Trump drops $10 billion lawsuit against IRS

MIAMI (CN) — President Donald Trump ended his $10 billion lawsuit against the Internal Revenue Service and U.S. Department of the Treasury on Monday just as the Department of Justice announced an “anti-weaponization fund” as part of a settlement.

Trump sued the IRS in January, accusing the agency of not properly safeguarding his financial information and allowing a former contractor to access his tax returns and disseminate them to “leftist media outlets” like The New York Times and ProPublica.

The president’s sons, Donald Trump Jr. and Eric Trump, joined the lawsuit along with the Trump Organization. Trump sued in his personal capacity and not in his official capacity as president, but early in the case U.S. District Court Judge Kathleen Williams questioned the appropriateness of a president suing an agency he controls.

“Although President Trump avers that he is bringing this lawsuit in his personal capacity, he is the sitting president and his named adversaries are entities whose decisions are subject to his direction,” Williams, a Barack Obama appointee, wrote in an order last month.

Trump’s lawyers had until Wednesday to answer why the case belonged in court if the parties are not “sufficiently adverse to each other.”

Watchdog groups and outside lawyers filed briefs in recent weeks, challenging Trump’s lawsuit as a conflict of interest because the president oversees the IRS. Just before Trump dropped his lawsuit, 93 Democrats in the U.S. House filed their own brief accusing the president of “undermining the Constitution by bringing this collusive suit.”

The Treasury Department and the IRS did not immediately respond to a request for comment.

In exchange for dropping the lawsuit, the DOJ will allocate $1.776 billion to a fund for people wrongfully targeted by the government.

“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,” said Acting Attorney General Todd Blanche in a statement. “As part of this settlement, we are setting up a lawful process for victims of lawfare and weaponization to be heard and seek redress.”

The fund, through a five-person commission, will issue formal apologies and monetary relief to successful claimants. Democrats have already denounced the fund.

“Trump deserves no credit for dropping this lawsuit,” Oregon Senator Ron Wyden wrote on X. “He’s doing it to set up a $1.7 billion slush fund for right-wing political violence. If Trump follows through, it will be the most brazen theft of taxpayer dollars by any president in history.”

Trump’s lawsuit came after Charles Littlejohn, working as a consultant for the IRS, obtained the tax returns of some of the wealthiest Americans, including Elon Musk and Florida Senator Rick Scott, and leaked them to the press. The subsequent reports in the The New York Times and ProPublica found the country’s richest people paid little to no income tax.

In 2023, the Justice Department charged Littlejohn with unauthorized disclosure of tax returns. Prosecutors claimed he intentionally applied for a job with the IRS to release Trump’s tax returns because the president was “a threat to democracy.”

Littlejohn was convicted in January 2024 and sentenced to five years in prison. He is currently appealing his sentence.

Trump was represented by Florida-based attorney Alejandro Brito and Daniel Z. Epstein of Epstein & Co. in Washington.

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