US Drops Tax Claims Against Trump in Landmark IRS Settlement
WASHINGTON — The U.S. government has agreed to permanently drop tax claims against President Donald Trump, his sons, and the Trump Organization as part of a rapidly expanding settlement in a $10 billion IRS lawsuit, according to AP News. The agreement marks one of the most extraordinary uses of executive power in modern American history, effectively shielding a sitting president from further examination of his past finances.
The Settlement
The Justice Department filed a one-page addendum on Tuesday, signed by Acting Attorney General Todd Blanche, that “forever bars and precludes” the IRS from examining or prosecuting Trump, his sons Donald Trump Jr. and Eric Trump, the Trump Organization, and related affiliates for past tax examinations. The document applies to “tax returns filed before the effective date” of the settlement — May 18, 2026 — though the Justice Department stated it only covers existing audits, not future examinations.
As part of the broader deal, Trump will receive a formal apology from the U.S. government but no monetary payment or damages from the settlement itself, according to the original settlement agreement.
The Anti-Weaponization Fund
The settlement also created a $1.776 billion “Anti-Weaponization Fund” — a figure deliberately chosen to reference the year of American independence. The fund, announced Monday, is designed to compensate individuals who claim they were unfairly targeted by the government for political purposes, as detailed in the DOJ press release.
Acting Attorney General Todd Blanche defended the fund, stating: “The machinery of government should never be weaponized against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again.”
The fund will be administered by five commissioners — four appointed by the Attorney General (removable by the President) and one appointed in consultation with congressional leadership. Claims will be evaluated based on the strength of evidence, time spent in prison, attorney’s fees, and other factors. Notably, there is no requirement that the fund’s work be made public.
Political Reactions
The settlement has sparked fierce bipartisan backlash. Senate Majority Leader John Thune (R-SD), the highest-ranking Republican to criticize the deal, told reporters he was “not a big fan” of the fund and expected it to undergo a “full vetting” by lawmakers, according to BBC News.
Democrats have been far more pointed in their criticism. Senator Patty Murray (D-WA) called the fund “corruption that has never been more blatant or more widespread,” adding: “What is happening is you write the cheque, Trump and his cronies cash it. American taxpayers who are already being whacked with high prices are going to foot the bill.”
Ninety-three congressional Democrats filed an amicus brief arguing the settlement is illegal, as The Guardian reported. Watchdog groups including CREW, Democracy Forward, and the Democracy Defenders Fund have pledged to challenge the legality of the settlement in court.
The Original Lawsuit
The case originated from the leak of Trump’s confidential tax returns by former IRS contractor Charles “Chaz” Littlejohn, who provided the records to ProPublica and The New York Times. Littlejohn was sentenced to five years in federal prison. Trump, his sons, and the Trump Organization subsequently filed a $10 billion lawsuit against the IRS and Treasury Department, alleging reputational and financial harm.
As part of the settlement, Trump also agreed to drop claims for monetary damages against the government over the raid on Mar-a-Lago and the investigation into Russian meddling in the 2016 election.
Judicial Scrutiny
U.S. District Judge Kathleen Williams, an Obama appointee overseeing the case, dismissed the lawsuit on May 18. In her filing, she admonished the government agencies, notably the Justice Department, for failing to be transparent about the settlement, noting that no agency “submitted any settlement documents nor filed any documents ensuring that settlement was appropriate.”
The settlement was announced just before a May 20 deadline in which the judge had asked for briefing on whether a legitimate controversy existed — a critical requirement for any lawsuit — because Trump controls the IRS through his administration.
Treasury Resignation
Hours after the settlement was announced, Treasury General Counsel Brian Morrissey abruptly resigned after seven months in the position. Morrissey did not comment on his departure, though a Treasury spokesman said he served the government with “honour and integrity.”
Analysis and Implications
The settlement raises profound legal and constitutional questions. Daniel Werfel, former IRS Commissioner during the Biden administration, said he was unaware of any instance where the IRS agreed in advance “to permanently forgo examination of previously filed tax returns for a specific person or business,” adding: “Whether you are the president or Joe the Plumber, people expect the same tax rules and enforcement framework to apply to everybody.”
Legal experts and watchdog groups have flagged potential violations of the Constitution’s domestic emoluments clause, which prohibits the president from receiving any emolument from the federal government beyond his salary. The fund draws from the Judgment Fund, a perpetual appropriation allowing the DOJ to settle cases, and any money remaining when the fund ceases operations by December 1, 2028, will revert to the federal government.
What’s Next
The settlement is expected to face legal challenges in the coming weeks, with watchdog groups already preparing lawsuits. Vice President JD Vance has defended the fund, stating that “anybody can apply for it,” including Hunter Biden. Meanwhile, Acting Attorney General Blanche faced intense questioning from lawmakers on Capitol Hill and did not rule out the possibility that individuals involved in the January 6, 2021, Capitol riot could seek compensation from the fund.
Congressional scrutiny is likely to intensify, with both Democrats and some Republicans calling for investigations into the fund’s structure and legality. The question of whether this settlement sets a precedent for future presidents to shield themselves from legal scrutiny remains open — and deeply contested.