Donald Trump filed to dismiss a $10bn lawsuit against the IRS on Monday, abandoning his legal claims just days before a court deadline, as reports indicate he is negotiating a settlement with the federal government that would fund compensation for his political allies.
The filing arrived two days ahead of a May 20 deadline set by the presiding judge for both sides to address whether the case contains a legitimate controversy warranting judicial review. That threshold carries particular weight given Trump's control over the IRS as president.
Trump's legal team kept the dismissal brief and formal. "Upon the filing of this notice, no judicial analysis is appropriate," the lawyers wrote.
Proposed Settlement Details
The settlement would establish a $1.776bn fund called the "Truth and Justice Commission," according to reporting by ABC News. While Trump himself would be barred from receiving payments, people affiliated with him could petition for compensation. A five-member commission, with four members appointed by the attorney general and removable by Trump, would control disbursements. The fund would not be required to publicly explain its decisions on awards.
The original lawsuit stemmed from a 2021 leak in which Charles Littlejohn, an IRS contractor, disclosed Trump's tax returns to ProPublica and the New York Times. Trump sued for $10bn in damages over the disclosure.
Democratic lawmakers swiftly mobilized against the rumored arrangement. Ninety-three congressional Democrats, including New York Democratic leader Hakeem Jeffries, submitted an amicus brief Monday arguing the settlement would violate federal law. Andrew Warren, deputy legal director at the Democracy Defenders Fund, characterized it as a scheme to channel federal money to Trump's political circle.
"Trying to hide this deal from the courts is corruption in plain sight. Trump is funneling taxpayer dollars to his political allies, and we will hold him accountable and block this billion-dollar giveaway at a time when Americans are already squeezed by inflation," Warren said.
The Justice Department and Trump's legal representatives declined to comment on the settlement reports.
The judge overseeing the case, Kathleen Williams, an Obama appointee, had appointed independent counsel to examine whether sufficient legal controversy existed for the suit to proceed. In their brief filed last week, those attorneys flagged a critical problem for Trump's case: the Justice Department has multiple potential defenses available, several of which it is already asserting in other litigation involving the same IRS records leak.
The counsel also noted that Trump, as president, exercises direct control over the defendants in the lawsuit, raising questions about the legitimacy of the dispute itself.
Author James Rodriguez: "A $1.7bn fund that hides how it spends money and answers to no one is not a settlement, it's a shell company with a patriotic name."
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