- The Washington Times - Tuesday, April 16, 2002

A senior member of the Senate Finance Committee yesterday asked the Internal Revenue Service to explain how the IRS could have paid out more than $30 million in 2000 and 2001 for nonexistent tax credits for slave reparations.
Sen. Charles E. Grassley, Iowa Republican, asked IRS Commissioner Charles O. Rossotti for answers about how thousands of taxpayers had been encouraged to file what he described as "specious claims."
"This scam has encouraged thousands of taxpayers to file specious tax claims encouraging them to claim a credit payable to the descendants of slaves," Mr. Grassley said, citing a recent investigation by the Treasury inspector general for tax administration.
"The scam states that the credit is for the cash equivalent of 40 acres and a mule, approximately $42,200," he said.
The Senate Finance Committee, which oversees the IRS, has been focusing in recent weeks on the reported loss of tens of billions of dollars to various tax scams.
One IRS employee is already under investigation for his help in approving tax returns claiming the slave reparations, Mr. Grassley said. He added that at least a dozen other current and former IRS employees, all described as low-level IRS officials, are said to have applied to receive such a credit or honored similar claims.
Mr. Grassley said David C. Williams, the Treasury Department's inspector general for tax administration, said in a March 28 report that four current IRS employees claimed credit on their tax returns, another may have knowingly honored a claim made by another taxpayer for the slave reparation credit and eight former IRS employees also applied for the credit.
He asked the IRS for information on what the agency was doing, if anything, to discipline those involved, including termination and paid or unpaid administrative leave.
"IRS must lead by example and show that zero tolerance for these tax schemes starts at home," Mr. Grassley said.
The three-term Iowa senator said the conduct of at least four IRS employees those who filed for the tax credits appeared to have violated the IRS Restructuring and Reform Act of 1998, which would require their termination after a final judicial ruling that they had willfully understated their federal tax liability.
Mr. Grassley said that while he was aware that the Williams report had been referred to the Office of Investigations for further review, "I would appreciate confirmation that such a review is being done; the expected time of the completion of the review; and whether the actions of these employees" falls under the act.
Earlier this year, the IRS issued a warning that "scam artists" were bilking black taxpayers nationwide by charging them for information about a phony slave reparation tax credit. The agency called it the "latest in a line of schemes dealing with money for descendants of slaves."
In the Feb. 6 notice, the IRS said its tax centers nationwide had received thousands of slave reparation-related claims, but because there was no law allowing reparations, the IRS had rejected them. The agency said at the time that the claims were prompted by phony tax preparers who charged a fee for false information on how to file the claims.
The IRS said it received nearly 80,000 returns in 2001, mostly from Southern states, claiming more than $2.7 billion in false reparation refunds. The agency said promoters charged filing fees ranging from a percentage of the refund to $100 or higher.
Currently, there is no law that allows the U.S. government or the IRS to pay slavery reparations or refunds. At one time, after the Civil War, Congress passed a bill to allow slavery reparations in the form of 40 acres and a mule, but that bill was vetoed by President Andrew Johnson and was never enacted into law.

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