Trump Scraps $1.8B Fund but Keeps IRS Audit Shield
WASHINGTON — The Trump administration has abandoned plans for a $1.8 billion “Anti-Weaponization Fund” meant to compensate allies of the president, Acting Attorney General Todd Blanche told lawmakers on Tuesday. But Blanche confirmed that a parallel provision of the same settlement — an order that “forever” bars the IRS from auditing President Trump’s past tax returns — will remain in place.
“We are not moving forward with the fund, period,” Blanche said during a House Appropriations subcommittee hearing, according to AP News. When pressed by Rep. Grace Meng (D-NY) whether the fund would ever move forward, Blanche answered simply: “Correct.”
A Rare Retreat
The decision marks an extraordinary turnabout for an administration that rarely backs down from its initiatives. The fund, established on May 18 as part of a settlement resolving Trump’s $10 billion lawsuit against the IRS over the leak of his tax returns, faced fierce bipartisan backlash from its inception.
Senate Republicans refused to pass a $72 billion immigration enforcement funding bill unless the fund was abandoned. Sen. Thom Tillis (R-NC) called the prospect of compensating individuals who assaulted police officers during the Jan. 6 Capitol riot “right up there with crazy,” as USA Today reported.
A federal judge in Virginia had already temporarily halted the fund’s formation on May 29, scheduling a June 12 hearing. The combination of legal setbacks, bipartisan opposition, and a Senate GOP revolt ultimately forced the administration’s hand.
The IRS Audit Shield Remains
While the fund has been scrapped, Blanche confirmed that the rest of the Trump-IRS settlement remains intact — including a one-page addendum signed by Blanche himself that “forever” bars the IRS from auditing past tax returns of Trump, his family members, and his companies.
Blanche defended the provision during the hearing, telling lawmakers, “It’s not a forward-looking document. It’s nothing that gives any sort of immunity in the future to the president or his family or his organizations,” as Yahoo News reported.
Legal experts and Democratic lawmakers have sharply criticized the arrangement. Sen. Ron Wyden (D-OR) called the settlement a “heinously corrupt act” and a “violation of the law that prohibits interference by executive branch officials in IRS audits,” according to Thomson Reuters.
Brandon DeBot, policy director of the Tax Law Center at NYU Law, described the settlement as “a breathtaking abuse of the tax and legal system.”
What the Fund Would Have Done
The $1.776 billion “Anti-Weaponization Fund” was designed to compensate individuals who claimed they were victims of government “weaponization” or “lawfare” during the Biden administration. The money was to be drawn from the U.S. Treasury’s Judgment Fund, a permanent appropriation that bypasses congressional oversight, as Al Jazeera explained.
Blanche had previously refused to rule out payments to violent Jan. 6 rioters, which further alarmed lawmakers. A five-member commission was to administer the fund, but no commissioners had been named and eligibility criteria remained unclear.
Political Fallout Continues
Despite Blanche’s announcement, the political battle is far from over. Senate Minority Leader Chuck Schumer (D-NY) has vowed to force a vote on legislation to permanently abolish any similar fund, putting Republicans on the record ahead of the 2026 midterm elections.
“The only way to end this scheme is abolish it by law,” Schumer said, according to USA Today. “Trump doesn’t get to use your tax dollars to pay off MAGA insurrectionists.”
Senate Majority Leader John Thune (R-SD), meanwhile, began moving forward with the immigration enforcement funding bill on Wednesday, after Blanche’s announcement cleared the path.
Analysis: The More Significant Component
While the fund received most of the media attention, legal analysts suggest the IRS audit shield may be the more consequential part of the settlement. According to BBC News, the one-page addendum shuts down current possible tax audits and investigations into Trump, his family, and his businesses. The New York Times reported that one IRS investigation into how Trump claimed losses on his Chicago tower “could have cost him more than $100 million.”
Legal questions remain about whether the Department of Justice has the authority to unilaterally bar IRS audits, and whether a future administration could reverse the order. Sen. Wyden has suggested the directive should be considered “completely invalid” by future administrations.
What to Watch
With the fund officially dead, attention now turns to the pending court challenges, the legislative battle in Congress, and the potential midterm election implications. Democrats see the controversy as a potent political weapon, while Republicans hope to move past the episode and focus on immigration enforcement funding.