Justice Department settles tax claims against Trump, barring IRS pursuit
Acting Attorney General Todd Blanche announces agreement that bars the Internal Revenue Service from pursuing pending claims, while a separate $1.7 billion compensation fund for political allies faces bipartisan scrutiny.
The US Justice Department has announced a settlement agreement that permanently bars the Internal Revenue Service from pursuing any pending tax claims against President Donald Trump, his family, or the Trump Organisation. Signed by Acting Attorney General Todd Blanche, the deal ensures that the IRS is forever prohibited from investigating tax liabilities that were outstanding as of May 18.
The agreement resolves a legal dispute initiated in January when Trump, his sons Eric and Donald Jr., and the Trump Organisation filed a lawsuit against the tax-collecting agency. The litigation sought $10 billion in damages following the leak of the President’s tax returns to the media. Trump dropped the lawsuit on Monday, a move coinciding with the establishment of a $1.7 billion fund designed to compensate political allies who allege they were unfairly prosecuted under the previous administration.
Despite the broader settlement, President Trump is explicitly ineligible for compensation from the newly created fund. The arrangement has drawn sharp criticism from Democrats, who have denounced the compensation mechanism as a slush fund intended to reward Republican loyalists with taxpayer money. Blanche, Trump’s former personal lawyer, appeared before a Senate committee on Tuesday to defend the eligibility criteria, asserting that any US citizen who believes they were a victim of weaponisation is eligible to apply.
The tax leak at the centre of the original lawsuit was the subject of a criminal case in 2023, when a former IRS contractor pleaded guilty to leaking the returns of Trump and other wealthy Americans. The contractor received a five-year prison sentence for the breach. The settlement effectively grants the Trump family a permanent exemption from future tax audits by federal authorities, ending a period of uncertainty regarding the President’s financial disclosures.
Trump has been the first US president in recent times to decline the public release of his tax returns, maintaining that they are currently under audit. The Justice Department’s intervention removes the immediate threat of back-tax pursuit, concluding a chapter of litigation that began with the criminal conviction of the contractor responsible for the data breach.
