Trump Proposes $1.7 Billion Fund for Allies in IRS Tax Return Settlement

President Donald Trump speaks to the press as he departs the White House on May 12, 2026. | Kevin Dietsch/Getty Images

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What’s Happening

President Donald Trump may have found a new way to repurpose taxpayer funds for his own political ends. Earlier this year, Trump, along with two of his children and his family business, sued the Internal Revenue Service (IRS) for $10 billion over the leak of his tax returns to media outlets. Now, he reportedly plans to drop the case in exchange for a $1.7 billion fund under his control, according to ABC News.

How the $1.7 Billion Fund Would Work

The proposed fund would function as a so-called “weaponization” fund, per ABC News. Payments from the fund could address grievances of Trump allies who believe they were unfairly targeted by the Biden administration—including those prosecuted in connection with the January 6 attack on the U.S. Capitol.

While Trump himself would not be eligible to claim funds from the settlement, “entities associated with Trump are not explicitly barred from filing additional claims,” per ABC News.

Legal Context and Settlement Details

The settlement, which could be finalized “in the coming days,” appears to bypass judicial skepticism surrounding Trump’s lawsuit. The case pits a sitting president against the government he leads, raising concerns about conflicts of interest.

As reported by The New York Times, the judge overseeing the case suggested it may be moot because the parties—Trump and other plaintiffs versus the IRS and the Justice Department—are not in true opposition. Trump, as president, is the head of the Department of Justice (DOJ), which is defending the IRS. Both sides were due to submit briefs this past Wednesday, a requirement the settlement could allow them to avoid.

Broader Implications for Trump’s Agenda

The reported settlement aligns with two key priorities of Trump’s second term: retaliating against perceived wrongs against him and his movement, and enriching himself and his allies. If finalized, the agreement would achieve both objectives simultaneously.

“Two major focuses of Trump II have been getting even for perceived wrongs against him and his movement, and finding ways to enrich himself and his allies. The reported settlement, if it goes through, would accomplish both in one fell swoop.”

With that, it’s time to log off…

Unbeknownst to me, Eurovision—Europe’s annual over-the-top song competition—has returned. The finals begin at 3 p.m. ET tomorrow. For a quick recap, NPR has compiled a helpful guide here.

Have a great weekend, and we’ll see you back here on Monday!