Trump Drops $10 Billion IRS Suit as Justice Department Creates $1.776 Billion Compensation Fund
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President Donald Trump has voluntarily dismissed a $10 billion lawsuit against the IRS and Treasury Department. The dismissal coincides with the Justice Department's creation of a $1.776 billion fund to compensate allies of the president who believe they were wrongly prosecuted. The fund will operate through December 2028 and is part of a deal to resolve the lawsuit.
Facts First
- President Trump dismissed his $10 billion lawsuit against the IRS and Treasury Department 'with prejudice', preventing him from refiling.
- A $1.776 billion 'Anti-Weaponization Fund' has been established to review claims of alleged government political targeting and award compensation.
- The fund's creation is part of a deal to resolve the lawsuit filed by Trump, his sons, and the Trump Organization over leaked tax returns.
- A five-member commission appointed by the Acting Attorney General will oversee the fund, which draws money from the federal judgment fund.
- The fund is scheduled to operate through December 15, 2028 and will issue formal apologies and monetary awards to approved claimants.
What Happened
President Donald Trump, his two eldest sons, and the Trump Organization voluntarily dismissed a $10 billion lawsuit against the Internal Revenue Service (IRS) and the Treasury Department on Monday, May 18, 2026. The dismissal was recorded in a filing in a Miami federal court and states the case was dismissed 'with prejudice', which prevents Trump from refiling the lawsuit. The Justice Department announced that a $1.776 billion compensation fund, named the 'Anti-Weaponization Fund', will be established. Acting Attorney General Todd Blanche stated the fund represents 'a lawful process for victims of lawfare and weaponization to be heard and seek redress.' The fund's creation is part of a deal to resolve the lawsuit, which alleged that a leak of confidential tax records caused reputational and financial harm.
Why this Matters to You
The establishment of a nearly $2 billion fund from the federal judgment fund may affect how taxpayer money is allocated for other government settlements and claims. The fund's focus on compensating individuals who believe they were wrongly prosecuted by a previous administration could shift the landscape for future political and legal disputes. You may see increased public debate and legislative action regarding the use of such funds, as Senator Elizabeth Warren and a group of Democratic lawmakers have already introduced a bill to prohibit the sitting president and vice president from collecting settlement payments.
What's Next
The fund is scheduled to operate through December 15, 2028. A five-member commission appointed by Acting Attorney General Todd Blanche will oversee it, with one member chosen in consultation with congressional leadership. The president has the authority to remove any member of the commission. The fund will review claims of alleged government political targeting, issue formal apologies, and award monetary compensation to approved claimants. Legal challenges and congressional scrutiny of the fund's operation are likely to continue.