Trump Drops $10 Billion IRS Lawsuit Amid Reports of $1.7 Billion Settlement Fund

Donald Trump, his two eldest sons, and the Trump Organization dropped a $10 billion lawsuit against the Internal Revenue Service on Monday, May 18, 2026. The dismissal is part of a settlement agreement that includes the creation of a $1.7 billion fund to compensate individuals who claim they were victims of government “weaponization” under the previous Biden and Obama administrations.

The lawsuit, which was filed in a federal court in Florida, centered on the leak of Trump’s personal and business tax records in 2019 and 2020. The records were allegedly leaked by an IRS employee, Charles “Chaz” Littlejohn.

The Department of Justice announced the creation of the “Anti-Weaponization Fund” as the primary component of the deal to resolve the litigation. Acting Attorney General Todd Blanche described the initiative in a statement as a lawful process for victims of lawfare and weaponization to be heard and seek redress.

The fund is designed to provide compensation to those who allege they were targeted by the Department of Justice. This includes Trump allies who participated in the January 6, 2021, attack on the U.S. Capitol.

The resolution has drawn sharp criticism from Democratic lawmakers. Representative Jamie Raskin of Maryland, the top Democrat on the House Judiciary Committee, characterized the fund as a mechanism for political enrichment.

Speaking with Democracy Now! shortly before the news of the lawsuit’s dismissal was confirmed, Raskin stated: They want a $1.7 billion slush fund, which comes to a million dollars a head in terms of Proud Boys, the Oath Keepers, the insurrectionists, with $100 million left over of taxpayer money to spread around in different ways.

Raskin, who recently introduced the Protecting Our Democracy Act to curb the use of public office for personal profit, argued that the settlement is part of a broader pattern of conduct within the current administration.

Corruption is the whole purpose of the Trump administration, Raskin said. It’s not like some eccentric peripheral thing; it’s a vast money-making operation.

In addition to dropping the IRS lawsuit, the plaintiffs have agreed to withdraw two other administrative claims. According to the Department of Justice, these include claims for damages resulting from the 2022 search of the Mar-a-Lago estate and the investigation into alleged Russian collusion during Trump’s first term in office.

The dismissal of the $10 billion suit effectively prevents a judge from evaluating the legal validity of the president’s civil claims against the IRS. The settlement terms are expected to prohibit Donald Trump from receiving direct payments related to the three specific legal claims being withdrawn, though the legal status of entities associated with him remains a point of discussion among officials.