Democrats push Palantir for answers on reports of IRS ‘mega-database’

Ten congressional Democrats are demanding answers from Palantir about reports that it is aiding the IRS in building a searchable, governmentwide “mega-database” to house Americans’ sensitive information.

In a letter sent Tuesday to Palantir CEO Alex Karp, the lawmakers argued that the creation of a database of that kind likely violates several federal laws, including the Privacy Act.

“The unprecedented possibility of a searchable, ‘mega-database’ of tax returns and other data that will potentially be shared with or accessed by other federal agencies is a surveillance nightmare that raises a host of legal concerns, not least that it will make it significantly easier for Donald Trump’s Administration to spy on and target his growing list of enemies and other Americans,” the Democrats wrote.

The letter, led by Senate Finance Committee ranking member Ron Wyden, D-Ore., and Rep. Alexandria Ocasio-Cortez, D-N.Y., follows New York Times reporting last month that detailed the expansion of Palantir’s federal government work under the Trump administration, noting that the data-mining giant has received $113 million since the president’s January inauguration plus another $795 million award from the Defense Department.

According to the Times, Palantir has spoken to IRS and Social Security Administration representatives about buying its tech. The Democrats’ letter said Foundry — a Palantir data analysis and organization product — has been deployed at the departments of Homeland Security and Health and Human Services, as well as the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health.

The letter cites reporting that claims Palantir’s IRS database will compile taxpayer information and be shared throughout the federal government, “regardless of whether access to this information will be related to tax administration or enforcement, which is generally a violation of federal law.”

Sharing taxpayer data is a felony; the letter pointed to the case of former IRS contractor Charles Littlejohn, who is serving a five-year prison sentence after leaking thousands of tax returns without authorization, including those from Donald Trump, Michael Bloomberg, Jeff Bezos and other wealthy Americans. Treasury Secretary Scott Bessent told lawmakers last week that he’d be in favor of stiffer penalties for such disclosures.

“While Section 6103 of the tax code prohibits any unauthorized disclosure of tax returns or information contained in tax returns,” the letter stated, “Section 7213A also makes it unlawful for any federal officer, employee, or authorized viewer to willfully inspect a return or return information for a purpose other than one specifically authorized by law, with inspection defined expansively, to include ‘any examination of a return or return information.’ Therefore, improper inspection of tax return information is illegal, even if it has not been made public or disclosed to anyone.”

The Privacy Act also details protocols for accessing Americans’ government data, and Palantir and its employees “can face civil and criminal liability for violating” it, the lawmakers stated, arguing that the creation of an IRS database that houses such sensitive taxpayer information “blatantly violates the notice, transparency, and procedural requirements of the Privacy Act.”

The letter asks Karp for answers to seven questions, including information on Palantir’s government contracts, the software/products it has sold, whether the company is aware of Privacy Act requirements, what services it has declined to provide, if it has received assurances from the Trump administration that it won’t be held responsible for violations of tax code or federal law, and more. 

Other signers of the letter to Palantir were Sens. Jeff Merkley of Oregon and Ed Markey and Elizabeth Warren of Massachusetts, and Reps. Sara Jacobs of California, Summer Lee of Pennsylvania, James McGovern of Massachusetts, Rashida Tlaib of Michigan and Paul Tonko of New York. 

Palantir posted a rebuttal to Democrats’ letter on its X account Tuesday, writing that the missive “contains myriad false accusations about Palantir’s work based on unfounded, previously addressed claims by The New York Times, alongside a number of shocking historical comparisons.”

“Palantir is not building a master database,” the company said in another statement. “Palantir is neither conducting nor enabling mass surveillance of American citizens. No amount of parroting of this false accusation will make it true. We are committed to America, regardless of which party the American people have voted into office. This should be obvious given our continuous work with the government for nearly 20 years.”

Wyden said in a comment shared with FedScoop that Palantir’s response to Democrats’ letter denies “accusations we did not make” and refuses “responsibility for what Donald Trump’s administration does with the products they build for his political appointees.”

“It is Exhibit A for why Americans are demanding real transparency about Palantir’s contracts and what the Trump administration is doing with Palantir’s technology,” Wyden added.

The Treasury Department and the IRS have been ground zero for much of the Trump administration’s data-dives via DOGE, the Elon Musk-created tech collective whose lax approach to entering government IT systems has alarmed cybersecurity experts and led to plenty of litigation. Treasury’s Office of Inspector General and the Government Accountability Office are both investigating DOGE access to agency payment systems.

House Democrats asked the Treasury watchdog last month to probe DOGE’s IRS “hackathon,” an event that according to Wired would involve Palantir and the creation of a “mega API.”

This story was updated June 17 to add comment from Wyden and correct his role on the Senate Finance Committee.