Trump Expected To Drop $10 Billion IRS Lawsuit For $1.7 Billion Fund For Allies
President Donald Trump is expected to drop his $10 billion lawsuit against the Internal Revenue Service in exchange for a proposed $1.7 billion compensation fund for allies who say the Biden administration wrongfully targeted them.
According to ABC News, the agreement, which has not been formally announced, would create a commission with authority to distribute taxpayer funds to people claiming harm from what Trump and his supporters describe as the “weaponization” of the legal system under Biden. They reported that potential claimants could include some of the nearly 1,600 people charged in connection with the Jan. 6 Capitol attack.
The fund would be part of a broader resolution of Trump’s legal claims against the federal government, including his $10 billion lawsuit over the leak of his tax records and separate claims tied to the 2022 FBI search of Mar-a-Lago and the Russia investigation, ABC reported.
Trump sued the IRS and Treasury Department in January, accusing the agencies of failing to protect his confidential tax information after former IRS contractor Charles Littlejohn leaked tax records to news organizations. Littlejohn was sentenced in January 2024 to five years in prison after pleading guilty to unauthorized disclosure of tax return information.
The case has raised questions because Trump, as president, is suing agencies inside the executive branch he controls. U.S. District Judge Kathleen Williams recently ordered Trump’s lawyers and the Justice Department to explain why the case should proceed, saying the court needed to determine whether the parties were truly adverse.
The reported settlement would prohibit Trump from directly receiving money tied to the three legal claims, according to ABC News. However, the outlet reported that entities associated with Trump would not be explicitly barred from filing additional claims.
Trump’s legal team defended the lawsuit, telling ABC News that the IRS allowed a “rogue, politically-motivated employee” to leak private information about Trump, his family, and the Trump Organization to news outlets.
Democrats immediately attacked the reported plan. Rep. Jamie Raskin, the ranking Democrat on the House Judiciary Committee, called it a “$1.7 billion taxpayer-funded slush fund for MAGA loyalists” and said Trump lacked authority to create such a compensation program through the Judgment Fund.
The Treasury Department’s Judgment Fund is used to pay certain court judgments and settlements against the federal government. ABC News reported that the proposed fund would draw from that mechanism, giving the arrangement both legal and political significance.
The lawsuit stems from one of the most sensitive tax breaches in IRS history. The Associated Press reported that Trump, his sons Eric Trump and Donald Trump Jr., and the Trump Organization sought $10 billion in damages, alleging reputational and financial harm from the leak.
