Trump poised to drop IRS suit, launch $1.7B 'weaponization' fund for allies: Sources - ABC News
Trump poised to drop IRS suit, launch $1.7B 'weaponization' fund for allies: Sources<br>The fund would compensate allies who claim they were targeted under Biden.
ByKatherine Faulders, Peter Charalambous, and Alexander Mallin<br>May 14, 2026, 6:56 PM
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President Donald Trump gives remarks during an event promoting maternal healthcare in the Oval Office of the White House in Washington, May 11, 2026.<br>Aaron Schwartz/EPA/Shutterstock
President Donald Trump is expected to drop his $10 billion lawsuit against the Internal Revenue Service in exchange for the creation of a $1.7 billion fund to compensate allies who claim they were wrongfully targeted by the Biden administration, sources familiar with the matter told ABC News.<br>The commission overseeing the compensation fund would have the total authority to hand out approximately $1.7 billion in taxpayer funds to settle claims brought by anyone who alleges they were harmed by the Biden administration's "weaponization" of the legal system, including the nearly 1,600 individuals charged in connection with the Jan. 6 Capitol attack as well as potentially entities associated with President Trump himself.<br>While the settlement is expected to be agreed upon in the coming days, sources caution that the final terms will not be set until they are officially announced.
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In addition to a public apology from the IRS, the compensation fund is believed to be the main condition for Trump to drop a series of legal actions he filed against the federal government, including the $10 billion lawsuit related to the 2019 leak of his tax returns as well as $230 million in legal claims related to the 2022 search of his Mar-a-Lago estate and the Russia collusion investigation he faced during his first term in office, sources familiar with the ongoing deliberations said.<br>The settlement terms are expected to prohibit Trump from directly receiving payments related to those three legal claims; however, entities associated with Trump are not explicitly barred from filing additional claims, sources said.
In response to a request for comment, a spokesperson for President Trump's legal team told ABC News, "The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people. President Trump continues to hold those who wrong America and Americans accountable."<br>A spokesperson for the Justice Department declined to comment when contacted by ABC News. Representatives for the IRS and the Treasury Department did not immediately respond to requests for comment.
President Donald Trump gives remarks during an event promoting maternal healthcare in the Oval Office of the White House in Washington, May 11, 2026.<br>Aaron Schwartz/EPA/Shutterstock
The proposed fund -- which could face significant legal hurdles -- would draw money from the Treasury Department's Judgment Fund, a permanent appropriation used by the federal government to pay court judgments and settlements, sources said.<br>The arrangement would be an unprecedented use of taxpayer dollars with little oversight. Under the terms of the potential settlement agreement, President Trump would have the authority to remove members of the commission running the fund without cause, and the commission would be under no obligation to disclose its procedures or decision-making process for awarding more than a billion dollars, the sources said.<br>The proposed creation of the compensation fund has led some administration officials to raise ethical concerns about the arrangement -- stemming not only from Trump suing his own government but also having control of an entity that can freely hand out $1.7 billion to his allies. When asked about his legal claims last year, Trump acknowledged the lawsuit "sort of looks bad," but claimed he would donate any money he receives from the claims to charity.
"It's interesting because I'm the one that makes a decision, right, and, you know, that decision would have to go across my desk," Trump said in the Oval Office in October. "It's awfully strange to make a decision where I'm paying myself."
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The settlement is also expected to stave off a concern raised by the judge overseeing his $10 billion lawsuit against the IRS, who has ordered Trump and the DOJ to justify by next week why the case should be able to proceed. In a ruling last month, U.S. District Judge...