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Amid Russia’s invasion, IRS aims to ban police oligarchs

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Amid Russia’s invasion, IRS aims to ban police oligarchs

WASHINGTON — The Internal Revenue Service is pressing Congress to dedicate more resources to the agency as it plays an increasingly central role in the Biden administration’s efforts to shield Russia and its oligarchs from punitive sanctions imposed by the United States. .

An aide to IRS Commissioner Charles P. Ratig told Congressional staff Wednesday afternoon that the agency’s criminal investigation unit, which has 3,000 employees, needs to grow by about 40 percent over the next five years. It wants a net profit of around 1,300 after attrition. That could require Congress to invest more than $5 billion in the agency, which is trying to oversee a massive sanctions program and combat piracy tactics that are becoming more sophisticated as a result of the proliferation of digital assets. .

The Biden administration is already trying to strengthen the overall IRS, including trying to increase its budget to $80 billion over 10 years in an effort to crack down on tax cheats. That effort has faced resistance from Republicans, who have historically tried to starve the agency of funds. The Treasury Department, which oversees the IRS, has not previously specified a funding requirement for the Department of Criminal Investigation.

In a report circulated among members of Congress, reviewed by The New York Times, the IRS said it needed additional resources because of the criminal investigation team’s inter-agency efforts to enforce sanctions related to Russia’s invasion of Ukraine. was asked to assist. The agency claimed that investing in the division would pay off, noting that its current $600 million annual budget allowed it to identify $10.4 billion in tax fraud and financial crimes last year.

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“Working with law enforcement entities across the government, the IRS is already investigating Russian oligarchs and those facilitating the illegal movement of money or property on their behalf,” the report said.

The report said the IRS has been involved in more than 20 investigations related to money laundering by oligarchs since 2017, working with other law enforcement agencies to track down assets and seize assets.

The IRS’s Criminal Investigation Division has a storied history; Its agents have helped eliminate notorious tax cheats such as Pete Rose and Al Capone. Like the rest of the IRS, the unit has seen a reduction in its budget in recent years. Its workforce size has declined by 25 percent over the past decade.

In the last month, its task became more complicated.

The United States has imposed sweeping sanctions on Russia in response to its invasion of Ukraine, freezing its central bank assets, blocking transactions involving major financial institutions, and targeting top government officials and oligarchs. Experts see the sanctions as the strongest ever directed at a major economy, but they are also expected to fuel aggressive piracy measures by the Russians.

IRS officials said they would use financial tracing technology and work with banks and international counterparties to track how oligarchs and others were moving money and assets around the world in violation of sanctions. They are looking for signs of newly created fictitious businesses that could be used to shelter transactions involving assets and cryptocurrencies, which criminals use to transfer funds anonymously.

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According to the report, the IRS seized $3.6 billion worth of stolen cryptocurrency last year and has already exceeded it this year.

Finding support for more money for the IRS won’t be easy. Republicans blocked a request for more criminal investigation funding in a spending bill passed by Congress last week, an agency official said.

Mr. Ratig will do the case in person on Thursday morning when he testifies before the House Ways and Means Committee.

“A strong, robust criminal tax enforcement presence provides significant deterrence to those wishing to evade their legitimate obligations to our country,” Mr. Ratig will say, according to a copy of his prepared remarks. “Without adequate resources, we risk sending far less powerful messages to proactive and proactive tax evaders.”

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