President Donald Trump reached a settlement Monday in his $10 billion lawsuit against the Internal Revenue Service, resulting in the creation of a massive $1.776 billion compensation fund for Americans who claim they were unfairly targeted by the federal government.
The agreement establishes what supporters describe as a first-of-its-kind effort to compensate victims of alleged political persecution and government abuse. The fund could potentially include claims from individuals tied to January 6 prosecutions and others who argue they were subjected to politically motivated investigations or enforcement actions.
Trump filed the lawsuit after a former IRS contractor leaked his confidential tax returns during his first term in office. The contractor later pleaded guilty and was sentenced to prison.
Under the terms of the settlement, Trump, his sons, and the Trump Organization will receive a formal apology but no financial payment.
The case was dismissed “with prejudice,” meaning it cannot be filed again.
The settlement 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 the parties to explain why the case should continue. US District Judge Kathleen Williams had raised questions about whether Trump and the federal agencies under his administration were sufficiently adverse parties to sustain the lawsuit.
Under the agreement, a five-member commission appointed by the attorney general will review claims submitted to the fund. The commission will have authority to issue financial compensation as well as formal apologies to approved claimants.
Trump will retain the power to remove commission members, and the program is expected to operate through December 2028, near the end of his second term.
Funding for the initiative will come from the Treasury Department’s Judgment Fund, which is used to pay government legal settlements.
Critics quickly attacked the arrangement. Paul Figley, a former Justice Department attorney who spent more than three decades in the Civil Division, argued the administration was effectively creating 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,” Figley said.
Others on the political left accused Trump of exploiting taxpayer privacy laws for political purposes.
But Trump allies defended the settlement as an effort to restore accountability after years of what conservatives have described as the weaponization of federal agencies 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 said, adding that the president “will continue his fight to hold those who wrong America and Americans accountable.”
