A federal judge for the U.S. District Court for the Northern District of California ruled on the side of lawyers who brought a class-action lawsuit against U.S. Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig arguing that denying these individuals relief checks based on their incarcerated status is unlawful.
The agency has until later this month to decide on whether it will follow through on these payments.
The IRS updated stimulus check guidance following a preliminary injunction issued in California to clarify that incarcerated individuals cannot currently be denied a $1,200 check.
The government, however, is appealing the ruling.
A spokesperson for the IRS did not return FOX Business’ request for comment.
The language of the CARES Act did not specifically prohibit payments from being sent to these individuals.
In May, the IRS declared that incarcerated people were ineligible.
A report by the Treasury Inspector General for Tax Administration said more than 84,600 checks totaling about $100 million were sent to people in prison.
The agency has also said that decedents are not eligible recipients of economic impact payments – and the agency has asked that relatives or family members return that money to the government.
Lawmakers have been unable to reach an agreement on an additional round of stimulus relief, though talks are ongoing.
A previous proposal by Republicans updated language for direct payments to preclude individuals that it did not intend the checks to be sent to, like decedents.
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