IRS Awards ID.me $1.028 Billion No-Bid Contract Following Lobbying Surge
The Internal Revenue Service granted a private firm a sole-source billion-dollar monopoly over taxpayer identity verification despite years of controversy regarding biometric privacy. This decision bypasses government-owned alternatives and forces citizens to hand sensitive facial scans to a for-profit entity.
The IRS granted ID.me a $1 billion no-bid monopoly over taxpayer identities after a major lobbying surge, privatizing the access point to federal services.
On December 29, 2025, the Internal Revenue Service (IRS) awarded ID.me, LLC a $1.028 billion Blanket Purchase Agreement (BPA) to serve as the primary identity gatekeeper for all federal online tax services. The contract was awarded as a sole-source, no-bid agreement, effectively bypassing the competitive requirements mandated by the Federal Acquisition Regulation (FAR). A formal Justification and Approval (J&A) document, signed by the IRS Chief Procurement Officer and filed on January 7, 2026, cited 'unusual and compelling urgency' as the legal basis for avoiding a competitive bidding process.
While the IRS describes the billion-dollar expenditure as a necessary move to modernize infrastructure against AI-driven fraud, the timing suggests a more calculated influence campaign. ID.me’s Q4 2025 LD-2 lobbying reports reveal a 40% spike in expenditures compared to the previous year. The company specifically targeted the Department of the Treasury and the House Appropriations Committee during the exact window when the BPA was being finalized. These funds were directed toward firms specializing in 'Modernizing Federal Identity,' coinciding with technical requirements from the Treasury’s Office of the CIO that favored ID.me’s proprietary technology over the public-sector alternative, Login.gov.
The contract contains a 'data persistence' clause that allows ID.me to maintain records of citizen biometric templates. This is a significant departure from the 2022 public commitments made by CEO Blake Hall following congressional scrutiny over the accuracy and retention of facial recognition data. By cementing this agreement, the IRS has effectively locked the federal government into a private-sector ecosystem, making the cost of switching to a government-owned system like Login.gov prohibitively expensive due to technical integration complexities.
Mainstream reporting has largely focused on the IRS's stated goal of fraud prevention, omitting the fact that the agency ignored the General Services Administration’s (GSA) platform, which was designed to prevent private monopolies on citizen data. The 'urgency' cited in the January 7 filing remains questionable given that the IRS had years to prepare for this procurement cycle. Instead of a public utility, the agency has opted for a private gatekeeper with a direct financial interest in maintaining control over citizen credentials.
For the average American, this means the right to access public tax records is now contingent on providing a facial scan to a private corporation. There is currently no alternative for digital self-service. Taxpayers are now paying over $1 billion for the privilege of handing their biometric data to a company that used its own revenue to lobby for the very contract that secures its dominance for the next five years.
Summary
The Internal Revenue Service granted a private firm a sole-source billion-dollar monopoly over taxpayer identity verification despite years of controversy regarding biometric privacy. This decision bypasses government-owned alternatives and forces citizens to hand sensitive facial scans to a for-profit entity.
⚡ Key Facts
- The IRS awarded a $1.028 billion sole-source contract to ID.me on December 29, 2025, bypassing competitive bidding.
- ID.me increased lobbying spending by 40% in Q4 2025, targeting the Treasury and House Appropriations Committee.
- A formal justification filed on January 7, 2026, used 'compelling urgency' to bypass the Federal Acquisition Regulation (FAR).
- The contract allows for 'data persistence,' enabling a private company to store biometric templates of American taxpayers.
- The deal creates a 'lock-in' effect, making it technically and financially difficult for the IRS to switch to the government-owned Login.gov platform.
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