Trump Drops $10 Billion IRS Lawsuit, DOJ Confirms Lawfare Compensation Fund

President Donald Trump voluntarily moved to dismiss a $10 billion lawsuit against the Internal Revenue Service (IRS) on Monday, instead establishing a compensation fund for those targeted by government lawfare, according to a federal court filing. 

The Department of Justice subsequently confirmed the creation of a $1.776 billion “Anti-Weaponization Fund” on Monday to “hear and redress claims of others who suffered weaponization and lawfare.” 

The Florida court filing noted a “dismissal with prejudice,” precluding Trump from pursuing the case in the future. The filing contained no details of any settlement, noting only that each party would cover legal fees. 

Trump filed the lawsuit against the IRS and the Treasury Department in a Miami federal court in January 2026, alleging mismanagement of protected information after tax records from his first term in office were leaked in 2019. The president’s two sons, Donald Trump, Jr., and Eric Trump, joined as plaintiffs in the suit. (RELATED: GOP Senator Sued By IRS Agrees To Pay Back $5,000,000 In Taxes)

Former IRS contractor Charles Littlejohn was sentenced in 2024 to 5 years in prison after he pleaded guilty to leaking 15 years of Trump’s tax records to media outlets, along with over a thousand other individuals’ tax records.

The New York Times published an article in September 2020 alleging that Trump paid only $750 in taxes from 2016 to 2017. Trump rejected all claims of tax fraud, saying that he paid “many millions of dollars in taxes but was entitled, like everyone else, to depreciation & tax credits.”

Trump clarified in the original court filing that he was bringing the suit in his capacity as a private citizen, although controversy arose in February after Obama-appointed U.S. District Judge Kathleen Williams questioned the sitting president’s ability to sue an executive branch of government. 

Williams ordered both parties to submit proof of “a case or controversy” in the lawsuit by May 20. A hearing was scheduled for May 27. 

Democrat politicians raged after reports of the settlement and a fund for victims of government weaponization circulated online. “This, of course, is a political grievance fund that Donald Trump can use to pay off his friends,” Democrat Rep. Jamie Raskin of Maryland told ABC on a Sunday interview. The top democrat of the House Judiciary Committee called the settlement “unconstitutional” and an “invention on [Trump’s] part.”

Democrats on the House Judiciary Committee filed a motion to block the settlement on Monday, led in part by Rep. Raskin and House Minority Leader Democrat Rep. Hakeem Jeffries of New York. Nearly 100 House Democrats submitted an amicus brief on Monday as well, arguing that the lawsuit was unconstitutional.

BREAKING: 93 House Democrats have filed a motion to block Trump’s self-dealing settlement in his sham $10 billion IRS lawsuit, which would create a $1.7 billion slush fund for Jan. 6 rioters and political allies. https://t.co/OfRvhjeWat pic.twitter.com/ZBI3RfekKO

— House Judiciary Dems (@HouseJudiciary) May 18, 2026

The “Anti-Weaponization Fund,” announced by Attorney General Todd Blanche, will “make right the wrongs” and have the power to “issue formal apologies and monetary relief” to claimants. The fund is scheduled to close no later than December 1, 2028.

The White House referred the Daily Caller to the Department of Justice for comment. The DOJ did not respond by the time of publication.