This Crystal Ball Says Palantir’s Taxpayer Data Grab Is A Recipe for Disaster
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This year’s Tax Day was particularly dreary. Headlines outlined the many ways the Trump-Musk administration is attacking the government’s ability to provide public services using tax revenue, while weaponizing the IRS’s access to taxpayer data to terrorize undocumented people, enrich Trump’s allies, and potentially attack Trump’s political enemies. Placed against the backdrop of nine states seeing extended tax filing deadlines due to the continuing impact of fossil-fueled climate disasters, a bleak image of our reality emerges.
None of these Tax Day updates should come as a surprise, though—Trump and his allies were clear about their plans to attack the Treasury Department, and its sub-agency, the Internal Revenue Service (IRS), from the beginning.
Treasury & IRS Attacks to Date
After winning the election in November, Trump nominated Scott Bessent, the (likely) billionaire hedge fund manager, for the role of Treasury Secretary. While Bessent is currently busy enacting Trump’s tariff shakedown, the IRS is being fileted right under his nose.
It’s not Bessent’s first abdication of responsibility at Treasury. As my colleague Kenny Stancil detailed at length in February, the administration launched an extensive and pre-meditated effort to allow Elon Musk’s DOGE task force to access Treasury data—a move we and allies have argued was unconstitutional, but that Bessent and the Trump-Musk administration is still backing.
Trump also made clear his intention to target the IRS specifically. On his first full day in office, Trump singled the IRS out as being under an “indefinite” hiring freeze (while the freeze placed on other agencies was limited to 90 days).
At the start of February, Treasury employees were among those offered deferred resignation deals, inducements to leave their roles with the federal government in exchange for a period of time when they would be compensated but not expected to work. Around 4,700 IRS employees took this initial offer.
On February 20th, around 7,000 probationary IRS employees were fired. Even after they were reinstated by a court order, the Treasury Department put them on paid administrative leave, rather than allow them back to work. (The judge who issued the order reinstating the workers contested this move, saying it did not meet the terms of his order). However, as Bloomberg reported, “at the start of April, a notice went out to many of those workers: Be prepared to return to ‘full duty’—if only temporarily—by April 14, it said. Just in time for Tax Day.”
The workers targeted in these initial cuts came disproportionately from the IRS unit “that specifically audits billionaires,” according to the International Consortium of Investigative Journalists, as my colleague Toni Aguilar Rosenthal reported in our weekly Corruption Calendar newsletter. The Trump administration has also targeted services that help low and middle income taxpayers pay their taxes correctly. As I wrote last month, the cuts disproportionately impacted the Taxpayer Advocate Service—”a small unit within the IRS that functions as an ‘internal watchdog,’ and provides support to taxpayers navigating technical and financial issues or struggling to pay their taxes.”
Finally, there are reports that the IRS’s new Direct File program, designed to allow people to skip the costly tax preparation companies and file their taxes for free, might be shuttered—yet another resource taken away from the majority of people as Trump offers more and more shortcuts and loopholes for the uber-wealthy.
I’ll reiterate here what I argued then—the Trump-Musk administration’s attacks on the IRS are entirely predictable and unimaginatively corrupt:
“For an administration bent on destroying the federal government while enriching their wealthy friends, it’s a strategic move. Undercutting IRS enforcement capacity makes it harder for the government to enforce tax laws on rich people and corporations, which leads to less tax revenue, and thus less funding for the government to enforce the law against rich people and corporations, leading to less government and more concentrated wealth for billionaires. It’s a perfect—if incredibly obvious and blatantly corrupt—plan.”
Insider dealing is sadly not novel–but the scale of billionaires and their buddies’ devastation of our country is in fact new.
More Recent Blows in the Lead Up To Tax Day
This week, the New York Times, among other outlets, reported that up to 22,000 additional IRS employees plan to accept deferred resignation deals, which would mean a total loss of about a third of the agency’s workforce.
There have been multiple reports that the IRS may not be able to process tax returns at a reasonable rate this year, given the interruptions to staffing. But given that workers who may end up taking a deferred resignation offer, and probationary employees who may eventually be terminated if the administration’s legal strategies prevail, have not been allowed to stop work until after Tax Day, the real impact of predicted delayed tax returns and lower numbers of enforcement actions for tax dodging will be felt on Tax Day 2026.
