Trump Drops IRS Lawsuit, Justice Department Creates $1.7 Billion Anti-Weaponization Fund

President Donald Trump and the Justice Department have reached a settlement in a $10 billion lawsuit against the Internal Revenue Service and Treasury Department concerning the leak of Trump’s tax returns. Acting Attorney General Todd Blanche announced Monday that Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization will drop the lawsuit and related claims in exchange for the creation of a $1.776 billion “Anti-Weaponization Fund.”

The fund is designed to provide a systematic process to hear and address claims from individuals who allege they have suffered from government “weaponization” or “lawfare.” It will be overseen by a five-member commission appointed by the attorney general, with one member selected in consultation with congressional leadership. The fund has the authority to issue formal apologies and monetary relief to claimants. It will cease processing claims on December 15, 2028, shortly before the end of the next presidential term, with any remaining funds reverting to the federal government.

The lawsuit, filed in January in Miami federal court, accused the IRS and Treasury Department of allowing a government contractor to leak Trump’s tax returns and those of his sons and company to media outlets in 2020. Trump had sought approximately $230 million in damages related to investigations during his administrations. However, no monetary payments or damages will be awarded to Trump or the other plaintiffs as part of the settlement; instead, they will receive a formal apology.

Acting Attorney General Blanche stated, “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.” Principal Associate Deputy Attorney General Trent McCotter added that the improper use of government power for political, personal, or ideological reasons “should not be tolerated by any Administration.”

The settlement announcement came just before a court deadline that would have required the Trump administration to clarify whether a legitimate case existed, given Trump’s control over the Justice Department. U.S. District Judge Kathleen M. Williams had previously questioned whether the lawsuit presented a true controversy, noting the unusual circumstance of a sitting president suing an executive agency he oversees.

In a court filing, Trump’s legal team argued that the dismissal was “self-executing” and did not require judicial approval, effectively bypassing the judge’s involvement. A spokesperson for Trump’s legal team said the settlement was “squarely for the benefit of the American people,” and that Trump would continue to hold accountable those who “wrong America and Americans.”

The settlement has drawn criticism from Democratic lawmakers and watchdog groups. A group of 93 House Democrats filed a motion to intervene, warning that the fund could divert billions of taxpayer dollars to Trump, his family, and allies. Representative Joe Neguse called the fund “one of the most brazen examples of corruption we’ve seen from this administration.” The nonprofit Citizens for Responsibility and Ethics in Washington condemned the settlement as “the most brazen act of self-dealing in the history of the presidency,” suggesting it may violate the Constitution’s Domestic Emoluments Clause.

The Justice Department noted that the fund’s amount was based on projected valuations of future claimants’ claims. Critics have expressed concern that the fund could be used to reward allies, including individuals convicted or charged in connection with the January 6 Capitol attack, some of whom were pardoned by Trump. The White House deferred questions about the settlement to the Justice Department, while Treasury and IRS representatives did not immediately comment.