Judge reviews Trump IRS settlement, $1.8 billion fund under scrutiny
A judge is reviewing a settlement that replaced a $10 billion IRS lawsuit with a $1.776 billion anti-weaponization fund, raising alarms over who might cash in.
The fight over Donald J. Trump’s IRS case has shifted from tax records to raw questions of power: whether a lawsuit against the federal government can be converted into a $1.776 billion compensation fund, and who may end up benefiting from it.
Trump, Donald J. Trump Jr., Eric Trump and the Trump Organization sued the Internal Revenue Service and the Treasury Department over the unauthorized release of Trump tax information after former IRS contractor Charles Littlejohn pleaded guilty in 2023 to stealing records and leaking them to news outlets in 2019 and 2020. Littlejohn later received a five-year prison sentence. The case was filed in the Southern District of Florida and had sought $10 billion before the Justice Department announced a settlement on May 18, 2026.
Under that deal, the plaintiffs agreed to drop the lawsuit with prejudice and withdraw two related administrative claims, including matters tied to the Mar-a-Lago search and the Russia-collusion investigation. Trump was to receive a formal apology, but no money from the fund itself. The Justice Department said the new Anti-Weaponization Fund would be financed with $1.776 billion from the federal judgment fund and would be used to hear claims involving weaponization and lawfare. It would be overseen by a five-person commission appointed by the attorney general, with quarterly reporting and the possibility of an audit.
The settlement immediately set off a new legal battle. Thirty-five former federal judges, including J. Michael Luttig, Nancy Gertner and Shira Scheindlin, asked the court to reopen the case and examine whether the arrangement amounted to a fraud on the court. U.S. District Judge Kathleen Williams, a Miami-based Obama appointee, ordered Trump’s lawyers to respond and said the court has authority to investigate serious misconduct. In a separate case in the Eastern District of Virginia, U.S. District Judge Leonie Brinkema temporarily blocked the fund while she heard additional arguments, keeping the program on hold until at least June 12.
The controversy has widened well beyond tax privacy. Reuters reported that Democrats branded the fund a slush fund, while some Republicans also expressed qualms. Coverage also said some people pardoned for their roles in the Jan. 6, 2021 Capitol attack saw the fund as a possible source of payouts, a prospect that sharpened concerns about whether a government settlement can morph into a politically directed compensation mechanism.
That is the precedent now under scrutiny: not just whether Trump won relief, but whether a president can use a dispute with the IRS and Treasury to build a taxpayer-funded claims process with unclear beneficiaries and extraordinary political overtones.
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