The US has created a $1.8 billion fund for victims of Government “lawfare” in exchange for Donald Trump and his family dropping a $10 billion lawsuit against the Internal Revenue Service over a leak of the president’s tax returns.
The lawsuit, which included the US president, his two older sons Donald Trump Jr and Eric, and the Trump Organisation as plaintiffs, was dropped voluntarily, according to a court filing on Monday.
The department of justice later said the case was dropped as part of a deal in which Government cash will be made available to what it called “others who have suffered weaponisation and lawfare”.
The settlement deal will direct US Government funds to people who claim to have been mistreated as Trump says he has been, although the department of justice said there would be “no partisan requirements” to file a claim.
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“President Trump, his family, supporters, and countless other America First Patriots were illegally targeted by the Democrat-lead [sic] law enforcement agencies,” a spokesperson for Trump’s legal team said. “President Trump is entering into this settlement squarely for the benefit of the American people.”
The lawsuit against the IRS was filed in January and stemmed from the disclosure of tax documents leaked by a former IRS contractor to several media outlets and organisations in 2019 and 2020.
The Florida federal suit marked an unusual move by a sitting US president to take legal action against an arm of his own Government.
According to the lawsuit, the leak to “leftist media outlets” caused “reputational and financial harm, public embarrassment, unfairly tarnished their business reputations, portrayed them in a false light and negatively affected President Trump and the other Plaintiffs’ public standing”.
The Trumps alleged that the IRS failed to establish proper safeguards to ensure the security and confidentiality of the tax returns of the US president and his family.
The department of justice said the “settlement agreement” would create an “anti-weaponisation fund” that would provide relief in the form of money or an apology to alleged victims.
Trump and his family members would receive an apology but no monetary payment, the department added. As part of the settlement deal they will also drop separate claims over a raid on his Mar-a-Lago home in 2022 and over what the department called the “Russia-collusion hoax”.
“The machinery of Government should never be weaponised 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,” said Todd Blanche, acting attorney-general, in a statement.
Charles Littlejohn, a former employee of the consulting firm Booz Allen Hamilton, a Government contractor, was sentenced to five years in prison in January 2024 for leaking Trump’s tax returns and separately releasing the tax filings of thousands of other wealthy people. A judge called it “the biggest heist in IRS history”.
In January the US treasury department said it was cancelling contracts with Booz Allen Hamilton as punishment for the leaks, which took place during the first Trump administration.
The company, whose shares plunged in the wake of the contract cancellations, is on a list of corporate donors for the construction of Trump’s new White House ballroom project.
Trump and his family members are dropping the case with prejudice, meaning they cannot bring it in another court, the filing said. Trump had originally demanded a jury trial.
The anti-weaponisation fund would have a commission of five members appointed by the attorney-general, with one chosen “in consultation with congressional leadership”, the department of justice said. It added that the fund “can be audited” at the direction of the attorney-general and would report quarterly on who had received relief. – Copyright The Financial Times Limited 2026
