IRS Warns of Slave Reparation Scams

Scam artists are bilking blacks nationwide by charging them for information about a phony “slave reparation” tax credit, the latest in a line of schemes dealing with money for descendants of slaves, federal officials said today.

The Internal Revenue Service said its tax centers nationwide all have received thousands of slave reparation-related claims in the last few months. But because there is no law allowing reparations, the IRS rejects the claims.

The claims are prompted by scam artists, who charge money for the false information on how to file the claims.

“It’s despicable that some are stealing from innocent people by charging fees to prepare what they know to be baseless claims,” IRS Commissioner Charles Rossotti said.

Prosecuting a Hoax The scam comes in two forms, IRS officials said. In one, the person tells blacks to claim a credit for black investment taxes or reparations. In the other, the person tells black taxpayers to attach a form listing thousands of dollars in tax withholdings that never occurred.

Officials are trying to prosecute the promoters of the scam, Rossotti said. In 1999, a black Texas minister got two years in federal prison for talking three people into filing tax returns claiming “black tax” exemptions.

In Florida last month, authorities got an injunction against a Miami-based promoter who was charging victims $100 to process their claims.

Part of the scam including a warning not to call the IRS to check the claim, because the federal government did not want the general public to know about the tax credit.

“Promoters do not want potential victims to learn the truth about this hoax,” Rossotti said.

Beware False Tax Charges

IRS officials say people who repeatedly filed for reparation claims, even after receiving a denial notice from the IRS, could be fined $500 for filing false tax claims.

This is not the first appearance of this type of scam, officials said.

In the South, phony letters are going to elderly black people telling them they may be eligible for $5,000 in slave reparations or Social Security reimbursements.

Those letters, which include requests for Social Security numbers, are apparently part of a scheme to steal people’s identities and run up credit bills under their names, officials said.

Claims for a slave reparation tax credit have popped up before, notably in 1994 and 1996, officials said. In 1994, the IRS received more than 20,000 claims for a “Black Tax” credit.