The Company Helping the IRS Go Undercover Online

The IRS has paid an Israeli company hundreds of thousands of dollars for an internet investigative tool that allows the IRS to conduct undercover investigations online, according to internal IRS documents obtained by Motherboard. Cobwebs Technologies, the company behind the tool, sometimes sells its platform with a facial recognition and other AI-focused capabilities add-on.

The news shows the continued use of AI-linked tools by law enforcement, and that of the IRS’ Criminal Investigations (IRS-CI) unit specifically, which has invested heavily in modern technologies, including systems based on the harvesting of cell phone location data, and blockchain analysis tools. The news comes as Republicans try to prevent the Biden administration from hiring tens of thousands of new IRS employees. Mitch McConnell, for example, wrote an op-ed stating that "Biden wants to give the IRS the OK to snoop on your bank account.”

“Cobwebs web-based subscriptions are needed to help implement and support the IRS-CI Cyber Crime Strategy to focus on cyber-enabled crime,” one of the documents reads. Motherboard obtained the documents through a Freedom of Information Act (FOIA) request with the IRS.

The IRS paid Cobwebs $181,000 in August 2020, and $229,000 in August 2022, according to procurement records. Immigration and Customs Enforcement (ICE) has also bought Cobwebs’ products, paying the company $226,060 in August 2022, and the Office of Intelligence and Analysis, a part of the DHS, has paid Cobwebs more than $1.5 million, the records show.

Cobwebs describes itself as "a global leader in AI-Powered Open-Source Intelligence,” and says “Our mission is to protect global communities and organizations from crime, threats, and cyber-attacks, by providing seamless access to publicly available data.”

Cobwebs’ main product is called Tangles, which lets users search content across social networks, the open web, and the dark web. It can include an artificial intelligence module that adds features such as facial and image recognition, according to Cobwebs’ website. Tangles is designed to work even if a social media site changes its API rules, the site suggests. Cobwebs offers this system to government agencies and private companies. It then also offers two extras to only government customers, called Trapdoor and Lynx, the website adds.

The IRS documents show the deal included the “LYNX add-on for every named user.” Lynx provides a global network of proxies that investigators can use to remain anonymous, according to Cobwebs’ site. “With Lynx, analysts can join darknet forums, hacker communities and other platforms without their cover being blown. With a single solution provided by Cobwebs and by using the proxies provided by Lynx, investigators can work in complete virtual isolation and collect and capture all necessary content from across all layers of the internet without disclosing or jeopardizing resources,” it reads.

Cobwebs also has a financial investigations platform that it says on its website can “identify frauds/money mule threats,” and “gauge reputation risk and conduct due diligence powered by AI.”

An IRS-CI spokesperson told Motherboard in an email that IRS-CI “conducts a variety of financial investigations, which include tax, money laundering, organized crime, drug trafficking, terrorism financing, cybercrime and other related frauds. Cases increasingly include cyber components, which require the collection of digital evidence to ensure that criminals are prosecuted. As part of investigating these cases, the agency uses technological tools to review open-source data online.”

Specifically on going undercover, the statement added that “In certain circumstances, agents may operate in an undercover capacity and employ certain tools to gather evidence for a criminal case. Obviously, discussing specifics of how a special agent uses various tools in an undercover capacity is viewed as law enforcement sensitive information. In all cases, however, agency personnel must follow all legal and agency policies and procedures in the execution of their duties.”

The Biden administration has made tax enforcement one of its priorities. The administration has pushed for more funding for the IRS in an effort to better enforce existing rules. The Inflation Reduction Act includes provisions to hire 87,000 new IRS employees over the next decade, in large part because more than 50,000 employees will likely retire in the next five years, and $80 billion in additional funding for the agency. This additional funding has become a key talking point for Republicans who oppose Biden, with the general, and inaccurate, narrative being that the IRS is hiring an "army" of new employees to spy on Americans: 

Governor Ron DeSantis previously said that the hiring of 87,000 IRS employees was a “middle finger” to Americans, and Republican Representative Marjorie Taylor Green claimed that those agents would be armed. A Reuters Fact Check found that only 2,100 in IRS-CI are allowed to carry firearms.

Republicans voted to block the hire of the 87,000 workers, which passed the House with a 221-210 margin. “Hardworking Southern Illinois families are struggling to heat their homes, put food on the table, and put gas in their cars. And President Biden’s solution is an army of auditors? House Republicans are fighting to stop this disastrous policy and make sure the IRS is working on behalf taxpayers instead of against them,” Republican Representative Mike Bost said in a statement at the time. Biden has vowed to veto what he called the “reckless” Republican bill.

The Republican narrative around the 87,000 employees reached such fever pitch that tax attorneys responded on the American Bar Association’s website, writing “What this doesn’t mean is that 87,000 IRS agents are going to come break down your door and force you to allocate for all of your Venmo accounts on the spot. Ordinary taxpayers have no idea what actually goes into hiring a single IRS agent, let alone 87,000 agents over multiple years to try to reduce the labor backlog.”

In November 2020, Motherboard reported that the IRS was able to query a database of phone location data over 10,000 times. The IRS bought access to the data from a company called Venntel, which sources the data in part from ordinary apps installed on peoples’ phones.

Cobwebs did not respond to a request for comment.

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