The U.S. Internal Revenue Service (IRS) will not pursue President Donald Trump, his family or companies for back tax claims under an agreement announced on Tuesday by the Justice Department.
Trump, his sons Eric and Donald Jr. and the Trump Organization filed a lawsuit against the tax-collecting agency in January seeking US$10 billion in damages following a leak of his tax returns. A former IRS contractor pleaded guilty in 2023 to leaking the tax returns of Trump and other wealthy Americans to the media and received a five-year prison sentence.
Trump dropped the lawsuit against the IRS on Monday in exchange for the creation of a US$1.7 billion fund to compensate political allies who believe that they were unfairly prosecuted under the Biden administration. Trump himself is not eligible for compensation from the “Anti-Weaponization Fund,” which Democrats have denounced as a “slush fund” that would reward the Republican president’s loyalists with taxpayer money.
An addendum to the settlement agreement signed by Acting Attorney General Todd Blanche and released on Tuesday says the IRS is “forever barred” from pursuing any tax claims against Trump, his family or his businesses that were pending as of the May 18 settlement date. Trump is the first U.S. president in recent times to decline to publicly release his tax returns. He has claimed repeatedly that they are being audited by the IRS.
Blanche, Trump’s former personal lawyer, appeared before a Senate committee on Tuesday and defended the compensation fund, pushing back against Democratic claims that money is “going to be only given to Republicans or friends of the president.” “Anybody in this country is eligible to apply if they believe they were a victim of weaponization,” Blanche said.
On Monday evening, hours after the settlement was announced, U.S. District Judge Kathleen Williams, who oversaw the lawsuit, issued an order closing the case and questioning whether the government was being transparent about a settlement. Williams expressed frustration with how the settlement was handled, saying that the U.S. has an “obligation” to uphold the “public’s strong interest in knowing about the conduct of its government and expenditure of its resources” and the “fair administration of justice.” Even so, in her order, the judge said that neither the IRS nor the Justice Department “filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed.” The judge had previously ordered Trump and the government to file briefs by May 20 explaining how the case could proceed with Trump effectively in control of both sides of the litigation. Williams on Monday canceled the deadline and said she no longer has any authority over the case.
