Topline
President Donald Trump voluntarily dropped his $10 billion against the IRS on Monday in exchange for a $1.8 billion “anti-weaponization” fund that is expected to pay out money to Jan. 6 rioters, a broadly controversial move that’s already drawn widespread outrage from Democrats and ethics experts.
Key Facts
Trump filed a notice with the court Monday saying he had voluntarily dismissed his $10 billion lawsuit against the IRS, which alleges the IRS failed to properly protect his tax returns after a contractor passed details of the president’s taxes on to news outlets.
While that filing did not mention a settlement, the Justice Department filed a notice Monday announcing the creation of a new $1.776 billion “Anti-Weaponization Fund” as part of settling the case, confirming reporting from ABC News last week that Trump intended to settle in exchange for the government creating a fund for those who claimed they were unfairly punished by the Biden administration—including Jan. 6 rioters.
It is unclear if there are any other terms of the settlement, after The New York Times previously reported the settlement could also come in exchange for the IRS dropping its tax audits into Trump, his family and his businesses.
Trump’s dropping of his suit came as Judge Kathleen Mary Williams has been considering whether Trump could actually sue his own IRS—given he controls the agency as president—and Democrats and ethics watchdogs had criticized Trump for potentially being able to profit off of litigation that wasn’t even valid to begin with.
The president’s personal legal team decried the IRS on Monday for “wrongly allow[ing]” a “politically-motivated actor” to disclose Trump’s confidential information, and said in a statement Trump was settling the case “squarely for the benefit of the American people.”
Can A Judge Stop Trump From Settling With The Irs?
Probably not. Legal experts cited by The Times said if Trump were to settle with the IRS before Williams could rule on whether or not the lawsuit could move forward, the judge’s hands would be tied when it comes to allowing the settlement to go through. Williams would be unable to stop any private transactions between Trump and the IRS from taking place after the case has been dropped, even if she were to determine the lawsuit was invalid to begin with.
Surprising Fact
If the IRS were to drop its audits against the president as part of a potential settlement, it could benefit him financially: The Times reported in 2024 that Trump was being audited for potentially claiming improper tax breaks on his Chicago skyscraper, and could owe $100 million if the audit came out against him.
What We Don’t Know
ABC previously reported that Trump was seeking the $1.7 billion fund in exchange for dropping not only his IRS lawsuit, but also other ongoing claims against the government. That could include Trump’s threats to sue the Justice Department for $230 million over its criminal investigations against him during the Biden administration.
Key Background
Trump, his sons and the Trump Organization sued the IRS in January, alleging the agency violated his privacy by not keeping his tax returns sufficiently confidential. Former IRS contractor Charles Littlejohn was previously sentenced to five years in prison for passing details of Trump’s taxes on to ProPublica and other news organizations, which Trump alleged resulted in false reporting that “caused Plaintiffs reputational and financial harm, public embarrassment, unfairly tarnished their business reputations, portrayed them in a false light, and negatively affected President Trump.” Trump’s tax returns have been a source of public fascination and controversy since the president first failed to release them before the 2016 election, and reporting from The Times and other outlets suggested Trump paid no income taxes for many years and used some “questionable measures” to lower his tax bill, which Trump disputes. The settlement fund comes as many Jan. 6 rioters who were convicted during the Biden administration for storming the Capitol have since sought money from the government, either in the form of refunds for the restitution they paid or bigger million-dollar payouts for the purported harm they faced by being prosecuted. Democrats have sought to pass legislation that would block such payouts, but those bills remain a longshot to pass in the GOP-controlled Congress.
