The IRS is testing a Palantir-built system that could change how the agency finds tax cases worth a closer look. Documents obtained by WIRED through a public record request show that the tax agency paid Palantir $1.8 million last year to improve a custom tool called the Selection and Analytic Platform, or SNAP.
The goal is not simply to add another database. According to the documents, SNAP is meant to help the IRS identify the “highest-value” cases for audits, collection of unpaid taxes, and potential criminal investigations.
Why the IRS wants a new way to select cases
When the contract was signed, the IRS described a technology environment built up over decades. The agency said it was using “more than 100 business systems and 700 methods” to decide which cases might involve incorrectly reported taxes or money owed to the government.
That kind of system can become difficult to manage. In one document outlining the contract, the IRS said the fragmented setup could create “duplication of effort and cost, poor understanding of gaps in the coverage, and suboptimal case selection.”
In plain terms, the IRS is trying to solve a sorting problem. The agency receives and reviews complex tax information, but its tools for deciding which cases deserve attention have become scattered across many systems and methods.
SNAP is designed to streamline that process. For now, the software is being used only as part of a pilot program, according to the documents. Palantir and the IRS did not respond to WIRED’s requests for comment.
What SNAP is being asked to find
The documents do not fully explain how SNAP fits into existing IRS technology. WIRED reports that, like other Palantir tools, it would likely sit on top of the agency’s splintered databases and help human auditors spot red flags in tax filings they might otherwise miss.
One document says the SNAP pilot is designed to surface “key information about contracts, vehicles and vendors” from “unstructured data from supporting documents.” That matters because useful tax signals may not always appear in neat database fields. They can be buried in forms, attachments, descriptions, and other supporting material.
The IRS asked Palantir to craft three “case selection methods” tied to existing parts of the tax code. The options named in the documents were:
- disaster zone claims, a form of tax relief for natural disaster victims
- Residential Clean Energy Credits, which offset costs for things like solar panels or wind turbines
- Form 709 Gift Tax Returns, which people may need to file when giving away valuable things such as artwork, stocks, or corporate entities
Mitchell Gans, a professor at Hofstra University focused on gift and estate taxes, told WIRED that if SNAP is analyzing unstructured data from supporting documents, it may be looking at forms that provide “adequate disclosure” of property being gifted to another person.
The IRS requires those disclosures to include “a detailed description” of how the property’s value was determined and the relationship between the giver and recipient. Gans said that if someone gives another person a private business, the disclosure would need supporting information about the appraisal, including “balance sheets and statements of net earnings, operating results, and dividends.”
The data question behind smarter audits
Erica Neuman, an accounting and finance professor at Youngstown State University, said public logs from money transfer apps like Venmo and public storefronts on websites like Etsy and Depop could also contain unstructured data that might interest the IRS.
But the documents place an important boundary around the pilot. If SNAP were to factor in data from Venmo or Depop while selecting audit cases, the IRS would already have to possess that information. The contract documents say Palantir should use only “existing data in SNAP today.”
That distinction is central to understanding the project. The documents describe a tool for analyzing data already inside SNAP, not a new open-ended collection system. The practical impact depends on what information is already available to the agency and how the tool helps organize it for case selection.
The IRS has long used a Discriminant Information Function, or DIF, score as a primary way to decide which cases to audit. The IRS says “the higher the score, the greater the audit potential.” Neuman said the scoring method is a black box, while researchers generally agree that the agency looks for similarities between current filings and past filings that led to audits.
A modernization push with old obstacles
The Palantir work sits inside a larger IRS modernization challenge. Government contracting records show that the IRS has bought Palantir technology since 2014. In total, Palantir has been awarded more than $200 million in contracts and obligated payments with the IRS, and the documents show the agency is interested in deepening that relationship.
Neuman has studied other methods the IRS has tried as it works to improve case selection, including contracting with companies like Coinbase to analyze information about crypto transactions and mining public social media posts for clues that an individual or business may be underreporting income.
At the same time, IRS technology upgrades have struggled. Neuman said the agency “basically never had a full successful modernization since the 1960s.” Other parts of the federal government have faced similar problems; WIRED notes that government retirement applications still partly involve paper documents stored in a limestone mine in rural Pennsylvania.
For the IRS, the difficulty is not only technical. Neuman said the agency’s unpopularity with the public makes it an easy political target, creating “a lack of political will to die on the hill of the IRS.”
Under the Trump administration, that pressure has come alongside fewer resources and staffing cuts. In February 2025, about 103,000 people worked for the agency. By July 2025, more than 25,000 people had resigned or accepted deferred resignation and early retirement offers.
Leadership turnover adds another constraint. Neuman said, “The commissioner turnover is incredibly quick—and that, of course, has accelerated in the most recent years.” She added: “But it’s just hard to get things done when there’s not enough resources, and no one is really pushing that hard for it.”
What the pilot signals
SNAP does not appear, from the documents described by WIRED, to be a finished replacement for IRS case selection. It is a pilot tool aimed at improving how the agency identifies potential fraud cases and prioritizes work.
Still, the direction is clear. The IRS wants smarter audits, fewer inefficiencies, and better use of the information already inside its systems. Palantir’s role in that effort could grow if SNAP proves useful, but the same documents also show why the project is complicated: old systems, fragmented data, political pressure, and limited resources all shape what modernization can actually deliver.