A bombshell leak has revealed that the Justice Department was advised to shut down Donald Trump’s lawsuit against the IRS before settling with the president by creating a $1.8 billion fund for MAGA loyalists.
IRS lawyers intended to contest Trump’s $10 billion lawsuit against the agency and advised the DOJ to move to dismiss it, The New York Times reports, citing two people familiar with a memo from the lawyers.
The 25-page memo, which laid out what the lawyers viewed as holes in the president’s lawsuit, was provided to Treasury officials in April, but it is unclear whether it was ever forwarded to its intended recipients at the DOJ, the two insiders told the Times.
The DOJ never mounted a defense, failing to show up in court to dispute Trump’s claims that the IRS hadn’t done enough to prevent the leak of his tax returns during his first term.
Instead, the agency—led by acting Attorney General Todd Blanche—cut an extraordinary deal with Trump, creating a $1.776 billion “Anti-Weaponization Fund” in exchange for the president dropping his suit.
The deal came after a judge cast doubt on the basic legality of a sitting president filing suit against the IRS, an agency he himself runs.
The revelation that the DOJ settled despite being provided legal defenses to fight the lawsuit is likely to fan accusations that the arrangement amounts to a corrupt giveaway of taxpayer money to the president’s allies.
When reached for comment, the DOJ declined to comment on whether it ever received the IRS lawyers’ memo and why the department decided to settle the case.
Instead, the department referred the Daily Beast to its press release announcing the fund, in which Blanche proclaimed, “The machinery of government should never be weaponized against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again.”
The IRS and the Treasury did not immediately respond to a request for comment.
The vast payout fund is designed to compensate people who claim they were wrongly targeted by the DOJ under the Biden administration. The pool could include the roughly 1,600 people charged over the Jan. 6, 2021, attack on the Capitol, including violent offenders who attacked Capitol Hill police.
Blanche, Trump’s former personal lawyer, will appoint a five-member commission to control the taxpayer-funded payout pot. Trump can remove any member without cause.
Those who get paid by the fund will remain anonymous to the general public, as will the amount they receive, according to the settlement agreement.
The IRS lawyers followed standard procedure in preparing the memo, but DOJ lawyers did not, unsure whether they could oppose Trump’s lawsuit since he leads the executive branch and had issued an order requiring government lawyers to follow his interpretation of the law, according to the Times.
In their memo, the IRS lawyers flagged issues with Trump’s suit that they said the DOJ should raise in court, including contending that it was filed after the two-year window for suing the IRS over unauthorized tax disclosures.
The memo also advised the DOJ to dispute whether the IRS can be held liable for the leak of Trump’s tax returns at all.
The billionaire president’s tax information was leaked by an IRS contractor, Charles Littlejohn, who worked for the consulting firm Booz Allen Hamilton at the time. He was sentenced to five years in prison in 2024 after pleading guilty to leaking the tax records.
