By FATIMA HUSSEIN – Associated Press
WASHINGTON (AP) – Amidst all the talk of sanctions against Russian oligarchs, there was one notable omission in the Ukraine aid package approved by Congress this month: a cash injection for the IRS’s Criminal Investigations Branch tasked with finding the expensive real estate track down the Russian elite did not manage.
The White House’s request to give the IRS $30 million to prosecute financial activities related to sanctioned individuals appeared to conflict with a general reluctance among Republicans to put more money into IRS enforcement activities. Republicans close to the spending bill negotiations said the IRS’s job should be to administer and enforce U.S. tax law, not enforce sanctions.
While the money for Ukraine in the spending account includes $25 million for the Treasury Department’s Terrorism and Financial Investigation Unit, $17 million for its departmental offices, and $19 million for the Financial Crimes Enforcement Network, the only financial agency who did not receive their request, the IRS criminal investigation.
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Many of the sanctions imposed on Russia’s elite and its central bank are administered by the Treasury Department and its various law enforcement agencies, including those of the IRS. Along with the newly formed KleptoCapture group headed by the Justice Department, the IRS plays an important role in imposing sanctions on oligarchs and supporters of Vladimir Putin.
A lack of funding for the IRS’s criminal investigation unit “impairs the ability of our law enforcement community to do its job,” said Danny Glaser, a former Treasury Department assistant secretary on terrorist financing and financial crime. “The IRS criminal investigators are among the best financial investigators in the world. It’s important that they are at full strength.”
In its funding request to Congress, the White House said the $30 million would expand the IRS Criminal Investigation’s ability to find connections between different companies, conduct digital asset tracking, and identify ownership of assets that oligarchs and belong to other people associated with Putin.
That money would have included the purchase of more than 50 licenses for databases that can access global public records, a Treasury Department official told The Associated Press, speaking on condition of anonymity to discuss internal matters. Only five people currently have this ability.
The investigative unit’s workforce has shrunk by 25% over the past decade, according to the Treasury Department.
The entity “urgently needs stable, long-term funding to develop a deeper understanding of the global financial landscape and to seek out and seize assets now in the hands of criminals,” the Treasury Department said in a statement last week.
Chye-Ching Huang, executive director of NYU Law’s Tax Law Center, said the funding issues for the IRS investigative unit are part of a larger problem in which the federal government relies on the IRS to intervene in national and international emergencies.
“We’ve seen it during the pandemic, when government agencies have been used to bring billions of dollars in aid to people and businesses in a short amount of time, and we’re seeing it during a foreign policy emergency,” she said.
“It points to its critical role and why lawmakers shouldn’t starve the IRS,” she said, adding that the IRS is key to “preventing criminal corruption that corrodes democracy.”
Biden signed the gargantuan spending bill earlier this month to fund the government through September. The funding includes $5.4 billion for IRS enforcement outside of criminal investigations, an increase of $225 million from fiscal 2021.
Jorge Castro, who served as an adviser to the IRS commissioner during the Obama administration, said he was confident the agency would get more money as the war in Ukraine showed no sign of ending.
“I suspect we’re not done with additional sanctions-related bills, and I suspect the Biden administration will want to make that a feature of their next request,” he said.
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