DOJ Creates $1.8 Billion Fund Under Trump IRS Settlement Accord

The US Justice Department said it’s creating a $1.8 billion fund to pay out claims of alleged government weaponization as part of a settlement agreement to end President Donald Trump’s lawsuit against the Internal Revenue Service over the 2019 leak of his tax information.

Under the deal, Trump won’t receive any money directly from dropping his $10 billion suit. But the funding is likely to go to individuals and groups that allege they were victimized by what they deemed weaponization of government under President Joe Biden.

Although the Justice Department said anyone can make claims to receive payments from the fund regardless of political party, the mechanics of it appear more likely to benefit Trump’s allies and conservatives.

Those allies could include about 1,500 individuals who were prosecuted for storming the US Capitol on Jan. 6, 2021, to try to prevent Biden’s election from being certified.

“The machinery of government should never be weaponized against any American,” Acting Attorney General Todd Blanche said in announcing the deal on Monday.

‘Slush Fund’

Critics condemned the arrangement as an inappropriate slush fund to reward Trump’s political allies. In addition, they point out that the Jan. 6 defendants weren’t prosecuted for their political beliefs, but for their actions — including breaking into the Capitol and in some cases assaulting law enforcement officers.

Those defendants had the ability to litigate their claims of innocence in court and some of them pleaded guilty, while others were convicted.

The amount of the fund is set at $1.776 billion, an apparent reference to the year 1776 and the creation of the US. A commission consisting of five members appointed by Trump’s attorney general will direct payments, which will be made by the US Treasury Department. The fund will stop processing claims at the end of 2028, which is days before a new president will be sworn in.

“This is pure fraud and highway robbery,” a group of House Democrats led by Minority Leader Hakeem Jeffries said in a statement Monday. They called the case a “racket” designed to take “taxpayer dollars out of the Treasury and pour it into a huge slush fund.”

The nonprofit group Public Citizen said Congress has the authority to block the fund from making any payments and called on lawmakers to do so.

Read More: Trump’s IRS Suit May End With a $1.7 Billion Compensation Fund

Trump’s lawyer said in a filing earlier Monday that Trump is dropping the IRS lawsuit and the move doesn’t need approval from Judge Kathleen Williams, who has been overseeing the case.

The White House referred requests for comment to the Justice Department.

Executive Authority

Since his return to office, Trump has pushed the limits of executive authority, from imposing tariffs and withholding federal funds to calling on the Justice Department to prosecute his perceived political enemies. Yet the IRS suit, which also named the Treasury as a defendant, stands out in Trump’s use of presidential power in court.

The lawsuit has raised conflict of interest questions about Trump, who has authority over the IRS and the Justice Department, which defends the government in lawsuits.

The IRS data leak at the center of the case was a significant blow to the agency. A former IRS contractor, Charles Littlejohn, pleaded guilty in 2023 to stealing tax records for thousands of wealthy Americans, including Trump, Ken Griffin, Elon Musk and Jeff Bezos, and leaking them to news organizations. Littlejohn was sentenced to five years in prison.

Based on the data, the New York Times reported on Trump’s tax information weeks before the 2020 presidential election, which he lost to Biden.

(Retops with details of new fund starting in first paragraph.)

--With assistance from Catherine Lucey.

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