Scams Over Slavery Reparations on Rise

A growing number of black taxpayers are being misled by scams falsely claiming they can get tax credits or refunds as reparations for slavery, the Internal Revenue Service said.

The IRS received about 80,000 tax returns last year claiming $2.7 billion in reparations refunds, up from 13,000 the previous year. The majority of claims come from taxpayers in the South, but they have occurred in all parts of the country--including some involving Native Americans.

Typical scams use terms such as “black investment taxes,” “reparations for African Americans” or a “black inheritance tax refund,” the IRS said.

Promoters charge an upfront fee, sometimes a percentage of the promised refund, and provide a fake tax form for claims that frequently seek $40,000 to $80,000 from the government.

These con artists often warn clients not to contact the IRS because the government doesn’t want the general public to know.

“Promoters are shamelessly preying upon people,” IRS Commissioner Charles Rossotti said. “In the end, the victims discover their refund claims are rejected, and their money and the promoters are long gone.”

There is no law allowing the U.S. government to pay reparations or give tax refunds for slavery. Effective April 15, the IRS will send a warning letter to taxpayers who filed for mythical slavery reparations, giving them a chance to submit a corrected return without fear of penalty. Otherwise, a $500 penalty could be assessed for filing a frivolous tax return.

IRS agents are stepping up enforcement efforts and increasing contact with black leaders and churches so information about the scams is distributed more widely.