What’s more, the ongoing attacks on undocumented people from multiple directions, as well as the illegal abductions of pro-Palestinian voices and unlawful deportation of Kilmar Abrego Garcia, have created a precarious situation for documented and undocumented people looking to obey our tax laws. It is a cruel irony that attempts to comply with tax laws the wealthiest Americans routinely ignore could result in deportation for the most vulnerable amongst us. Beyond being wrong and cruel, this move also has downstream effects that will undercut the availability of resources for other people who need them, in that it will only compound the revenue shortfalls, leaving fewer resources for public services. To put a number on it, NBC News predicted that undocumented people choosing not to pay taxes for fear of persecution could result in a loss of almost $100B a year.
In addition to the rounds of layoffs and attacks on IRS programs that support everyday taxpayers, the agency has also seen immense leadership turnover. As Don Moynihan wrote on Monday, “the IRS has gone through three Commissioners in three months. It still does not have a permanent Commissioner in place. And no Chief Human Capital Officer. The Acting Chief Counsel was replaced with someone more DOGE-friendly after he resisted DOGE requests for data. Oh, and a few other people resigned after the privacy violations occurred. The Chief of Staff. The Chief Financial Officer. The Chief Risk Officer. The Chief Privacy Officer.” Most recently, on Monday, Chief Information Officer Rajiv Uppal resigned—a day before Tax Day.
Several of these officials left or were replaced as part of efforts to resist or protest DOGE’s efforts to use IRS data to target undocumented immigrants for deportation.
Additionally, as Moynihan points out, Trump has hinted at weaponizing the IRS to attack his political adversaries. In Moynihan’s words, “There is already enough going wrong with the IRS, but it can always get worse.”
Plans to Funnel Funds to Thiel’s Palantir
Perhaps the cherry on top of this chaotic, racist, classist, and authoritarian weaponization of the Treasury Department and the IRS specifically is DOGE’s collaboration with Palantir to mine IRS data. As Wired reported last week, “DOGE and a handful of Palantir representatives, along with dozens of career IRS engineers, have been collaborating to build a ‘mega API.’” An API is an “application programming interface”—effectively, Palantir would be building a tool that would allow different applications to access and utilize IRS data.
As Wired reports:
“Should this project move forward to completion, DOGE wants Palantir’s Foundry software to become the ‘read center of all IRS systems,’ a source with direct knowledge tells WIRED, meaning anyone with access could view and have the ability to possibly alter all IRS data in one place. It’s not currently clear who would have access to this system.”
Palantir, the Peter Thiel-founded technology company, has been a federal contractor for years, and has already made billions in government contracts, so it’s no surprise that the Trump administration is collaborating with them. The company has been broadly criticized for its contracts with the Department of Homeland Security and the Israel Defense Forces (IDF), “providing artificial intelligence tools that the IDF uses in drone and air strikes on Gaza.”
It is, however, noteworthy that this massive grab at government data is being facilitated by DOGE, which features at least three Palantir alumni and a Thiel Fellow, at a Treasury Department helmed by Palantir investor Scott Bessent (the hedge fund Bessent founded is invested in Palantir), all under the authority of an administration featuring Vice President JD Vance, Peter Thiel’s personal pick for VP. The Palantir-connected DOGE agents in question are Clark Minor, Gregory Barbaccia, Akash Bobba, and Luke Farritor; see more on their DOGE work and their Palantir and Thiel connections in our DOGE Agent Profiles.
Between the federal government’s history of awarding federal contracts to Palantir, the connections of DOGE agents with the company, and the presence of current Palantir employees at the DOGE-driven “Hackathon” event, the threat of this private technology company getting access to sensitive taxpayer data including “taxpayer names, addresses, social security numbers, tax returns, and employment data” is looming, to say the least.
Who’s affected and who benefits?
To summarize, the Trump administration’s attacks on and weaponization of the Treasury Department and the IRS will:
- Make regular people’s lives harder;
- Make it harder for low and middle income people to get questions answered as they try to pay their taxes
- Make processing tax returns slower, keeping money out of the pockets of people waiting on a tax refund
- Likely force people to continue relying on paying tax preparers to help them file their taxes
- Take the jobs of IRS employees—disproportionately women and people of color—who have been dedicated public servants, through no fault of their own
- Make it easier for corporations and the uber-wealthy to cheat on their taxes;
- Threaten undocumented people who have been attempting to follow tax laws with persecution up to and including deportation;
- Result in massive revenue shortfalls that will leave key government services like childcare, healthcare, and other benefits underfunded;
- And funnel access to sensitive IRS data to private corporations who, no doubt, plan to mine, repackage, and sell it to further their profits, at everyone else’s expense.
Or, in other words, it was an unhappy Tax Day, even by Tax Day standards.
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