Trump drops IRS lawsuit, gets billion-dollar "victim's fund"

The White House announced on Monday that a settlement had been reached between the US Justice Department and the Internal Revenue Agency (IRS) over President Donald Trump's lawsuit, in which he sought a $10 billion (€8.5 billion) ⁠from ⁠the tax agency over a leak of his tax returns.

Trump, along with his adult sons Donald Trump Jr. and Eric Trump, and their business group, the Trump Organization, had sued the IRS in January, blaming the agency for not doing enough to prevent a former contractor from leaking their tax information to media outlets.

The IRS contractor plead guilty in 2023 to leaking the tax returns and was handed a five-year prison sentence.

Trump administration sues itself

Although the leak occurred during his first term, Trump filed the lawsuit against the IRS after being sworn in for a second term, effectively suing an agency he oversees.

Under the settlement, the Trump administration agreed to drop the $10 billion lawsuit in exchange for the creation of a $1.76 billion "Anti-Weaponization Fund," which would be used by those it says were victims of "lawfare" and prosecutions under former President Joe Biden's administration.

"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," Justice Department Acting Secretary Todd Blanche said in a statement.

Critics of the IRS lawsuit and the resulting settlement said the move is an attempt to direct taxpayer money to Trump and his allies.

What's in the settlement?

Trump is expected to receive an apology from the IRS over the tax returns leak, but he will not receive direct financial compensation.

Under the agreement, Blanche is directed to appoint four of the five members of a commission that will decide the merits of claims submitted to the fund.

So far, the Justice Department has not said how it will determine who receives payouts, stating only that the fund can be tapped by those who believe they were unfairly pursued by the Biden administration.

Democrats decry 'outright corruption'

Congressional Democrats sharply criticized both the IRS lawsuit and the Justice Department's decision to settle and establish the fund.

"This case is nothing but a racket designed to take $1.7 billion of taxpayer dollars out of the Treasury and pour it into a huge slush fund," said Representative Jamie Raskin of Maryland, the top Democrat on the House Judiciary Committee.

Representative Alexandria Ocasio-Cortez of New York called the events "outright corruption."

Democratic Senator Chris Van Hollen accused Trump of dropping a "bogus lawsuit" to create the fund in order to "pay off his political allies."

Thousands in US demand Trump release tax returns

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Edited by: Louis Oelofse