Trump Set to Drop Lawsuit Against IRS in Exchange for $1.7 Billion for Allies – Including Capitol Rioters
BREAKING: DOJ Creates $1.7 Billion Fund for Victims of ‘Weaponization’
by Michael Luciano, Mediaite.com, May 14, 2026
President Donald Trump is set to drop his $10 billion lawsuit against the Internal Revenue Service in exchange for the creation of a fund that will pay up to $1.7 billion to some of his political allies, including people involved with the Jan. 6 Capitol riot, ABC News reported on Thursday night.
The president sued the IRS in January after a contractor at the agency leaked his tax returns in 2019 and 2020.
His sons Donald Trump Jr. and Eric Trump, who run the Trump Organization, are also suing. Based on the leaks, the Times reported in 2020 that the billionaire president paid just $750 in income tax in 2016 and in 2017. The leaks came from Charles Littlejohn, a former IRS contractor who worked for Booz Allen. He pleaded guilty to unauthorized disclosures of tax returns and was sentenced in 2024 to the maximum of five years.
On Tuesday, The New York Times reported that the Department of Justice, which is representing the IRS in the case, has been holding internal discussions about settling the lawsuit.
According to ABC News, those discussions have apparently yielded an outcome in which conservatives who claim they were unfairly targeted by the Biden administration will receive compensation. That includes the more than 1,500 people charged or convicted in connection with the Jan. 6 Capitol riot. Citing sources familiar with the matter, ABC News reported:
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.
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.
Shortly after taking office again on Jan. 20, 2025, Trump pardoned virtually every person charged or convicted in connection with the riot.
ABC News noted that the arrangement is not final, and added that the compensation fund is “the main condition for Trump to drop a series of legal actions he filed against the federal government.”
Trump is also seeking $230 million from the Department of Justice over the FBI’s investigation into potential ties between his 2016 campaign and Russia, as well as the bureau’s execution of a warrant at his Mar-a-Lago residence in 2022. In that instance, Trump did not sue the DOJ, but filed two complaints via an administrative claims process in which members of the president’s administration will determine whether to pay the amount the president is seeking.
“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,” ABC News stated.
The Fund will receive $1.776 billion and will come from the judgment fund, which is a perpetual appropriation allowing DOJ to settle and pay cases. On a quarterly basis, the Fund shall send a report to the Attorney General outlining who has received relief and what form of relief was awarded.
At the Attorney General’s direction, the Fund can be audited. The Fund must take steps to protect private information and avoid fraud. The Fund shall cease processing claims no later than December 1, 2028.
There is legal precedent for such a Fund, most notably the “Keepseagle” case where the Obama Administration created a $760 million fund to redress various claims alleging racism against the federal government over a period of decades.
In Keepseagle, hundreds of millions of dollars remaining in the fund were distributed to non-profits and NGOs that never made claims, whereas any money remaining in The Anti-Weaponization Fund will revert to the federal government. The Obama DOJ settled by putting $680 million from the judgment fund into a bank account for a single claims administrator to dole out. In Keepseagle the remaining money—which ended up being over $300 million—was distributed to the entities that had not even submitted claims.
In a statement to the outlet, a spokesperson for Trump’s legal team reiterated the president’s position.
“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,” the statement said.
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