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'Black tax credit' is a scam for the ages

Friday, February 15, 2002

In "Dead Souls," Nikolai Gogol's comic masterpiece about greed and self-deception, a rogue named Chichikov scoured the backwoods and boulevards of 19th-century Russia for naive landowners and inept businessmen willing to "buy" the souls of deceased serfs for tax purposes.

It wasn't a particularly elaborate scheme. As with most confidence games, Chichikov depended on the dubious motives of his victims to supply whatever was lacking in the scam's internal logic.

Chichikov's rap was so seductive, dupes were willing to invest in the integrity of a stranger hawking intangibles like "souls" in exchange for promises of tax relief. All he had to do was stay several steps ahead of his victims while recruiting a new generation of suckers whose numbers never seemed to diminish.

Once upon a time, "Dead Souls" was the stuff of sweet comedy. For a book originally published in Russia in 1842, it's surprisingly easy to find moments of prescience in its pages that illuminate the banality and greed of our own age. That's what classics are supposed to do, I suppose -- probe the conscience of readers long after the author is dead.

Gogol's novel is probably of special interest to former Enron employees these days, but it has a special relevance for black folks, too. If Chichikov's story were to be written today, he would have a black face. He'd prey on the gullibility of elderly African-Americans waiting for their "reparations" refund -- better known as the "black tax credit."

In recent years, an extremely profitable scam aimed at blacks has been making the rounds during tax time. Self-styled auditors have been criss-crossing the country selling the "debt" accrued by the suffering of black slaves to their descendants in much the same way Chichikov sold the souls of serfs to the gullible businessmen of Czarist Russia.

These grifters use the Internet, church pulpits, beauty parlors, black lifestyle magazines and family reunion picnics to get their message out: If you're black and you're a descendent of a slave, you're entitled to as much as $80,000 in "slave reparation" tax credits.

The scam is depressingly simple, just like the one in Gogol's novel. For a fee ranging from $100 to $500, a "special" tax auditor will file a Form 2439 claim with the Internal Revenue Service. The tax form exists; the tax credit, for very obvious reasons, doesn't. During this filing process, the claimant is discouraged from communicating with the IRS.

The auditor doesn't prepare the claimant's taxes, but only "attaches" the Form 2439 to the taxpayer's 1040 and passes it on to the IRS, which received 80,000 requests for the "black tax credit" in 2001 alone.

As absurd as it sounds, this scam would be easier to debunk if the IRS hadn't mistakenly paid out hundreds of fraudulent claims in recent years. Try telling someone who's already collected a rebate that the "black inheritance tax refund" doesn't exist and he'll laugh in your face.

One recently convicted "auditor" was responsible for 300 claims that led to erroneous IRS payouts of $1.2 million, according to a report on ABC News. Chichikov would've fainted at the prospect of such a payday. The less-than-literary-minded criminals of our day aren't as modest. Their numbers are growing because exploitation of racial indignation is extremely profitable.

Reparations "auditors" exist because too many blacks believe they're entitled to a "slavery rebate" of some kind -- and they're not shy about demanding it. Unfortunately, common sense is often jettisoned for ideological reasons. In response, the IRS is getting tough on those who file for the "black tax credit," levying $500 fines for frivolous claims on top of what is actually owed.

Hundreds of thousands, perhaps millions, of African-Americans believe Congress has passed legislation granting them financial compensation for their forebears' enslavement. They believe this bit of news has escaped the attention of mainstream news agencies and civil rights organizations, leaving it to free-lance "auditors" to spread the word.

At best, this reveals a naivete worthy of Gogol's agrarian businessmen. If there's anything we should know about our Congress by now, it is that "reparations" and tax breaks are reserved for those who run corporate plantations.

Tony Norman's e-mail address is: tnorman@post-gazette.com.

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