Trump Drops $10B IRS Lawsuit; DOJ Unveils $1.776B Compensation Fund
Donald Trump has withdrawn his $10B IRS lawsuit as the DOJ announces a $1.776B compensation fund.
Why it matters: The withdrawal and new fund could set precedents for legal challenges involving government disclosures and how federal money is used in politically sensitive settlements. General counsels and legal operations teams face new uncertainties on how such funds are structured, overseen, and scrutinized, especially amid heightened partisan dispute.
- Trump’s $10B suit over IRS data leaks was dismissed on May 18, 2026.
- The DOJ announced a $1.776B ‘Anti-Weaponization Fund’ to award those alleging improper government targeting.
- A five-member Attorney General-appointed commission will oversee awards and formal apologies.
- Nearly 100 Democratic House members and ethics groups contest the fund’s constitutionality and scope.
On May 18, 2026, Donald Trump formally withdrew his $10 billion lawsuit against the IRS and Treasury Department. The suit, filed in January, accused the agencies of failing to protect Trump's confidential tax information, later leaked by former IRS contractor Charles Littlejohn. Littlejohn received a five-year sentence in 2024 for unauthorized disclosures.
- The dismissal comes as the Department of Justice unveils a $1.776 billion compensation fund designed for individuals who claim they were wrongfully targeted by government investigations or enforcement actions.
- A five-member commission, appointed by the Attorney General, will determine both financial awards and issue formal apologies; however, detailed qualification criteria remain undisclosed.
- Democratic legislators, including Rep. Jamie Raskin, and watchdog organizations have strongly criticized the fund. Raskin called it “pure fraud and highway robbery,” arguing that it could disproportionately benefit Trump associates accused of crimes related to the January 6 Capitol attack.
- The fund is scheduled to wind down by December 1, 2028, with unspent funds returning to the Treasury. Nearly 100 Democratic House members have challenged its legality in an amicus brief, arguing it constitutes an improper use of taxpayer money.
- Acting Attorney General Todd Blanche said the commission’s work aims to address concerns of government "weaponization"—referring to claims by some that government agencies have been used for partisan investigations—but details remain scant.
With its structure unsettled and oversight debated, the fund’s future administration poses practical and compliance questions for private-sector legal teams and policy advisors monitoring government settlement practices.
By the numbers:
- $10B — damages sought by Trump before voluntarily dismissing lawsuit
- $1.776B — total amount allocated to new DOJ fund
- 5 — commission members tasked with overseeing fund payouts
Yes, but: Eligibility requirements for the fund are not yet fully detailed, leaving uncertainty around payouts and oversight.
What's next: Fund commission procedures and award criteria are expected to be released later this year, alongside ongoing legal challenges from congressional Democrats.