IRS warns against "slavery reparation" tax scam

Social justice news
March 2002

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Humanitarian emergency follows collapse of Colombia's peace process
IRS warns against "slavery reparation" tax scam
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Pax Christi plans summit in a "time of terrorism
Pope calls for immediate Middle East ceasefire
USCCB calls refugee admissions stall a crisis
Vatican opposes Iraq attack, favors Palestinian state

IRS warns against "slavery reparation" tax scam
The IRS issued a press release warning African-Americans against a false slavery reparations tax credit. Perpetrators of the scam offer to file forms for clients to receive a tax credit or refund for the slave labor of their ancestors, called the "black investment tax," "black inheritance tax refund," or "reparations for African-Americans." Some simply list the credit as compensation for racial discrimination.

In 2001, the IRS received almost 80,000 returns claiming more than $2.7 billion in such credits. Some of the fraudulent tax advisors charge a flat fee for their service, while others charge a percentage of the estimated refund. In one known case, the promoter charged up to 30 percent of the $40,000 to $80,000 credit he told taxpayers they would receive.

Schemers target elderly African-Americans in particular, as well as church groups. Recent evidence shows they are widening the pool of victims to members of other minority groups as well. The IRS has seen about 200 claims thus far for Native American reparations.

The IRS warns that schemes of this sort often employ rapidly changing tactics as perpetrators attempt to stay one step ahead of investigators and consumer warnings. Special teams of IRS agents have been trained to spot the suspicious returns as Americans submit their taxes each spring.

Often the scam promoters tell clients that the IRS does not want the general public to know about the reparations credit and thus advise against phoning the IRS for information. They also tell clients that the claim may be rejected for this reason, and some even solicit a fee to resubmit on behalf of the claimant. It is important to note that if a taxpayers resubmit a reparations tax claim after the claim has been rejected as false by the IRS, they may then be subject to a $500 fine.

Following the Civil War, a reparations bill was passed through Congress entitling former slaves and their descendants to the infamous "40 acres and a mule." But the bill was vetoed by President Andrew Johnson and never became law. More recently, the leader of the Congressional Black Caucus, Representative John Conyers of Michigan, has introduced a bill to study the possibility of reparations to African-Americans every year since 1989, but it has never progressed.

Taxpayers are advised to phone the IRS' information hotline at 1-800-829-1040 with any questions on the issue, and to phone 1-800-829-0433 if they suspect tax fraud activity. Information is also available at the IRS Web site.—Tara Dix

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