The United States Justice Department is in active discussions about whether to settle President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service, according to CNN.
Trump filed the lawsuit in January in federal court in Florida, personally not in his official capacity as president and alongside his sons Donald Trump Jr and Eric Trump and the Trump Organization. The suit targets the IRS and the Treasury Department, both part of the executive branch that Trump himself oversees.
In a court filing made in mid-April in Miami federal court, Trump’s lawyers asked a judge to pause the case for 90 days to allow settlement discussions to take place. “This limited pause will neither prejudice the parties nor delay ultimate resolution,” the filing said, per Al Jazeera. “Rather, the extension will promote judicial economy and allow the Parties to explore avenues that could narrow or resolve the issues efficiently.”
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How did this lawsuit begin?
The case traces back to 2017, when Charles “Chaz” Littlejohn, a contractor working through government consulting firm Booz Allen Hamilton was rehired to work on IRS files. While there, he stole copies of Trump’s tax returns and leaked them to media outlets including The New York Times and ProPublica.
In 2020, The New York Times published a series of reports revealing that Trump paid no income taxes in 10 of the 15 years preceding the stories. Other years, he paid relatively small sums like $750 because he reported more losses than gains.
Littlejohn was charged in 2023 with leaking tax records belonging to Trump and thousands of other wealthy Americans. Prosecutors said he was motivated by a political agenda. He later pleaded guilty and was sentenced to five years in prison.
Trump’s legal team has maintained that the leak caused serious damage. “The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people,” a spokesperson for Trump’s legal team told CNN in a statement.
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Why is this settlement do controversial?
Trump is negotiating with his own government. The Justice Department lawyers on this case ultimately report to Trump. The IRS and Treasury Department, both defendants are also part of the executive branch he controls. A watchdog group, Democracy Forward, warned in a court filing: “This case is extraordinary because the President controls both sides of the litigation, which raises the prospect of collusive litigation tactics,” per Al Jazeera.
The IRS could stop auditing Trump and his family. As part of a potential settlement, one option being discussed is that the IRS would agree to end its ongoing tax audits of Trump, his family members and their businesses, meaning they would no longer be examined for potential tax issues, as per CNN.
Taxpayer money could be at stake. If a monetary settlement is reached, any payout would likely come from taxpayer dollars, per Reuters. Trump has said he would donate the money to charity but legal experts warn this could still violate the Emoluments Clause of the US Constitution, which bars a president from profiting off his position, per Al Jazeera.
The lawsuit has major legal weaknesses. Legal experts say the case has several problems that could cause it to fail. First, the $10 billion figure Trump is demanding appears to be based on how many times his leaked tax returns were mentioned in media reports but that is not how courts calculate financial damages. Second, because Littlejohn was an outside contractor and not a direct government employee, it is unclear whether the government can even be held fully responsible for his actions. Third, experts question whether Trump filed the lawsuit too late. Under the law, there is a two-year window to file such a case, according to Al Jazeera.
