IRS Expands Use of Palantir Tools in Modernization Efforts

The Internal Revenue Service has engaged Palantir through multiple contracts to advance its modernization initiatives, focusing on audit selection and data infrastructure improvements.

In December 2024, the IRS selected Palantir to develop a platform for identifying and prioritizing audit cases, with the goal of refining how the agency targets compliance activities. The contract required Palantir to pilot three different case selection methods and deploy three artificial intelligence models to support these efforts.

The pilot methods introduced by Palantir concentrated on disaster zone claims, Residential Clean Energy Credits, and Form 709 gift tax returns. These pilots were intended to help the IRS better identify areas for compliance review using advanced analytics.

Palantir’s technology has also been tested by the IRS to highlight high-value audit and investigation targets within its existing legacy systems. The agency’s Criminal Investigation division uses Palantir software to process large datasets, allowing agents to detect patterns and instances of noncompliance more efficiently than with previous tools.

What the numbers show

• Palantir received over $180 million from the IRS across 26 contracts since 2018
• The December 2024 contract for audit targeting was valued at $1.8 million
• Palantir’s U.S. government revenue in FY2025 was about $2 billion
• Federal contract ceilings for Palantir in 2025 totaled over $13.7 billion

In September 2025, the Treasury Department awarded Palantir another contract to design a common API layer for the IRS. This project aims to streamline workflow automation and connect various IRS systems, supporting broader modernization goals.

To facilitate these projects, Palantir employees have worked alongside staff from the Department of Government Efficiency within the IRS. Their collaboration has focused on building a unified API, sometimes referred to as a “mega API,” to integrate data from multiple IRS databases.

The IRS’s partnership with Palantir is part of a wider effort to move away from paper-based processes and update taxpayer-facing services. These modernization activities are intended to strengthen the agency’s data infrastructure and improve operational efficiency.

Palantir’s involvement with the IRS spans software development, support for criminal investigations, and the deployment of case selection tools. The company’s work is part of a series of contracts awarded by the IRS to enhance compliance and support ongoing modernization objectives.

* This article is based on publicly available information at the time of writing.