WASHINGTON – Charles Young knew instantly the offer was too good to be true.
The unsolicited e-mail that the Baltimore resident received said African- Americans could get $40,000 to $60,000 in slavery reparations from the federal government, if they paid the sender $250 to help with the paperwork.
Young, an accountant, knew both the promise and the supposed tax provision were false. But last year, nearly 2,000 taxpayers in the region did not.
The number of people claiming the non-existent credit for slavery reparations soared from about 300 in Maryland and the District of Columbia in the year 2000 to about 2,000 claims last year, said Internal Revenue Service spokesman Sam Serio.
“These e-mails pose a real threat to those who are willing to believe these hoaxes,” said Rep. Elijah Cummings, D-Baltimore, at a recent news conference with IRS Commissioner Charles Rossotti. Cummings called such schemes “a horrible fraud that is preying upon innocent, hard-working and honest citizens in this country.”
Beginning this year, victims of such scams could pay twice for their mistake — once to the scam’s promoter and once to the IRS for filing a false claim.
Federal and Maryland officials are warning taxpayers about the scams, saying neither federal nor state law provides such compensation.
The IRS said the scam has been around since 1994, but that claims nationwide jumped from 14,000 to 80,000 last year, roughly mirroring the six- fold increase in Maryland.
The typical claim seeks refunds between $40,000 and $80,000, said IRS spokeswoman Michelle Lamishaw. The reparations promoters usually offer to help the taxpayer get the credit, for either a flat fee or an up-front percentage of the claim.
The increase in claims has driven the IRS to crack down, in an effort to limit resources spent on processing the fraudulent claims.
Beginning April 15, taxpayers will be notified in writing of the fraudulent claim and given the chance to amend their return, Lamishaw said. If they don’t amend it, or are filing a second such claim, the agency will impose a $500 fine for filing a “frivolous” tax return.
Officials believe that most individuals who have filed reparation claims did so innocently, often after being contacted through unsolicited e-mail, like the one Young received. The IRS said it has seen signs that some promoters are now targeting church congregations to further their scam.
Maryland Attorney General J. Joseph Curran Jr.’s office said the numbers are small, but the speed and anonymity of e-mail facilitates the scam.
The author of one such e-mail, which was provided by Curran’s office, said the reparations bill was passed during President Clinton’s administration, but that the “IRS will not tell you these things,” because it does not want African- Americans to know about their rights.
That e-mail had been forwarded at least three times, once to 34 people. Their e-mail addresses show they work for high-tech companies, the military, the federal government and non-profit organizations.
The message claims that “all African-Americans living here in the United States are descendants of slavery, therefore our government has finally passed such a bill to pay all descendants back . . . through a refund called the ‘Black Inheritance Tax Refund/40 Acres and a Mule.'”
The message directs the e-mail recipient to call a toll-free number and request an application for the tax refund.
When a reporter called the number, a message directed callers to a long- distance number in Georgia. An employee at the Georgia number identified the organization as the National Resource Information Center, then declined to answer questions about the process. No supervisor returned the call.
Lamishaw said the IRS has investigated these promoters for years, and has successfully prosecuted at least five people since 1996 for promoting the reparations tax-credit claim.
But Assistant U.S. Attorney Virginia Evans said none were prosecuted in Maryland in 2001 or 2002. Curran’s office said it has not prosecuted any reparations scam promoters.
A spokesman for Maryland Comptroller William Donald Schaefer said the office has not seen evidence of the problem on state tax returns, but would definitely pursue any taxpayer who filed such a “frivolous return.”