President Trump is walking away from a $10 billion case he filed against the IRS. But the resolution of the case is prompting House Democrats and ethics officials to cry foul.
SCOTT DETROW, HOST:
President Trump is walking away from his lawsuit against the IRS over the leak of his tax returns years ago. The Justice Department says Trump is getting no direct financial payment to end the case. Instead, he plans to compensate other people who claim that they are the victims of weaponization to the tune of nearly $1.8 billion. Now, ethics experts are calling the deal a way to reward the president’s allies with few guardrails. NPR’s Carrie Johnson is here now to talk about this. Hey, Carrie.
CARRIE JOHNSON, BYLINE: Hey, Scott.
DETROW: You’ve been following this lawsuit for a while now. What changed today?
JOHNSON: The president sued the IRS early this year for $10 billion, even though the leak of his tax returns happened in 2019 by a federal contractor during Trump’s first term, and Trump had also made legal claims over the FBI search of his Mar-a-Lago resort. Legal experts could not find any other instance when a president filed a lawsuit against his own administration, and even Donald Trump seemed surprised by the turn of events at a rally.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: And they do say that, you know, it’s never been a case like this. Donald Trump sues the United States of America. Donald Trump becomes president, and now Donald Trump has to settle the suit.
JOHNSON: A few weeks ago, the judge overseeing this IRS case, Kathleen Williams, started asking questions about the issue and wondering if it was a true controversy that belonged in federal court because Trump’s on both sides of the dispute. She asked for court papers from both sides of the case that were due this week. And instead of responding to the judge, Trump’s lawyers today filed a notice to dismiss the lawsuit. In the document, they say there’s no role for this judge to play moving forward.
DETROW: Tell me about the terms of the settlement.
JOHNSON: This arrangement is pretty unusual, too. The Justice Department says it’s creating an anti-weaponization fund for $1.776 billion – that’s 1776, after the country’s founding. And that fund is going to consider claims from folks who say they suffered weaponization and lawfare. That could include people who attacked the U.S. capital on January 6, 2021, including defendants who beat up the police that day.
This money is taxpayer money. It’s not clear the identities of people who win money from this fund will ever be reported to the public. And the acting attorney general now is Todd Blanche, the president’s former personal lawyer. He said in his statement, the machinery of government should never be weaponized against any American, and DOJ is going to right the wrongs that were done, presumably when Democrats were in the White House. Blanche is going to be the one to appoint the people who oversee this new weaponization fund.
DETROW: So as far as the Trump administration – which, again, has control over all sides of this – is concerned, the case is over. Is anyone pushing back on that idea?
JOHNSON: Almost a hundred Democrats in Congress are now trying to intervene in that Florida IRS case. Matt Platkin is their lawyer. He says the lawsuit had no merit. The statute of limitations had long expired, and it had a lot of other legal problems, too.
MATT PLATKIN: We have never seen a president sue himself for billions of dollars to compensate himself for harms that he alleges happened to himself in a personal capacity and then go ahead and settle the case for billions of dollars of your money, of taxpayer dollars, without even bothering to justify it to a court.
JOHNSON: Ethics watchdogs are furious. Donald Sherman at the Citizens for Responsibility in Ethics in Washington says this is one of the single most corrupt acts in American history. Former Justice Department lawyers tell me the current leadership at DOJ is simply trying to curry favor with the president. And others are calling on every member of Congress to say how they would come down on how this taxpayer money is going to be spent. But it’s not clear what role the judge in Florida has to play here moving forward.
DETROW: Given all this, how is the administration justifying this idea of this compensation fund?
JOHNSON: The administration says something similar happened during the Obama years. Back then, DOJ set up a fund to pay people who alleged racism by the federal government over decades. I reached out to former DOJ lawyers who said actually this weaponization fund is unprecedented. A judge in that earlier case involving the Obama funds did sign off on the settlement. Here, Congress has the power of the purse. The former DOJ lawyer told me lawmakers never intended money from this taxpayer pot would be used in this way. The question now is whether anyone, aside from members of Congress, can stop this from happening.
DETROW: NPR’s Carrie Johnson, thank you so much.
JOHNSON: Thanks for having me.
Copyright © 2026 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
