Dems hyperventilate about Palantir's work with the IRS in letter to CEO Karp

They're taking the data from IRSengard, claim Dems; officials tell us that's not true

A coalition of House and Senate Democrats has sent an aggressive letter to Palantir CEO Alex Karp questioning whether the controversial data intelligence biz is breaking federal law by allegedly helping the IRS build a searchable "mega database" of taxpayer information, and, likening his firm to US companies accused of aiding human rights violations in apartheid South Africa, Nazi Germany, and the People's Republic of China. 

The letter [PDF] from Senate Finance Committee member Ron Wyden (D-OR), Representative Alexandria Ocasio-Cortez (D-NY), and eight Democratic cosignatories, starts off fairly soberly, as such letters tend to. It says Palantir employees installed at the IRS are reportedly "helping the agency use Palantir's software to create a 'single, searchable database' of taxpayer records" that "will likely be shared throughout the government regardless of whether access to this information will be related to tax administration or enforcement." 

These claims stem from a New York Times story published late last month that cited six government officials and Palantir employees with knowledge of the deepening relationship between the company and the Trump administration. According to the story, multiple federal agencies have adopted Palantir's Foundry platform, which allows a variety of data sources to be centralized under a single analytics platform with workflow and AI capabilities for sifting through reams of info for relevant data points. Basically, what used to be called a business intelligence platform, only applied to government data.

Describing the "unprecedented possibility" of such a database as a "surveillance nightmare," the letter argues that such a system would violate tax code rules on the confidentiality and disclosure of tax return information and be punishable by fines. 

"These prohibitions have long prevented political appointees in previous administrations from accessing … private tax records," the letter states, arguing that the creation of a master taxpayer database "may be in violation of these statutes," even if improper inspection of tax records isn't made public or otherwise disclosed. 

Likewise, the Democrats argue, the creation of the so-called mega database could also violate the 1974 Privacy Act, which imposes strict safeguards on how federal agencies store, share, and disclose personal information, requiring routine uses to be publicly documented and limiting cross-agency sharing without proper notice and procedures.

"As you should be aware, contractors are explicitly covered by many of the Privacy Act's requirements," the letter said, warning Palantir and its employees of legal exposure for their activities at the IRS. 

Then it starts to go beyond matters of law. To support the Democrats' claims that Palantir is a "right-wing aligned tech company … assisting Trump in likely mass violations" of federal law, the letter called attention to Palantir's "troubling assistance to the Trump Administration," including the company's work with Immigration and Customs Enforcement (ICE) to build software to speed up Trump's mass deportations. 

The letter also pointed out Palantir's $480 million deal with the Department of Defense to develop Project Maven battlefield AI after Google abandoned the deal, as well as Karp's statement on an earnings call Palantir's software would "bring violence and death to our enemies." 

Karp's threat of violence was made in the context of a claim that "the West and America are superior ways of organizing and that this is a great country and historically anomalous in its greatness" - a claim he's made more than once of late. 

But the Democrats who signed the letter expressed concern that Palantir's tech could be turned against Americans, given Trump's recent behavior around anti-ICE protests in Los Angeles, including his move to call in the Marines and to federalize the National Guard over the objections of California Governor Gavin Newsom.

"We are concerned that Palantir's software could be used to enable domestic operations that violate Americans' rights," the Democrats said.

It then compares Palantir to American companies that have helped foreign governments repress human rights, offering the following view of history:

Palantir is certainly not the first American company to earn huge profits by enabling violations of human rights by authoritarian governments. For example, IBM sold computers to South Africa's apartheid-era government that the regime used to maintain racial classification records. Before that, the company sold punch card machines that the Nazis used to run concentration camps. Cisco custom-built the so-called "Great Firewall of China," which enables the Chinese government to conduct surveillance and censorship against its citizens. More recently, Gatekeeper Intelligence Security sold facial recognition technology to the repressive monarchies of Saudi Arabia and the United Arab Emirates and Honeywell helped Egypt's military dictatorship build an AI-powered network of surveillance cameras.

In light of all this, the letter writers demanded that Karp provide them with information including a full list of its current government contracts, whether it's received assurances from the federal government that its employees won't be held liable for violations of federal law, whether it has a "red line" for human rights violations enabled by its software, whether it has declined any requests from the Trump Administration due to concern of misuse of its software, and more. 

The Democratic politicians want answers by July 10. 

So, is there really a mega database?

The senators and congressional representatives who sent the letter make clear early on that they don't actually have proof that the mega database is a thing, admitting that their concerns are based on that NYT report.

The Register covered similar concerns last month when we looked at a reported IRS hackathon reportedly being undertaken under the direction of the Department of Government Efficiency and with the support of Palantir. The original report that informed our story didn't mention a mega database, but did talk about a supposed "mega API," which a Department of the Treasury (the IRS' parent agency) spokesperson admitted to us was under development, but wasn't anything new. 

According to Treasury comments to us last month, the IRS has been working on an API to connect compartmentalized systems for 20 years, and at a cost of $4 billion, without much to show for it. Far from being a project to centralize government records, the Treasury spokesperson asserted, the move was supposed to eliminate fragmentation at the tax agency and make it easier for taxpayers to deal with the IRS. 

The Treasury spokesperson also confirmed Palantir was working with the IRS, but said its work at the agency involved cleaning up procurement systems using software that had already been FedRAMP approved for government use. IRS employees were doing the bulk of the work on that project, Treasury told us, with Palantir contractors picking up some slack on excess workload. 

The New York Times report from the end of May that spurred Tuesday's letter claimed Palantir's work at the Treasury has since expanded, with Palantir reportedly in talks for a permanent IRS contract, though the Times story didn't mention the IRS' role in the supposed whole-of-government database.

As for the actual existence of the said mega database, we note that President Trump did order federal agencies in March to eliminate information silos in an attempt to stop fraud, waste and abuse in the federal government. It's possible, therefore, that Palantir has been tapped to actualize the order.

When asked directly whether Palantir had been engaged on a national database, White House assistant press secretary Taylor Rogers was about as indirect as one could be. 

"President Trump signed an executive order to streamline data collection across all agencies to increase government efficiency and save hard-earned taxpayer dollars," Rogers told us in an email without adding any details.

A Treasury spokesperson, on the other hand, told us that Palantir's role at the IRS remains the same as it was when we reported on its activity in May: The company is working on the procurement system, and has been assisting with unifying all those IRS APIs. In particular, there are 10 such APIs that the Treasury official told us are difficult to use in their current fragmented incarnations.

Palantir is not breaking the law through its API work at the IRS, the spokesperson told us. They explained that the unified API layer that Palantir is helping flesh out has no impact on rules for data sharing, the Privacy Act, tax code rules, or other data protection rules.

Whether Palantir has been separately engaged for cross-agency work remains unconfirmed.

We asked Palantir too, but the company didn't respond to questions for this story. Nonetheless, we are certain that the Democrats' stern words against a mid-sized government vendor with a spooky Lord-of-the-Rings-inspired name won't distract them from other pressing matters of legislation. ®

Update: This story was updated shortly after publication to reflect comments from a Treasury spokesperson.