Trump's DOJ Weighs $10B IRS Settlement Using Taxpayer Funds: Report

The Department of Justice is exploring a settlement in Donald Trump’s lawsuit against the Internal Revenue Service (IRS), a move that could redirect approximately $10 billion in taxpayer funds directly to the President, according to a New York Times report published on Tuesday. The development was confirmed by three sources familiar with the matter.

In January, Trump, along with two of his sons, filed a lawsuit against the IRS. The legal action alleges that the agency failed to prevent the unauthorized disclosure of Trump’s tax documents by a government contractor, who subsequently shared the information with news outlets.

Conflicts of Interest and Legal Questions

Trump’s oversight of the IRS—the agency he is suing—has raised significant legal and ethical concerns. As the New York Times noted,

"For a lawsuit to be valid, the two parties must actually be on opposite sides, otherwise the judge can throw out the case."

Additional conflicts emerge from the Department of Justice’s leadership, which is currently helmed by Trump’s former personal criminal defense attorney.

Settlement Terms and Future Implications

If a settlement is finalized, it could have sweeping consequences. Beyond the $10 billion payout, one of the proposed terms under review would require the IRS to cease all audits of Trump, his family, and his businesses. This could effectively shield his finances from future scrutiny.

Political and Legislative Response

Last month, Democratic lawmakers introduced legislation aimed at blocking the President, Vice President, and their families from receiving settlement funds from the government. Senator Elizabeth Warren (D-Ma.) criticized the potential settlement, stating:

"While American families are getting flattened by skyrocketing costs, Donald Trump is trying to snatch up billions of taxpayer dollars to line his own pockets and settle personal scores."

Previous Attempts to Profit from the DOJ

This is not the first instance where Trump has sought to leverage the Justice Department for personal gain. In October 2025, reports indicated that he was pursuing a $230 million damages claim against the DOJ. The lawsuit stemmed from the federal seizure of classified documents he had unlawfully transported to Mar-a-Lago, as well as an earlier investigation into his campaign’s ties to Russia.

At the time, Trump remarked on the apparent conflict:

"It’s awfully strange to make a decision where I’m paying myself."