Washington– The US government will permanently dismiss tax claims against President Donald Trump, according to a settlement document announced Tuesday, in an unusual use of executive power that could effectively help shield the president from further scrutiny of his finances and legal conduct.
As part of the settlement deal aimed at resolving Trump’s $10 billion lawsuit against the Internal Revenue Service over the leak of his tax returns, the United States is “forever prohibited” from questioning or prosecuting Trump, his children and the Trump Organization’s current tax issues, according to a one-page document posted on the Justice Department’s website.
The White House referred AP’s inquiries to the Justice Department, and the U.S. Treasury Department did not respond to AP’s requests for comment.
The Justice Department said in response to a request for comment on the expanded settlement that the settlement only refers to current audits, not future examinations.
President Donald Trump gestures to reporters as he walks across the South Lawn of the White House, Friday, May 15, 2026, in Washington.
AP Photo/Jacqueline Martin
The move comes after the Trump administration on Monday announced, as part of the lawsuit settlement, the creation of a roughly $1.8 billion fund to compensate allies of the Republican president who they believe were unfairly investigated and prosecuted, an arrangement that Democrats and government watchdogs have derided as “corrupt” and unconstitutional.
The $1.776 billion “Arms Control Fund” will allow people who believe they are being targeted for prosecution for political purposes, including by the Biden administration’s Justice Department, to apply for reparations, creating what Acting Attorney General Todd Blanche called “a legal process for the voices of victims of legal war and arms to be heard and to seek redress.”
Blanche, who was questioned by lawmakers on Capitol Hill on Tuesday, did not rule out the possibility that people who carried out violent acts during the Jan. 6, 2021, riot at the U.S. Capitol could be considered for payments from the new fund.
Democratic lawmakers and ethics watchdogs have criticized the creation of the fund, saying it is corrupt, opaque and has the potential to become an “illegitimate fund” for the president and his allies. Even Republican lawmakers have expressed signs of discomfort with the creation of the fund, including Senate Majority Leader John Thune, who told reporters he is “not a big fan.”
Trump told reporters at the White House on Monday that the fund is intended to “compensate people who have been treated horribly.”
Daniel Werfel, a former IRS commissioner during the Biden administration, said he was not aware that the IRS had agreed in advance “to permanently waive examination of previously filed tax returns for a particular person or company.”
He said the arrangement gave Trump and his family separate tax bases from other Americans.
“Whether you’re the president or Joe the plumber, people expect the same tax rules and enforcement framework to apply to everyone.”
The fund was announced after Trump, his sons Eric Trump and Donald Trump Jr., and the Trump Organization agreed to drop their lawsuit against the IRS and the Treasury Department. The lawsuit alleged that the leak of confidential tax records caused reputational and financial harm and negatively affected their public standing, among other claims.
According to a separate settlement agreement posted on the Justice Department’s website on Monday, Trump will receive a formal apology from the US government but “will not receive any cash payments or compensation of any kind” from the settlement.
Kathleen Williams, the judge presiding over the case, dismissed the case on Monday, blaming government agencies, particularly the Justice Department, in her filing for failing to be transparent about the settlement.
She said neither agency had “provided any settlement documents nor provided any documents ensuring that a settlement is appropriate when there is an outstanding question as to whether there is an actual case or controversy.”
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Associated Press writer Alana Durkin Richer contributed to this report.
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