Trump Drops $10B IRS Lawsuit as DOJ Creates $1.77B Lawfare Fund
CNBC reported Monday that President Donald Trump, along with his two eldest sons and the Trump Organization, voluntarily dropped a $10 billion lawsuit against the Internal Revenue Service. The dismissal followed the Department of Justice agreeing to establish a $1.776 billion fund intended to compensate individuals who claim they were wrongfully targeted under the prior administration.
Lawsuit Dismissed With Prejudice in Miami Court
A filing in Miami federal court confirmed that Donald Trump Jr., Eric Trump, and the Trump Organization joined the president in withdrawing the case. The dismissal was filed “with prejudice,” meaning the same legal claims cannot be refiled in a new complaint. The timing was notable. It arrived just two days before a court-imposed deadline requiring both sides to address whether a genuine legal dispute existed. U.S. District Court Judge Kathleen Williams had raised questions about jurisdiction. She flagged that Trump was effectively suing federal entities that fall under his own executive authority.
Background: A Tax-Leak Case Dating to 2019
Trump originally filed the IRS suit in late January over the unauthorized disclosure of his tax returns by a former IRS contractor, Charles “Chaz” Littlejohn, who accessed and leaked the records in 2019 and 2020. Littlejohn was later sentenced to five years in federal prison. The suit sought $10 billion in damages and became one of the most high-profile civil actions brought by a sitting president against a federal agency.
Democrats Condemn the Fund as Corruption
The arrangement drew immediate and sharp criticism from opposition lawmakers. Sen. Elizabeth Warren, D-Mass., described the deal as “corruption on steroids” and said Trump was moving closer to directing taxpayer money to political allies. Sen. Ron Wyden, D-Ore., went further, calling the proposed fund a vehicle for what he characterized as right-wing political activity. ABC News had reported as early as May 14 that the settlement framework was being negotiated, prompting Democrats to label it a “slush fund” for Trump’s political base.
Two Additional Claims Also Withdrawn
Alongside the IRS suit, the DOJ confirmed that Trump agreed to drop two separate administrative claims. One related to the 2022 search of his Mar-a-Lago estate. The other concerned what the filing described as the Russia-collusion inquiry. The administration framed all three withdrawals as part of a single coordinated resolution under the new lawfare compensation mechanism.
Spokespeople for Trump’s legal team and the IRS had not responded to requests for comment at the time of publication.
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