WASHINGTON — The Internal Revenue Service is pressing Congress to devote more resources to the agency as it takes an increasingly central role in the Biden administration’s efforts to prevent Russia and its oligarchs from evading the punishing sanctions that the United States has imposed.
Aides to Charles P. Rettig, the I.R.S. commissioner, told congressional staff on Wednesday afternoon that the agency’s criminal investigations unit, which has 3,000 employees, needs to grow about 40 percent over the next five years. It wants a net gain of about 1,300 after attrition. That could require Congress to invest more than $5 billion in the agency, which is trying to oversee a sprawling sanctions program and coping with evasion tactics that have become more sophisticated as a result of the proliferation of digital assets.
The Biden administration is already looking to bolster the overall I.R.S., including trying to increase its budget by $80 billion over 10 years in an attempt to crack down on tax cheats. That effort has faced resistance from Republicans, who have historically tried to starve the agency of money. The Treasury Department, which oversees the I.R.S., has not previously specified the need for funds for the criminal investigations division.
In a report circulated among members of Congress that was reviewed by The New York Times, the I.R.S. said it needed additional resources because the criminal investigations team had been asked to assist with interagency efforts to enforce sanctions related to Russia’s invasion of Ukraine. The agency asserted 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.
“Working with law enforcement entities across government, the I.R.S. is already in the process of investigating Russian oligarchs and those who facilitate the illegal movement of money or assets on their behalf,” the report said.
The I.R.S. has been involved in more than 20 investigations related to money laundering by oligarchs since 2017, working with other law enforcement agencies to track assets and seize property, the report said.
The criminal investigations division of the I.R.S. has a storied history; its agents have helped take down notorious tax cheats such as Pete Rose and Al Capone. Like the rest of the I.R.S., the unit has seen its budget depleted in recent years. The size of its staff declined 25 percent over the last decade.
In the last month, its task became much more complicated.
The United States has enacted sweeping sanctions on Russia in response to its invasion of Ukraine, freezing the assets of its central bank, blocking transactions associated with major financial institutions and targeting top government officials and oligarchs. Experts consider the sanctions to be the most robust ever directed at a major economy, but they are also expected to spur aggressive evasion measures by Russians.
I.R.S. officials said they would use financial tracing technology and work with banks and international counterparts to track how oligarchs and others were shifting money and assets around the world in violation of the sanctions. They are looking for signs of newly created fictitious businesses that could be used to shelter assets and transactions involving cryptocurrencies, which criminals use to move money anonymously.
According to the report, the I.R.S. seized $3.6 billion of stolen cryptocurrency last year and has already surpassed that this year.
Russia-Ukraine War: Key Things to Know
Zelensky’s appeals. President Volodymyr Zelensky of Ukraine addressed Congress as part of a wider attempt to put pressure on the Kremlin with a series of video messages to democratic countries. President Biden announced $800 million in new military aid.
NATO’s plans. NATO defense ministers directed military commanders to enhance their deployments near Russia, a deterrence measure in light of the country’s threat to the alliance’s eastern flank. Final decisions will be taken at a summit meeting in late June.
On the ground. The Ukrainian armed forces launched counterattacks against Russian troops outside Kyiv and in the Russian-occupied city of Kherson. At least 500 civilians have been killed in the Russian shelling of Kharkiv, Ukraine’s second largest city, since the start of the war.
A looming crisis. The International Energy Agency warned that the global economy could be troubled by disruptions to oil supplies and a sharp fall in demand resulting from Russia’s invasion of Ukraine, adding that the world could be heading into “the biggest supply crisis in decades.”
Finding support for more money for the I.R.S. will not be easy. An agency official said Republicans had blocked a request for more criminal investigation funds in the spending bill that Congress passed last week.
Mr. Rettig will make the case personally 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 willing to evade their lawful obligations to our country,” Mr. Rettig will say, according to a copy of his prepared remarks. “Without adequate resources, we risk sending a much less powerful message to would-be and active tax evaders.”
