Trump Drops $10 Billion IRS Lawsuit, DOJ Confirms Lawfare Compensation Fund
President Donald Trump voluntarily decided Monday to dismiss a $10 billion lawsuit against the Internal Revenue Service (IRS), instead creating a compensation fund for people targeted by the government law, according to a federal court filing.
The Department of Justice subsequently confirmed the creation on Monday of an “Anti-armament Fund” of 1.776 billion dollars to “hear and repair the claims of others who have suffered from armament and legal warfare”.
Florida court filing noted a “dismissal with prejudice,” barring Trump from pursuing the case in the future. The file did not contain any details of any settlement, noting only that each party would bear legal costs.
Asset took legal action against the IRS and the Treasury Department in a Miami federal court in January 2026, alleging mishandling of protected information after tax records from his first term were leaked in 2019. The president’s two sons, Donald Trump, Jr., and Eric Trump, joined as plaintiffs in the lawsuit. (RELATED: Republican Senator Sued by IRS Agrees to Repay $5,000,000 in Taxes)
Former IRS contractor Charles Littlejohn was sentenced in 2024 to 5 years in prison after pleading guilty to leaking 15 years of Trump’s tax records to the media, as well as those of more than a thousand other people.
The New York Times published a article in September 2020, alleging that Trump paid only $750 in taxes between 2016 and 2017. Trump has denied all allegations of tax fraud, adage that he paid “several million dollars in taxes but was entitled, like everyone else, to depreciation and tax credits.
Trump clarified in the original court filing that he was bringing the suit in his capacity as a private citizen, although controversy erupted 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 sides must submit proof of “a case or controversy” in the lawsuit by May 20. A hearing was scheduled for May 27.
Democratic politicians were furious after reports of the regulations and a fund for victims of government militarization distributed online. “This is, of course, a political grievance fund that Donald Trump can use to pay his friends,” said Democratic Rep. Jamie Raskin of Maryland. told ABC during an interview Sunday. The top Democrat on the House Judiciary Committee called the regulation “unconstitutional” and an “invention of [Trump’s] part.”
Democrats on the House Judiciary Committee filed a request to block the settlement Monday, led in part by Rep. Raskin and the House minority leader, Democratic Rep. Hakeem Jeffries of New York. Nearly 100 House Democrats submitted a amicus brief also Monday, arguing that the trial was unconstitutional.
BREAKING: 93 House Democrats have filed a motion to block settlement of Trump’s self-dealing in his $10 billion IRS sham lawsuit, which would create a $1.7 billion slush fund for the January 6 rioters and their political allies. https://t.co/OfRvhjeWat pic.twitter.com/ZBI3RfekKO
– House Judiciary Democrats (@HouseJudiciary) May 18, 2026
The “Anti-Arms Fund,” announced by Attorney General Todd Blanche, will “right the wrongs” and will have the power to “provide formal apologies and financial assistance” to claimants. The fund is expected to close no later than December 1, 2028.
The White House referred the Daily Caller to the Justice Department for comment. The DOJ did not respond at the time of publication.
