President Donald Trump is set to drop his $10 billion lawsuit against the Internal Revenue Service (IRS).
As part of a deal with the Justice Department, those who were targeted by Democrats who weaponized the government against political opponents would be compensated, according to ABC News.
The Department of Justice is finalizing a deal to launch a so-called "Truth and Justice Commission" and establish a compensation fund of $1,776,000,000 to pay claims made by alleged victims of government "weaponization" in exchange for President Donald Trump dropping his ongoing lawsuit against the Internal Revenue Service, sources told ABC News.
Sources told ABC News that the proposed deal -- which is likely to face legal hurdles and has already been criticized by Democrats as a "slush fund" for Trump's allies -- arose after months of deliberations between the White House and DOJ officials who originally attempted to craft a legal justification for the settlement to compensate Trump directly.
Internally, DOJ lawyers believed they could ignore the conflict of interest outright, privately arguing that Trump has both the right to sue as a private citizen and the power to command the executive branch as president, according to sources familiar with their discussions.
Advocating a centuries-old legal principle known as the "rule of necessity," DOJ lawyers have argued that no alternative existed other than letting the lawsuit proceed with Trump acting as the plaintiff while being directly in charge of the defendants -- the IRS and Treasury -- according to sources.
Sources said that plan was ultimately scuttled in favor of the $1.776 billion compensation fund -- with the figure being a nod to the nation's founding -- as the judge overseeing Trump's IRS lawsuit began to raise issues with Trump suing the very government he leads. In an order last month, U.S. District Judge Katheen Williams ordered Trump's lawyers in the case and the Department of Justice to submit court filings by next week to justify whether both sides of the case were sufficiently adverse for the matter to proceed.
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🚨 JUST IN: President Trump is DROPPING his $10 billion lawsuit against the Internal Revenue Service in exchange for a $1.776 billion COMPENSAITON FUND for those wrongly targeted and prosecuted by the Biden admin — ABC.
— Eagles (@Ed53861632) May 18, 2026
And he did it for Americans who were wronged 🇺🇸
Trump sued the IRS and Treasury Department in January, seeking $10 billion over the leak of his tax returns in 2019 and 2020. The lawsuit names the president, his sons Donald and Eric, and the Trump Organization as plaintiffs.
The lawsuit argued that the IRS failed to protect his private tax information that was disclosed to several news outlets, Reuters reported.
Legal experts agreed that Trump had a legitimate grievance with the agency over the leak. However, they said the $10 billion demand could raise legal and ethical questions since he is suing agencies that fall under his purview as president.
Lawyers representing both sides asked a judge to pause the proceedings for 90 days as they discussed a potential resolution.
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