The Mythical “Black Tax Credit” or “Slavery Tax Credit”

Here’s another in my series of posts on fringe tax avoidance schemes. Yesterday, Robert Foster was sentenced to 13 years in prison for preparing his daughter’s taxes with a fraudulent “slavery tax credit” that gained her a half million dollar refund. The daughter, Crystal Foster, was sentenced to three years in prison.

This “slavery tax credit” in its various forms harmonizes with a belief held by many African Americans that they are due reparations for the American institution of slavery. It has no basis in the tax code or the law, however.

The Washington Post reports today that the refund check to Foster:

…which she received in October 2001, is believed to be the largest slavery claim ever paid by the agency. IRS spokeswoman Michelle Lamishaw said yesterday that the IRS received nearly 80,000 tax returns claiming $2.7 billion in nonexistent slavery credits in 2001 alone. It has paid out about $30 million in fraudulent reparations claims, she said, but she was unable to say over what time period.

Earlier news stories say that the $30 million figure was from the years 2000 and 2001. Here’s the snopes.com entry on the “Black Tax Credit.”