House Republicans are proposing that new U.S. aid to Israel’s military be paid for by cutting enforcement funding for the federal agency that recently helped choke off illicit funds flowing to Hamas — the terrorist group whose mass murders ignited the latest conflict in Israel and Palestine.
Despite that proposal to slash the Internal Revenue Service’s budget, newly installed House Republican Speaker Mike Johnson (R-La.) has cast his party as committed to destroying Hamas, declaring: “There will be a ceasefire when Hamas ceases to be a threat to Israel.”
The bill allocates an additional $14 billion to Israel, as requested by President Joe Biden, for aid and weapons, including $800 million in ammunition. The proposal, which would come on top of the $3.8 billion in annual military aid the United States sends to Israel, arrives amid growing calls for a military ceasefire from activists, lawmakers, and human rights organizations.
In 2020, the IRS was credited with helping identify and cut off a cryptocurrency scheme funneling resources to Hamas’s military wing. Following that Trump administration success, the Biden administration’s 2022 Inflation Reduction Act provided new resources to further strengthen the agency’s capacity “to conduct criminal investigations including investigative technology [and] to provide digital asset monitoring and compliance activities” — and earlier this year, the agency began working with Middle East governments to combat terrorist financing.
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Republicans’ new legislation, though, would cut $14 billion out of the new IRS funding for enforcement and operations support — eliminating more than 20 percent of the $71 billion appropriated under the Inflation Reduction Act, which provided new resources to the tax collection agency after decades of budget cuts.
“Hamas depends on sham charities and other illicit finance schemes to fund its operations, but this proposal would cut resources to IRS criminal investigators who are actively helping American allies stop terrorist financing and sanctions evaders,” Sen. Ron Wyden (D-Ore.) said Monday in a press release responding to the GOP proposal.
Wyden’s statement echoed President Donald Trump’s IRS commissioner Charles Rettig, who in 2021 credited the agency’s enforcement division with the takedown of “the largest child exploitation site operating in the darknet utilizing virtual currencies; uncovering international money laundering operations involving the theft of virtual currencies; and the seizure of terrorism financing sites maintained on behalf of al Qaeda, Hamas, and ISIS.”
GOP Proposal Follows Pressure From Conservative Groups
Republican lawmakers’ move to target IRS funding follows opposition to stronger IRS enforcement by major conservative groups that have traditionally fought efforts to raise taxes on the wealthy. It also follows complaints from the cryptocurrency industry, which has significantly increased its lobbying spending and its campaign contributions to Republican candidates and committees.
Johnson’s proposal is a direct attack on the Biden administration’s attempts to strengthen the IRS with 84,000 new agents tasked with investigating loopholes that allow some of the world’s richest people to pay just a fraction of what the average American pays.
“My desire in the first draft of this bill is to take some of the money that has been set aside for building and bulking up the IRS,” Johnson told Fox News’ Kayleigh McEnany, Trump’s former White House Press Secretary. “They have about $67 billion in that fund and we’ll take the $14.5 [billion] necessary for this immediate and urgent need.”
“It’s insulting that the hard right is trying to exploit the crisis in Israel to try to reward the ultra rich,” Senate Majority Leader Chuck Schumer said Tuesday. “The new Speaker knows perfectly well if you want to help Israel, you can’t propose legislation that is full of poison pill[s] and this partisan legislation sends the wrong message to our allies around the world.”
“Combat The Flow Of Money To And Within Terrorist Organizations”
Johnson’s proposal could impact a new IRS program that trains 40 representatives from six Gulf countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — in counterterrorism financing efforts.
“This is the first time [the IRS Criminal Investigation unit] has participated in training fellowship participants, and we hope the information we share will combat the flow of money to and within terrorist organizations,” IRS criminal investigation division chief Jim Lee said in a press release. “Without financing, terrorist organizations can’t continue their wrath of terror.”
But the funding for the IRS is not just to police tax revenue, it is also used to target terrorist organizations.
In August 2020, the Department of Justice announced that, in conjunction with the IRS, it broke up three terrorist funding campaigns for Hamas, al-Qaeda, and the Islamic State of Iraq and Levant. The three groups were utilizing social media to solicit donations to over 300 cryptocurrency accounts the groups controlled.
Hamas’ military arm, dubbed the al-Qassam Brigades, solicited bitcoin donations on social media starting in 2019, the Justice Department said.
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Hamas even put up detailed instructions on how to anonymously make the donations and claimed the funds would be used for “violent causes,” the Justice Department alleged. Hamas claimed the donations were untraceable, but the IRS and the Justice Department were able to trace the accounts and seize the funds.
“[The IRS’] ability to trace funds used by terrorist groups to their source and dismantle these radical group’s communication and financial networks directly prevents them from wreaking havoc throughout the world,” Don Fort, the head of the IRS Criminal Investigation, said in a 2020 press release.
Trump’s former Attorney General William Barr praised the IRS efforts.
“I want to thank the investigators from the Internal Revenue Service, Department of Homeland Security, Federal Bureau of Investigation, and the prosecutors from the D.C. United States Attorney’s Office and National Security Division for their hard and innovative work in attacking the networks that allow these terrorists to recruit for and fund their dangerous actions,” Barr said in a 2020.
The same enforcement arm of the IRS is responsible for busting up child pornography rings on the darknet, disrupting international money laundering operations that use cryptocurrencies, and taking down fentanyl trafficking rings. Just two weeks ago, the IRS announced it helped arrest a Connecticut man responsible for selling nearly 100 grams of the deadly opioid.
Israeli Prime Minister Benjamin Netanyahu has also been accused of propping up Hamas in Gaza by allowing international funding to trickle into the organization, while suppressing the Palestinian Authority, the government body that controls the West Bank.
In 2019 reporting from The Jerusalem Post, Netanyahu allegedly suggested that Israel’s supervision of funding to Hamas would ensure that the money “would go to humanitarian causes.”
Netanyahu’s tacit support of Hamas ensured the Palestinian Authority would be undermined, which “made for great domestic political rhetoric,” Jonathan D. Strum, a former adjunct professor of international law at Georgetown University Law Center, wrote for The Hill. Strum added that a “weakened [Palestinian Authority], coupled with Hamas in Gaza, enabled Netanyahu to effectively ignore Palestinian issues rather than deal with them.”
Funding Request Amid Calls For Ceasefire
The $14 billion aid package introduced Monday is the first major action by Johnson. He has voted against Ukraine funding in the recent past and has said he wants to aid the military efforts in Israel and Ukraine separately, which is at odds with Biden’s proposed package of $100 billion to support the two countries and funding for the U.S.-Mexico border.
On Tuesday, protesters repeatedly interrupted a Senate hearing on additional aid to Israel to call for a ceasefire in the Gaza Strip. Over the weekend, a United Nations General Assembly resolution calling for a ceasefire — which the head of the UN agency for Palestinian refugees called a ‘matter of life and death for millions’ — passed by a vote of 120-14, with the United States among the dissenters.
The new bill, which would send billions to Israel, and allocates $800 million exclusively to ammunition, comes as human rights organizations around the world call for an immediate ceasefire in Gaza. Advocates have also called for additional humanitarian aid to Gaza, and to reestablish electricity, water, fuel, and communication networks for its 2.3 million residents.