The case centers on the IRS’s leak of Trump’s tax returns during his first term, which occurred after he broke decades of precedent by refusing to release them. The lawsuit alleges that the IRS failed to prevent former IRS contractor Charles Littlejohn from unlawfully disclosing tax information to media outlets, for which he pleaded guilty in 2024.
The leaks, reported by The New York Times and ProPublica, revealed that Trump had engaged in what was described as “outright fraud” and other “dubious” schemes to avoid taxation, and that he paid no federal income taxes in many of the years leading up to his presidency.
The Trumps are seeking a payout of at least $10 billion from the IRS, which is currently being headed by Trump’s handpicked Social Security Administration head, Frank J. Bisignano, who reports to Treasury Secretary Scott Bessent.
This creates an extraordinary legal situation widely described as a blatant conflict of interest, since Trump is suing an IRS that he effectively controls, which is being represented by a DOJ he also effectively controls.
For a case to be valid, however, the parties must demonstrate that they are actually on opposite sides; otherwise, the case can be thrown out of court.
US District Judge Kathleen M. Williams of the Southern District of Florida, who is overseeing the case, questioned its constitutionality last month and required the parties to file briefs by May 20 demonstrating whether there is an actual conflict between them.
According to the Times, however, the DOJ is considering settling the case with Trump before that happens, and there’d be little Williams could do to stop it.
Not only could Trump walk away with a payout of several billion dollars—if not the full $10 billion he asked for—according to the Times, the White House and DOJ have also discussed a deal for the IRS to drop all audits into Trump, his family, and his businesses.
Presidents and vice presidents are required under IRS to undergo audits of their annual tax returns, and a 2024 Times report found that if Trump failed an audit, it could cost him more than $100 million.
Trump’s presidency has been defined by him and his family profiting from their positions of influence. According to a live tracker from the Center for American Progress, Trump and his family have used the White House to rake in more than $2.6 billion worth of cash and gifts.
In addition to about $1.5 billion from their cryptocurrency ventures, which they’ve used the White House to promote, they have received direct gifts—like a $400 million luxury jet from the government of Qatar—and legal cash settlements from media and tech companies worth over $90 million. On top of the IRS lawsuit, Trump has also demanded that the DOJ pay him $230 million over past criminal investigations into him.
But if Trump received even a fraction of what he demanded in a payout from the IRS, it could make the graft from the first year and a half of his presidency look like pocket change, potentially netting him several billion more dollars and possibly even doubling his net worth.
“Trump is considering stealing billions of dollars from the American people,” said Rep. Don Beyer (Va.), the ranking House Democrat on the Joint Economic Committee. “He’s already the most corrupt president ever by a wide margin, but this would be fraud and theft on a scale even he has never attempted. The largest single act of grand larceny in American history.”
Sen. Elizabeth Warren (D-Mass.), the ranking member on the Senate Banking, Housing, and Urban Affairs Committee, added that for the DOJ to hand Trump a settlement “before a court rules” would be a “massive, unprecedented scandal.”
“Congress must stop him,” the senator added, noting that she had introduced a bill last month that would bar presidents, vice presidents, and their families from collecting settlement payments from the federal government while in office. If they file administrative claims, Warren’s bill would also require that the agencies be represented by independent counsels appointed by the court. However, her bill has gotten little traction in a Republican-controlled Congress.
Bharat Ramamurti, who served as the deputy director of the White House National Economic Council under former President Joe Biden, said the IRS lawsuit was a “massive scam” that was “much worse” than Trump’s proposal for Congress to provide $1 billion in taxpayer money to pay for his White House ballroom project.
Of the IRS lawsuit, he said, “Democrats should raise hell over it.”
