IRS unit didn’t get money to enforce sanctions on wealthy Russians

WASHINGTON (AP) — For all talk about sanctions on Russian oligarchs, the Ukraine aid package approved by Congress this month had one notable lapse: an infusion of funds for the IRS criminal investigation branch to track down valuable assets. Works Russian elite did not cut.

The White House’s request to give the IRS $30 million to trace financial activities linked to those sanctioned went away from a widespread reluctance by Republicans to put more money into IRS enforcement actions. Republicans close to the spending bill talks said the mission of the IRS should be to administer and enforce the US tax code, not impose sanctions.

While the money for Ukraine in the spending bill includes $25 million for the Treasury Department’s Terrorism and Financial Intelligence Unit, $17 million for its departmental offices, and $19 million for the Financial Crimes Enforcement Network, the only Treasury agency that made its request. Didn’t receive that IRS criminal investigation.

Many of the sanctions imposed on Russia’s elite and its Central Bank are imposed by the Treasury Department and its various enforcement arms, including the IRS. Along with the newly formed Kleptocapture group led by the Justice Department, the IRS plays a major role in banning oligarchs and supporters of Vladimir Putin.

The lack of funding for the IRS criminal investigation unit “harms the ability of our law enforcement community to do its job,” said Danny Glaser, a former Treasury assistant secretary of state for terrorist financing and financial crimes. “IRS criminal investigators are some of the best financial investigators in the world. It’s important that they be in full force.”

The White House said in its funding request to Congress that the $30 million would expand the ability of the IRS criminal investigation to find links between different businesses, conduct digital asset tracing and identify ownership of assets owned by oligarchs and others linked to Putin. to do.

That money would include buying more than 50 licenses for databases that can access global public records, a Treasury official told the Associated Press on condition of anonymity to discuss internal matters. Currently, only five people have that ability.

According to the Treasury, the investigative unit’s workforce has decreased by 25% during the past decade.

“The entity is in dire need of stable, long-term funding to develop a deeper understanding of the global financial landscape and to trace and seize assets in the hands of criminals today,” the Treasury said in a statement last week.

Chi-Ching Huang, executive director of the Tax Law Center at NYU Law, said the funding crisis is part of a larger issue for the IRS investigative unit, as the federal government relies on the IRS during national and international emergencies.

“We saw that during the pandemic, when the administrative machinery was used to get billions of dollars in aid to people and businesses in a short amount of time, and we are seeing this during a foreign policy emergency,” she said.

“This points to its important role and why lawmakers should not starve the IRS,” she said, adding that the IRS “is critical to preventing criminal corruption, which is corrosive to democracy.”

Biden signed the massive spending bill into law earlier this month to fund the government through September. Included in the funding is $5.4 billion dedicated to IRS enforcement outside criminal investigations, an increase of $225 million from fiscal year 2021.

Jorge Castro, who served as an adviser to the IRS commissioner during the Obama administration, said he expected the agency to receive more funding, as the war in Ukraine shows no signs of ending.

“I suspect that we haven’t dealt with the bills related to the additional sanctions and I think the Biden administration would like to make this a feature of their next request,” he said.

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