The IRS has reached a settlement with President Trump that permanently bars the agency from auditing his previous tax filings, reigniting a long-running political battle over the president's finances. Acting Attorney General Todd Blanche signed an order Tuesday declaring the IRS is "forever barred" from pursuing any claims against Trump based on his prior tax returns.
The deal also establishes a $1.776 billion "anti-weaponization" fund, which has already prompted legal challenges from two police officers who were at the Capitol on January 6, 2021, and a group of 93 House Democrats. The settlement comes after Trump dropped his $10 billion lawsuit against the IRS, a move that sidestepped a judge who had questioned whether the two sides were truly adversarial.
Scope of the Settlement
The agreement extends beyond Trump himself, covering his two oldest sons, Eric Trump and Donald Trump Jr., as well as the Trump Organization, family trusts, affiliated companies, and subsidiaries. All were plaintiffs in the January lawsuit over leaks by a former IRS contractor between 2019 and 2020. The order states the IRS "releases, waives, acquits and forever discharges" Trump from any potential action related to "tax returns filed before the Effective Date" of the agreement.
A Justice Department spokesperson defended the settlement, saying, "As is customary in settlements, both sides have executed waivers of a variety of claims that were or could have been brought. There would be little point in settling several significant claims if either party could simply turn around and seek to initiate more adverse claims that could have been pursued previously." The spokesperson emphasized the waiver applies only to existing audits, not future ones. As of 2024, Trump was fighting an IRS audit dating back more than a decade that could have cost him $100 million, according to The New York Times.
Legal and Political Fallout
The anti-weaponization fund and audit shield are drawing sharp criticism. House Democrats filed an amicus brief Monday seeking to block the fund, arguing the court should dismiss the underlying lawsuit because the president is on both sides of the case. Separately, Capitol Police officers Harry Dunn and Daniel Hodges are suing Trump over the fund, alleging it endangers their "lives and safety" by potentially financing those who committed violence on January 6 and later received clemency from Trump.
Brandon DeBot, policy director of the Tax Law Center at New York University, questioned the legality of the fund, suggesting it may not be a proper use of the Treasury's Judgment Fund. He also warned that the audit release "heightens concerns about potential criminal violations of the tax code's protections against political interference given White House officials' reported involvement in the settlement negotiations." DeBot added, "It purports to put the President, his entities, and his family above the tax laws—even though DOJ alone doesn’t have authority to offer those extraordinary protections."
Even some Republicans are uneasy. Senate Majority Leader John Thune (R-N.C.) said Tuesday he was "not a big fan" of the fund and doesn't "see a purpose for that." Senator Susan Collins (R-Maine) pressed Blanche during a Senate Appropriations subcommittee hearing, noting settlements typically don't pay out for "future claims that have yet to be brought." Blanche responded by calling the fund "unusual" but "not unprecedented."
Renewed Fight Over Trump's Taxes
The settlement sets the stage for another clash over Trump's taxes, a perennial flashpoint. Trump broke decades of precedent by refusing to release his returns when he first took office, sparking legal battles that reached the Supreme Court. The House Ways and Means Committee eventually obtained six years of his returns and released them publicly in December 2022.
This is not Trump's only legal dispute with his own administration. He confirmed last October that his legal team was seeking $230 million from the Justice Department as compensation for previous investigations. The unusual nature of these cases underscores the president's willingness to challenge federal agencies he now controls.
