Trump May Drop IRS Lawsuit for Deal
President Donald Trump may be close to cutting a major deal that could end one of his biggest legal fights with the IRS. ABC News reports that Trump is expected to drop his $10 billion lawsuit over the leak of his tax returns if a new taxpayer-funded compensation fund is created.
That fund would be worth about $1.7 billion. According to the report, it would be used to pay claims from people who say they were wrongly targeted by the Biden administration’s “weaponization” of the legal system. That could include nearly 1,600 people charged in connection with the Jan. 6 Capitol attack, along with potentially some entities tied to Trump himself.
The deal is not locked in yet. Sources told ABC News that the final terms are still being worked out and could change before any public announcement. A public apology from the IRS is also believed to be part of the discussion.
Trump’s legal team has been aggressive on this issue from the start. In January, Trump, Eric Trump, Don Jr., and the Trump Organization filed suit against the IRS over the leak of their tax returns. They asked for $10 billion in damages. The case centered on the release of private tax information that eventually made its way to the media.
The leak story goes back to 2023, when federal prosecutors charged former IRS contractor Charles Littlejohn. Court records say he improperly obtained and shared tax details from a high-ranking public official and many wealthy Americans. The DOJ said the information was sent to two news outlets, including The New York Times and ProPublica.
“In July and August 2020, Littlejohn separately stole tax return information for thousands of the nation’s wealthiest individuals. Littlejohn was again able to evade IRS detection. In November 2020, Littlejohn disclosed this tax return information to News Organization 2, which published over 50 articles using the stolen data. Littlejohn then obstructed the forthcoming investigation into his conduct by deleting and destroying evidence of his disclosures,” the DOJ previously said.
Littlejohn was sentenced to five years in prison. Some Republicans argued that was far too light for a leak that exposed private financial data on a massive scale.
“The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people,” a spokesperson for Trump’s legal team told CNBC.
If the agreement goes through, it would give Trump a clean exit from the IRS case while also setting up a broad payout process for others who say they were targeted by the government. For now, it’s still a wait-and-see situation.