The IRS is now paying a defense intelligence contractor to decide which Americans get audited. And if you think the legal guardrails around your tax data will protect you, the federal government has already proven otherwise.
The Spy Company Inside Your Tax Returns
WIRED reported this week that the IRS paid Palantir Technologies $1.8 million last year to build a custom tool called the “Selection and Analytic Platform,” or SNAP. The tool identifies what the agency calls “highest-value” targets for audits, tax collection, and criminal investigations. It is currently in a pilot phase, pulling data from more than 100 legacy IRS systems and using AI to flag patterns in tax filings that human auditors might miss.
Palantir is not a tax software company. It is a surveillance firm co-founded by billionaire Peter Thiel, built to serve the CIA, the NSA, and the Department of Defense. Its core product, Foundry, was designed to fuse massive intelligence datasets into a single searchable platform. That technology is now sitting on top of the IRS’s databases: your tax returns, your bank records, your financial life.
Palantir has received over $200 million in IRS contracts since 2014. According to contract documents obtained by WIRED, SNAP pulls “key information about contracts, vehicles, and vendors” from “unstructured data” in supporting documents. The AI digs through your filings looking for discrepancies in disaster relief claims, clean energy credits, gift tax returns, and more.
A Machine That Can Be Pointed at Anyone
What matters here is not what SNAP is doing right now. What matters is what it can do, and what the federal government has already shown it will do with IRS data when it suits them.
The Treasury Department has signed data-sharing agreements with other federal agencies. Court filings revealed that confidential taxpayer information was improperly shared tens of thousands of times. A federal judge found the IRS violated its own legal safeguards. The Electronic Frontier Foundation warned that Palantir is building a tool that makes highly sensitive data accessible to agency personnel who have no legitimate reason to see it.
Ten members of Congress wrote to Palantir’s CEO last June, calling the prospect of a searchable mega-database of tax returns a “surveillance nightmare.” They were right about the problem, even if their proposed solutions leave much to be desired.
Remember the IRS targeting scandal? Between 2010 and 2013, the agency systematically slow-walked and scrutinized Tea Party and conservative groups applying for tax-exempt status. It took years of congressional investigations, a formal apology, and a multi-million dollar settlement to drag that abuse into the open. And that was done by hand, by bureaucrats with highlighters and keyword lists.
Palantir’s SNAP replaces the highlighters with an AI that can cross-reference your tax filings, financial transactions, property records, and supporting documents in seconds. Your small business revenue, your ranch’s land transactions, your family’s charitable giving and medical expenses: all of it indexed, searchable, and ready to query. The next time an administration decides to punish people it doesn’t like, it won’t need a room full of IRS employees working overtime. It will need one search.
The Thiel Irony
And then there’s Peter Thiel. ProPublica reported in 2021 that Thiel seeded a Roth IRA with roughly $2,000 in PayPal stock in 1999 that had ballooned into a $5 billion tax-free fortune by 2019. The man profiting from building the IRS’s audit-targeting AI is exactly the kind of person that AI ought to be catching.
But SNAP isn’t pointed at billionaires running sophisticated Roth IRA strategies. Its pilot targets are disaster zone claims, clean energy credits, and gift tax returns: deductions claimed by ordinary Americans, not Silicon Valley titans. The surveillance tools Washington builds always look down, never up.
What This Means for Texas
Every Texan who files a federal tax return is feeding data into a system run by a defense intelligence contractor. That data has already been shared in violation of federal law. The agency that collects it has already been caught targeting Americans for their political beliefs. And now an AI built by a spy company is deciding who gets flagged.
Texans are legally compelled to hand over this information. They were never asked whether a CIA contractor should manage it.
An independent Texas would control its own tax system, its own data, and its own privacy standards. No defense contractor would sit between Texans and their financial records. No one in Washington would get to decide what happens with that information next.
Texans didn’t consent to any of this, and every year they file a 1040, they feed a machine they have no power to shut off. The only way to pull the plug is to leave.
