An out-of-court settlement between Donald Trump and the Internal Revenue Service (IRS) has created a $1.8bn fund that critics say amounts to a slush fund for rewarding political allies. The agreement, which bars the IRS from auditing Trump's past tax returns, has drawn rare bipartisan opposition and a federal judge reopened the case on Friday after a group of judges alleged collusion.
The settlement stems from a 2024 case where an IRS contractor leaked tax returns of wealthy individuals, revealing Trump paid just $750 in federal income tax in 2016 and 2017. Trump sued the IRS for $10bn, and the administration later overruled internal IRS advice to fight the lawsuit, instead agreeing to the fund.
The fund is intended to provide financial restitution to people subjected to 'weaponised lawfare' by the federal government. However, a five-member commission appointed by the attorney general—not a court—will decide on applications. Four commissioners are selected by Todd Blanche, Trump's former personal lawyer, and the fifth in consultation with Congress. All can be fired by Trump at any time.
More than a dozen Republican senators have urged the administration to change course, and YouGov polling shows a majority of both Democrats and Republicans oppose the fund. The Guardian US political enterprise editor George Zornick described the scheme as highly unusual and expressed scepticism about its non-partisan claims.
