulus payments and $1, 000.00 in damages due to “inhumane treatment” while in prison. (Id. . at 5, 7.)

III. DISCUSSION

For the reasons discussed below, the Court finds that the complaint does not state any cognizable claims. Plaintiff will be provided with the legal standards that appear to apply to his claims and will be granted an opportunity to file an amended complaint to correct the identified deficiencies.

A. CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), codified in part at Section 6428 of the Internal Revenue Code, 26 U.S.C. § 6428, establishes a mechanism for the IRS to issue economic impact payments (“EIPs”) to eligible individuals in the form of a tax credit. Scholl v. Mnuchin (Scholl I), 489 F.Supp.3d 1008, 1020 (N.D. Cal. 2020), appeal dismissed, No. 20-16915, 2020 WL 9073361 (9th Cir. Nov. 20, 2020). Under § 6428(a), eligible individuals may receive a tax credit in the amount of $1, 200 ($2, 400 if filing a joint return), plus $500 multiplied by the number of qualifying children. Scholl I, 489 F.Supp.3d at 1020 (citing 26 U.S.C. § 6424(a)). This amount is credited against the individual's federal income tax for the year 2020. Id. For purposes of the CARES Act, an eligible individual is defined as “any individual” other than (1) a nonresident alien individual, (2) an individual who is allowed as a dependent deduction on another taxpayer's return, or (3) an estate or trust. Id. at 1021 (citing 26 U.S.C. § 6424(d)).

The CARES Act 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.” Id. (quoting 26 U.S.C. § 6428(f)(1)). Therefore, the Act provides that “if an eligible individual filed a tax return in 2018 or 2019 or filed one of the enumerated Social Security forms, then the Act directs the IRS to treat those taxpayers as eligible for an advance refund of the tax credit.” Id. Congress provided that “[n]o refund or credit shall be made or allowed under this subsection after December 31, 2020.” 26 U.S.C. § 6428(f)(3)(A).

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. 26 U.S.C. § 6428(e). Finally, the CARES Act delegates to the Secretary of the Treasury the authority to “prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including any such measures as are deemed appropriate to avoid allowing multiple credits or rebates to a taxpayer.” 26 U.S.C. § 6428(h).

1.The Scholl Class

In Scholl I, the district 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;

(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;

(c) were not claimed as a dependent on another person's tax return; and

(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.

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.

Scholl I, 489 F.Supp.3d at 1047. In Scholl v. Mnuchin (Scholl II), 494 F.Supp.3d 661 (N.D. Cal. 2020), the court granted final certification of this class and entered the following declaratory relief:

[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.

Scholl II, 494 F.Supp.3d 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 [Federal Rule of Civil Procedure] 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.

Id. at 691.

2. Jurisdiction Under 28 U.S.C. § 1346(a)

Pursuant to 28 U.S.C. § 1346, the United States consents to be sued in the district court for refund of taxes. 28 U.S.C § 1346(a)(1). However, the United States consents to be sued for a tax refund only where the taxpayer has followed the...