Topline
President Donald Trump voluntarily dropped his $10 billion against the IRS on Monday in exchange for a $1.8 billion “anti-weaponization” fund that is expected to pay out money to Jan. 6 rioters, a broadly controversial move that’s already drawn widespread outrage from Democrats and ethics experts.
President Donald Trump speaks to reporters aboard Air Force One on May 15.
Copyright 2026 The Associated Press. All rights reserved.
Key Facts
Trump filed a notice with the court Monday saying he had voluntarily dismissed his $10 billion lawsuit against the IRS, which alleges the IRS failed to properly protect his tax returns after a contractor passed details of the president’s taxes on to news outlets.
While that filing did not mention a settlement, the Justice Department filed a notice Monday announcing the creation of a new $1.776 billion “Anti-Weaponization Fund” as part of settling the case, confirming reporting from ABC News last week that Trump intended to settle in exchange for the government creating a fund for those who claimed they were unfairly punished by the Biden administration—including Jan. 6 rioters.
The DOJ suggested in a press release Monday the only terms of the settlement were the creation of the fund and the IRS issuing a formal apology to Trump, after The New York Times previously reported the settlement could also come in exchange for the IRS dropping its tax audits into Trump, his family and his businesses.
In addition to the IRS suit, Trump will also drop two other legal claims tied to the DOJ’s criminal investigations into Trump during the Biden administration, the DOJ said.
Trump’s dropping of his suit came as Judge Kathleen Mary Williams has been considering whether Trump could actually sue his own IRS—given he controls the agency as president—and Democrats and ethics watchdogs had criticized Trump for potentially being able to profit off of litigation that wasn’t even valid to begin with.
The president’s personal legal team decried the IRS on Monday for “wrongly allow[ing]” a “politically-motivated actor” to disclose Trump’s confidential information, and said in a statement Trump was settling the case “squarely for the benefit of the American people.”
What To Watch For
The DOJ’s notice Monday states the U.S. Treasury must pay $1.776 billion into the “anti-weaponization” fund within 60 days of the settlement taking effect, though it’s still unclear what that date will be. It’s unclear when payouts could begin. It’s also possible the fund could get tied up in litigation over whether it’s legal to begin with, ABC noted in its report last week. Donald K. Sherman, president of ethics watchdog Citizens for Responsibility and Ethics in Washington, noted in a statement to Forbes last week the then-potential settlement fund could violate the Constitution’s Domestic Emoluments Clause, which prohibits presidents and other federal officials from profiting off their position beyond their government salary.
How Will The Settlement Fund Work?
The “anti-weaponization” fund will be for “victims of lawfare and weaponization to be heard and seek redress,” Acting Attorney General Todd Blanche said Monday, though it’s still unclear who exactly will be approved to get money from it. Those who believe they’re victims can apply to receive compensation from the fund, the DOJ said in a press release Monday, and the fund will be able to issue both “formal apologies and monetary relief” to those who file claims. It will issue claims through Dec. 1, 2028, right before Trump’s term ends. The fund will be run by a five-person board, which will be appointed by the attorney general. One of the members will also be appointed “in consultation with congressional leadership,” and Trump will have the power to remove the board members, the DOJ said. The $1.776 billion allocated for the fund will be used to both pay out claims, and on administrative costs associated with running the fund.
Chief Critics
Democrats, ethics experts and other groups have decried the $1.8 billion fund since ABC first reported last week that it could come to fruition. Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee, said Monday the fund “will be the most brazen theft and abuse of taxpayer dollars by any president in American history,” and Brandon DeBot, policy director at the Tax Law Center at New York University, described the settlement Monday as “a breathtaking abuse of the tax and legal system.”
Could Trump Use The Settlement Fund To Pay Himself?
It’s unclear. ABC’s reporting last week suggested the proposed settlement fund could not be used to make payments to Trump directly, even though the president claims he was a victim of the Biden administration’s purported “weaponization” of the DOJ. It would not bar entities related to Trump from applying for payouts from the fund, ABC reported, however, which means Trump’s businesses could try to get money from it. The DOJ’s filing Monday did not include any specific terms regarding who can and can’t get payouts from the new fund.
Can A Judge Stop Trump From Settling With The Irs?
Probably not. Legal experts cited by The Times said if Trump were to settle with the IRS before Williams could rule on whether or not the lawsuit could move forward, the judge’s hands would be tied when it comes to allowing the settlement to go through. Williams would be unable to stop any private transactions between Trump and the IRS from taking place after the case has been dropped, even if she were to determine the lawsuit was invalid to begin with.
Key Background
Trump, his sons and the Trump Organization sued the IRS in January, alleging the agency violated his privacy by not keeping his tax returns sufficiently confidential. Former IRS contractor Charles Littlejohn was previously sentenced to five years in prison for passing details of Trump’s taxes on to ProPublica and other news organizations, which Trump alleged resulted in false reporting that “caused Plaintiffs reputational and financial harm, public embarrassment, unfairly tarnished their business reputations, portrayed them in a false light, and negatively affected President Trump.” Trump’s tax returns have been a source of public fascination and controversy since the president first failed to release them before the 2016 election, and reporting from The Times and other outlets suggested Trump paid no income taxes for many years and used some “questionable measures” to lower his tax bill, which Trump disputes. The settlement fund comes as many Jan. 6 rioters who were convicted during the Biden administration for storming the Capitol have since sought money from the government, either in the form of refunds for the restitution they paid or bigger million-dollar payouts for the purported harm they faced by being prosecuted. Democrats have sought to pass legislation that would block such payouts, but those bills remain a longshot to pass in the GOP-controlled Congress.