US President Donald Trump (R) and his son Eric Trump (L) depart the White House en route to Charlottesville, Virginia on April 10, 2026, in Washington DC.
Celal Gunes | Anadolu | Getty Images
President Donald Trump, his two eldest sons, and the Trump Organization dropped their $10 billion lawsuit against the Internal Revenue Service on Monday in exchange for the Department of Justice creating a $1.776 billion fund to settle claims by people who allege they are victims of so-called lawfare.
A Miami federal court filing by Trump’s lawyers dropping the lawsuit suggested it effectively barred a judge from analyzing whether the president’s civil suit was legally valid and from dismissing it if she finds it is invalid.
The dismissal came on the heels of controversy over reports that the DOJ was negotiating a settlement with the president in exchange for creating a fund to compensate allies of Trump who allege wrongful treatment by the Biden administration.
ABC News reported on May 14 that Trump was expected to drop his lawsuit against the IRS in exchange for the creation of that fund, which Democratic members of Congress called a “slush fund.“
In addition to dropping the lawsuit against the IRS, which related to a leak of Trump’s tax returns, the plaintiffs also agreed that, in exchange for the creation of this fund, Trump will withdraw two administrative claims, “including for damages resulting from the unlawful raid of Mar-a-Lago and the Russia-collusion hoax,” the DOJ said in a statement.
“Trump is one step closer to creating a giant slush fund of taxpayer dollars for his MAGA buddies,” Sen. Elizabeth Warren, D-Mass., wrote in a post on X on Monday. “This is corruption on steroids.”
The court filing on Monday said Donald Trump, Donald Trump Jr., Eric Trump, and The Trump Organization were voluntarily dismissing the lawsuit against the IRS “with prejudice.”
“With prejudice” means the plaintiffs can not renew the same claims in another civil complaint.
The notice of dismissal came two days before a deadline set by U.S. District Court Judge Kathleen Williams for the DOJ and Trump’s attorneys to answer whether a “case and controversy exists in this matter so as to establish the Court’s jurisdiction.”
Williams’ question suggested that because Trump is suing “entities whose decisions are subject to his direction,” there might not be enough actual adversity between the parties to satisfy a constitutional requirement that federal courts only adjudicate cases or controversies.
The filing on Monday said Trump’s dismissal means “no judicial analysis is appropriate, and any “subsequent order purporting to dismiss ‘all claims’ . . . [would be] a nullity.”
Trump sued the IRS in late January over the leak of his tax information by an IRS employee Charles “Chaz” Littlejohn in 2019 and 2020.
A spokesman for Trump’s attorneys had no immediate comment on the dismissal.
The IRS did not immediately respond to a request for comment.
Sen. Ron Wyden, D-Ore., in a statement, said, “Regardless of whether Trump filed this lawsuit with a personal payday or a slush fund in mind, he deserves no credit for dropping it, and even by his standards the move he’s trying to get away with now is a stunning act of corruption.”
“What Trump wants is a $1.7 billion slush fund for right-wing political violence and subversion, and if he follows through, it will be the most brazen theft and abuse of taxpayer dollars by any president in American history,” Wyden said.
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