The IRS has quietly paid Palantir Technologies more than $130 million since 2018 to run its data analysis software on federal tax databases. The scope of that work just became public, and it is broader than anyone outside the agency realized.

An investigation by The Intercept, based on records obtained by government watchdog American Oversight through FOIA, reveals that Palantir's contract covers what the IRS internally describes as "massive-scale" data mining across sensitive federal databases. The system cross-references financial records, identifies suspicious patterns, and flags potential violations for the IRS Criminal Investigation division.

From Financial Crimes to Political Targeting

The contract itself predates the Trump administration. Palantir has been embedded in IRS operations since 2018, originally tasked with investigating financial crimes like tax fraud, money laundering, and terrorist financing. But the political context has shifted dramatically.

The Wall Street Journal previously reported that IRS Criminal Investigation has begun scrutinizing "left-leaning groups" under the current administration's direction. Civil liberties organizations have warned that Palantir's tools, originally built for military intelligence operations in Iraq and Afghanistan, are now being repurposed for domestic tax enforcement with minimal oversight.

TechCrunch confirmed the $130 million figure and noted that the contract covers Palantir's Gotham platform, the same system used by the Pentagon, CIA, and ICE. The IRS deployment represents one of Palantir's largest domestic civilian contracts.

The Palantir Pattern

This story lands two days after The Guardian revealed that London's Metropolitan Police used Palantir's AI system to scan its own officers, uncovering widespread corruption but raising fundamental questions about surveillance tools being turned inward. The pattern is consistent: Palantir builds tools for external threats, then those tools get redirected at internal populations.

The company's stock has surged 340% in the past year, driven largely by government contracts. CEO Alex Karp has positioned Palantir as indispensable to both defense and domestic governance. The IRS contract is a case study in how that positioning works: start with an uncontroversial use case (catching tax cheats), build institutional dependency, then let the political winds determine who the tools get pointed at.

The FOIA documents obtained by American Oversight do not detail what specific databases Palantir can access or what safeguards govern political targeting. The IRS declined to comment on the scope of the contract. Palantir did not respond to The Intercept's request for comment.

What is clear: a military intelligence contractor now has persistent access to American tax records at a scale never previously disclosed. Whether that access is being used responsibly depends entirely on who is giving the orders.

First reported by The Intercept. Contract records obtained by American Oversight via FOIA. Additional reporting from TechCrunch.