The Department of Justice has issued an order that permanently bars the IRS from auditing past tax returns of President Donald Trump, his family, and related companies as part of a settlement that also creates a nearly $1.8 billion fund.
Under the terms of the settlement reached on May 18, the president filed a voluntary dismissal of his $10 billion lawsuit against the IRS on the same day, two days before a court deadline to address jurisdictional challenges to the case.
Settlement Ends Lawsuit, Creates Permanent Bar on IRS Audits
The agreement stems from a lawsuit filed on January 29, 2026, by President Trump, his sons Donald Jr. and Eric, and The Trump Organization. The complaint alleged the IRS and Treasury failed to safeguard their tax information from unauthorized disclosure by former IRS contractor Charles E. Littlejohn, who was sentenced to five years in prison for the leak.
On May 18, the plaintiffs filed a “self-executing” notice of voluntary dismissal with prejudice, which terminated the lawsuit the moment it was filed and permanently bars them from refiling the claim. Because the government had not yet filed an answer, the dismissal was available as of right and did not require court approval.
The dismissal occurred two days before a court-mandated deadline for the parties to address whether the court had jurisdiction to hear a case in which a sitting president was suing an agency under his own executive authority.
On the same day as the dismissal, 93 members of the U.S. House of Representatives filed an amicus brief urging the court to dismiss the case on jurisdictional grounds. The dismissal also followed, by several days, a separate amicus brief from a panel of court-appointed legal experts that raised similar concerns. The court-appointed experts stated specifically that the case presented “significant Article III subject matter jurisdiction concerns.”
A day after the dismissal, the DOJ issued a one-page order signed by Acting Attorney General Todd Blanche. The order states that the United States agreed to “forever” release and discharge the plaintiffs from all government claims. It also precludes the government from pursuing future actions, such as tax “examinations or similar or related reviews,” against President Trump, his family, trusts, and affiliated companies for any tax returns filed before the settlement date.
The order covers “any matters that were raised or could have been raised” in the lawsuit and “any matters currently pending or that could be pending.”
Blanche Defends $1.8 Billion ‘Anti-Weaponization’ Fund
The settlement also establishes a nearly $1.8 billion “Anti-Weaponization Fund” to compensate individuals who claim they were victims of government “weaponization or lawfare.” The money is sourced from the U.S. Treasury’s Judgment Fund, a permanent appropriation used to pay claims and settlements against the government.
During a May 19 hearing before a Senate Appropriations Subcommittee, Acting AG Blanche defended the fund’s legal basis. In an exchange with Senator Susan Collins (R-ME), Blanche compared the action to a fund established during the Obama administration to settle discrimination claims made by Native Americans against the Department of Agriculture. He noted that in that case, a lawsuit was pending, but many potential claimants had not filed.
However, Blanche acknowledged some differences. The Obama-era fund used a single claims commissioner, while the new fund will use five. Blanche stated that four commissioners will be appointed by the Attorney General, with a fifth appointed by the Attorney General in consultation with congressional leadership. He also noted that while any leftover money from the Obama-era fund was distributed to nonprofits, any money left in the new fund would be returned to the federal government.
During the hearing, Blanche told Democrats that he could not commit to barring payments to Trump campaign donors or to individuals who assaulted police during the January 6, 2021, Capitol riot, as reported by Reuters. He stated the standard for eligibility would be defined broadly for those who experienced “weaponization” and confirmed the fund would not be limited to any political party.
Partisan Divide and Legal Concerns
The settlement drew praise from many Republicans but also criticism from Democrats and legal experts. At the subcommittee hearing, Senator Patty Murray (D-WA), vice chair of the Senate Appropriations Committee, said, “What we are talking about is nothing short of the sitting President of the United States looting from the Treasury for his own gain.” In a later exchange during the same hearing, Murray stated, “this is corruption that has never been more blatant or more widespread.”
Senate Finance Committee Ranking Member Ron Wyden (D-OR) issued a statement calling the order a “violation of the law that prohibits interference by executive branch officials in IRS audits” and labeled the deal a “heinously corrupt act.” He stated that future administrations should consider the directive “completely invalid” and that “the Trump family is not above the law.”
The settlement also drew scrutiny from legal scholars. The Tax Law Center at NYU Law raised separate legal questions about the order’s authority. Policy Director Brandon DeBot described the settlement as a “breathtaking abuse of the tax and legal system,” particularly the broad waiver of tax claims.
DeBot argued that the DOJ, on its own, does not have the authority to grant such extraordinary protections, noting that “the IRS would need to act to make the release of claims effective, which could raise additional questions about whether there has been unlawful political interference in the audit process.”
Norm Eisen, co-founder and executive chair of Democracy Defenders Fund, called the settlement fund “the most outrageous example of corruption of any U.S. presidency in American history.” He added that the “public is rightfully outraged, and the legal fights have only just begun.”
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