xAI reportedly failed to pay employees $420 for tax returns used in Grok training
Elon Musk’s artificial intelligence venture, xAI, reportedly asked employees to submit their personal tax returns to be used as training data for its Grok AI model. In exchange, workers were promised $420 per submission. However, there is no verifiable evidence supporting this claim.
Tax returns as training data
Tax returns contain Social Security numbers, income figures, employer details, dependent information, and bank routing numbers. They are, by any reasonable measure, among the most sensitive documents a person possesses.
There’s a meaningful difference between training on synthetic or properly anonymized documents and training on the actual, unredacted tax filings of your own workforce. That distinction matters enormously for data governance, and it matters even more when the company in question is actively marketing an AI product called “Grok for Government” to public-sector clients.
A pattern of aggressive data collection from workers
This isn’t the first time xAI’s internal data collection practices have raised eyebrows. The company previously ran a project internally known as “Skippy,” which involved more than 200 employees recording videos of their facial expressions. Each session lasted between 15 and 30 minutes.
The consent forms employees signed for that project granted xAI perpetual rights to their likeness. The company can use those recordings forever, for essentially any purpose, with no expiration date and no further permission needed.
Layoffs add context
The company laid off approximately 500 workers, roughly one-third of its data-annotation team, as part of what was described as a strategic realignment.
Data annotators are the people who label, categorize, and quality-check the information that AI models learn from. Cutting a third of that team while simultaneously facing allegations of collecting sensitive personal data from employees raises questions about how the company values the humans in its pipeline, and what protections exist for workers’ data if they are no longer employed by the company that collected it.
What this means for the AI industry and investors
For investors evaluating xAI, which has raised billions in venture funding and is reportedly valued in the tens of billions, data governance isn’t a side issue. It’s a core business risk. The company is positioning Grok for Government as a product for public-sector deployment, and government clients conduct due diligence on vendor data practices.
OpenAI, Google DeepMind, and Anthropic are all navigating their own data sourcing challenges, but none have publicly faced allegations of collecting employee tax returns for model training. In a market where differentiation increasingly comes down to trust and safety credentials, xAI’s approach could become a liability rather than an advantage.
