Washington, D.C. — President Donald Trump is expected to drop a major lawsuit against the IRS as part of a proposed agreement that would create a $1.7 billion federal compensation fund for individuals he says were harmed by politically motivated investigations during the Biden administration, according to ABC News.
The original lawsuit stemmed from the unauthorized release of Trump’s tax records from 2019 and 2020 by former IRS contractor Charles Littlejohn, who pleaded guilty in 2023 to leaking tax information involving Trump and other wealthy Americans.
Under the proposed arrangement, Treasury Department funds would be used to compensate individuals claiming they were unfairly targeted by federal investigations or prosecutions. ABC News reported the program could affect nearly 1,600 people pardoned by Trump following the Jan. 6 Capitol riot cases.
The proposed fund would reportedly be managed by a five-member commission appointed through the executive branch, with Trump retaining authority to remove commissioners. Sources told ABC News the settlement would also resolve legal questions raised by U.S. District Judge Kathleen Williams regarding whether Trump’s lawsuit against federal agencies created a legitimate adversarial case while he serves as president.
The proposal arrives as Trump continues pursuing other legal claims tied to investigations involving Mar-a-Lago and earlier federal Russia probes. Critics are already questioning whether the compensation structure would expand presidential authority over federal dispute resolution.
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