The US Internal Revenue Service (IRS) reportedly paid Palantir $1.8 million last year to develop a custom tool for the agency. This tool is designed to help the federal agency identify cases for audits, tax collection, and potential criminal investigations, a report claimed, citing documents obtained via a public records request. The tool, called the Selection and Analytic Platform, or SNAP, is currently being used as part of a pilot programme. According to a report by Wired, the contract comes amid the IRS’s long struggle with a fragmented technology infrastructure. When the agreement was signed, the agency was operating “more than 100 business systems and 700 methods” that had been built over decades to identify potential tax discrepancies. “This fragmented landscape can lead to a number of undesirable outcomes including but not limited to duplication of effort and cost, poor understanding of gaps in the coverage, and suboptimal case selection,” the IRS wrote in a document (seen by Wired) outlining the scope of the contract.US government contracting records show the IRS has been purchasing Palantir technology since 2014, with total contracts and obligated payments exceeding $200 million. The documents indicate the agency is now looking to deepen that relationship.
What Palantir’s SNAP tool for IRS does and how it works
Like other Palantir products, SNAP is likely designed to sit on top of the IRS’s existing databases and surface patterns that human auditors might otherwise miss. According to one of the documents seen by Wired, the tool is built to pull “key information about contracts, vehicles and vendors” from “unstructured data from supporting documents.”The IRS asked Palantir to develop three case selection methods tied to specific areas of the tax code: disaster zone claims, a form of tax relief for natural disaster victims; Residential Clean Energy Credits, which offset the cost of installing equipment such as solar panels or wind turbines; and Form 709 Gift Tax Returns, which apply when individuals transfer valuable assets such as artwork, stocks, or corporate entities.However, the contract documents state that the agency has directed Palantir to use only “existing data in SNAP today,” meaning any such external data would need to already be in the agency’s possession.It remains unclear how long Palantir has been developing SNAP or how the tool will eventually be integrated into the IRS’s wider technology infrastructure. For now, the pilot continues, with the scope of any broader rollout yet to be determined.For decades, the IRS has relied primarily on a scoring method known as the Discriminant Information Function, or DIF, to decide which returns to audit. According to the agency, “the higher the score, the greater the audit potential.” Previous efforts have included contracting with companies like Coinbase to analyse cryptocurrency transactions and mining public social media posts for signs that individuals or businesses may be underreporting income.Under the current government, staffing levels have also contracted sharply. From a workforce of approximately 103,000 in February 2025, more than 25,000 employees resigned or accepted deferred resignation and early retirement offers by July 2025. Frequent turnover at the commissioner level has compounded the problem.
