The Department of Justice could hand President Donald Trump a taxpayer-funded windfall before a judge has a chance to decide whether to throw out his $10 billion lawsuit against the Internal Revenue Service.
Trump, his sons Don Jr. and Eric, and the Trump Organization family business sued the IRS in January over tax returns that were leaked to the press by an independent contractor during the president’s first term in office.
But given that Trump oversees the IRS, the judge in the case has ordered both sides to submit briefs by May 20 laying out the legal arguments for why they’re really on opposing sides. If the court finds they’re not parties to a genuine conflict, the lawsuit could be thrown out.
Eager to avoid that scenario, the DOJ is holding internal discussions about how to settle the lawsuit before the May 20 briefing deadline, sources told The New York Times.
That could involve the government directly paying Trump using taxpayer dollars, in what would be a stunning cash grab even by Trump’s standards.
If the DOJ, which is headed by the president’s former personal defense attorney Todd Blanche, agreed to pay even a fraction of Trump’s requested $10 billion, it could potentially double his net worth, according to the Times.
One settlement option being reviewed by the DOJ and White House officials also involves the IRS dropping any audits of Trump, his family members, and his businesses, according to the Times.
That guarantee alone could be worth millions of dollars, considering IRS procedures call for mandatory audits of the president and vice president’s annual tax returns.
The leaked returns showed that Trump paid little or no income tax for years, if the IRS found against him it could cost Trump more than $100 million, the Times reported in 2024.
Legal experts told the Times that if the DOJ does reach a settlement agreement with Trump, the federal judge overseeing the case, Kathleen Williams, likely would not be able to prevent Trump from withdrawing the suit and reaching a private agreement with the government.
Even if the judge ultimately found that the settlement was collusive or reached in bad faith, she probably would not be able to stop the money or other benefits from changing hands, according to the Times.
That’s the despite the fact that Trump’s IRS suit is generally regarded as a weak case.
The former IRS contractor at the heart of the case, Charles Littlejohn, was convicted and sentenced to five years in prison for leaking tax return information about thousands of wealthy Americans.
When some of those other subjects also sued the IRS, the DOJ argued that the government couldn’t be held liable for a contractor’s actions.
A suit brought by hedge fund billionaire Ken Griffin was settled in 2024 without the government paying any damages. Instead, the IRS publicly apologized for the leak.
Reached for comment by the Times, the DOJ declined to comment.
In a statement to the Times, a spokesperson for the president’s personal lawyers said Trump—who claims the federal government has been weaponized against him and has spent much of his second term using the DOJ as his personal revenge vehicle—was “holding those who wrong America and Americans accountable.”
The Daily Beast has also reached out for comment.
The IRS lawsuit came after Trump filed two claims totaling $230 million against the DOJ for allegedly violating his rights when the government investigated Russian interference in the 2016 election and brought criminal charges against Trump for mishandling classified information after he left office.
The DOJ has also tried to prevent Trump from having to pay an $83.3 million verdict owed to author E. Jean Carroll, who successfully sued the president for sexual abuse and defamation, and secretly advised him that he can violate a federal law aimed at preventing government corruption.
