The Long History of the ‘Slavery Tax Refund’ Scam

For years, the idea of Black Americans receiving compensation for the atrocities inflicted upon them as part of the slave trade has been the lure for a strain of disinformation that also served as a scam targeting senior communities.

Like a lot of disinformation online, the scam — which has gone by names like the “Slave Reparation Act,” the “Black Inheritance Tax Refund/40 Acres and a Mule,” among others — has taken on many forms.

For instance, Associated Press reported in 1994 that the NAACP Legal and Educational Defense Fund had asked postal inspectors to investigate “letters being distributed within Black communities and Black churches” urging recipients to attempt to claim a $43,209 tax refund, the purported value of 40 acres and a mule.

According to the story, the Internal Revenue Service rejected around 20,000 claims by taxpayers for the refund, spurred by an actual op-ed piece:

Many of the tax forms have come in attached to a copy of a commentary published in the April 1993 issue of the black-oriented magazine Essence, the IRS said. Written by L.G. Sherrod, the commentary argued that racial discrimination functions as a hidden tax and urged readers to fill out Form 1040s as if they had paid $43,209 in “black taxes” and thereby collect a delinquent tax rebate.

Another iteration that also used terrestrial mail was first spotted around 2000.

“Born prior to the year of 1928 and of the Black ethnic race?” the letter read. “Do you know anyone who was born up until 1927? Did you know that the government is refunding monies to anyone alive that was born up until the year of 1927 due to the Slave Reparation Act?”

Readers were then given a contact phone number and instructed to give the purported “National Victims Registrar” behind this alleged payment their name, address, phone number, Social Security number, and date of birth.

“An application will be mailed to you for the issuance of a $5000.00 check which can be either attached to your Social Security check or issued in one lump sum,” the letter promised.

The Washington Post reported that this version of the scam was spotted in mail sent to Black households around the southern United States. “What they are really trying to get is personal information from seniors,” then-Arkansas Attorney General Mark Pryor told the newspaper.

The Washington Post would go on to report in April 2002 that the IRS not only received $2.7 billion in “reparation credit” claims in more than 100,000 tax returns, but that the agency mistakenly paid out more than $30 million in tax refunds for those claims in 2000 and 2001 — with some of those returns being worth the $43,209 figure quoted in the magazine.

According to the newspaper:

One IRS employee is under investigation for allegedly helping process returns that claimed the credit, officials said yesterday. At least 12 current and former IRS employees, all low-level workers in processing centers, applied to receive such a credit.

The rise of chain emails provided another avenue for scammers to seek out potential victims. This version, which is much lengthier (and was still lingering online as recently as 2020), is addressed from an anonymous sender to “all my friends, family, and everyone in the African American community,” and reads in part:

As you my know, all African Americans living here in the United States are descendants of slavery, therefore our government has finally passed a bill to pay all descendants back.

The way they are paying us back is through a refund called the, “Black Inheritance Tax Refund/40 Acres and a Mule”.

When you call this number you’ll give them your name, address, and phone number and they’ll send you out a packet, which includes further details and information on how to receive the refund.

The “acceleration” of these fake claims prompted the IRS to release a statement addressing the scams more in depth, which noted that the people behind them would also charge victims “a flat fee of $50, $100 or higher,” or take a percentage of their purported refund. The agency said:

Promoters of these scams frequently warn their clients against contacting the IRS on the pretext that the IRS does not want the general public to know about the “credit.” This type of advice should be a red flag to taxpayers that there is a problem.

In recent years, however, the idea of reparations for Black Americans has become more concrete. In March 2021, the city council in Evanston, Illinois approved a plan to issue sixteen residents a $25,000 housing grant apiece; the effort prioritized residents whose families “lived in the city between 1919 and 1969 or suffered housing discrimination after 1969.” Two years later, the city also approved an option for grant recipients to take a direct cash payment instead.

“It’s something that we’re enormously proud of,” Mayor Daniel Biss told PBS. “I think it’s an important step, one might argue a partial step or an inadequate step, but still a really important step, toward both, on a factual level, reckoning with our past, but also creating the concrete equity that our community has been talking about for probably four or five generations but has never really fully realized.”

In California, meanwhile, a task force on reparations, which was appointed by Democratic Gov. Gavin Newsom, President pro Tempore of the Senate Toni Atkins, and Speaker of the Assembly Robert Rivas, issued a report in June 2023 recommending that the state make “down payments” toward reparations to Black descendants of enslaved Americans, though it did not list a specific amount. The nonprofit news outlet CalMatters reported that taking into account aspects of discrimination highlighted by the committee — including housing discrimination and over-policing — an eligible Californian who has lived in the state since 1950 could be eligible for a payment as high as $1.2 million.

At the federal level, Missouri Rep. Cori Bush (D) introduced a bill in March 2023, H.R. 414, that called for $14 trillion to be distributed to the descendants of enslaved Black Americans.

“The United States has a moral and legal obligation to provide reparations for the enslavement of Africans and its lasting harm on the lives of millions of Black people,” Bush said in announcing the bill.

Update 9/27/2023, 2:57 a.m. PST: This article has been revamped and updated. You can review the original here. — ag