Donald Trump moved to dismiss a $10bn lawsuit against the Internal Revenue Service (IRS) on Monday, dropping his claims amid reports that he is considering a settlement with the federal government. The proposed deal would create a $1.7bn fund to compensate allies for supposed persecution by the government.
Legal Maneuvering
The Monday filing came just two days ahead of a 20 May deadline, in which the judge overseeing the case had asked the parties for briefing on whether a legitimate controversy existed — a requirement for any lawsuit — because Trump now controls the IRS. The filing made clear that Trump's attorneys are trying to resolve the case before the judge can intervene and issue an adverse ruling.
"Upon the filing of this notice, no judicial analysis is appropriate," Trump's lawyers said in a brief filing on Monday requesting dismissal of the suit.
Proposed Settlement Details
According to ABC News, the settlement would create a $1.776bn fund called the "Truth and Justice Commission." Trump could not receive payments from the commission, though people affiliated with him could seek compensation. Five commissioners — four of whom would be appointed by the attorney general and removable by Trump — would oversee the body's work, and it would not have to disclose its reasons for awarding money.
The suit sought damages after Charles Littlejohn, an IRS contractor, leaked Trump's tax returns to ProPublica and The New York Times. Neither the Justice Department nor attorneys representing Trump returned a request for comment.
Political Reaction
Democrats have harshly criticized the rumored settlement, saying it amounts to the creation of a slush fund for the president's allies. Ninety-three congressional Democrats — including Hakeem Jeffries, a Democratic leader of New York — filed an amicus brief with the court on Monday, arguing that such a claim would be illegal.
"Trying to hide this deal from the courts is corruption in plain sight. Trump is funneling taxpayer dollars to his political allies, and we will hold him accountable and block this billion-dollar giveaway at a time when Americans are already squeezed by inflation," said Andrew Warren, deputy legal director at the Democracy Defenders Fund.
Judicial Scrutiny
The settlement comes after US District Judge Kathleen Williams, a Barack Obama appointee overseeing the case, appointed a group of lawyers to advise her on whether there was sufficient controversy to proceed. Those attorneys filed their brief last week, noting numerous potential defenses the Justice Department could offer to push back against Trump's claims — several of which they were asserting in other cases involving leaks of IRS records.
There is "reason to believe that the president is, in fact, exercising his control over the defendants in this litigation," they wrote.
Watchdog Concerns
Watchdog groups pledged to challenge the legality of any settlement. "Any settlement would be outrageously unethical and likely a violation of the Constitution's Domestic Emoluments Clause," said Donald Sherman, president and CEO of Citizens for Responsibility and Ethics in Washington (CREW).
"This case was always a sham, and another ploy by the President to access taxpayer funds to line his pockets. The Justice Department needs to explain themselves here — because there is no legal authority for this settlement," said Skye Perryman, president and CEO of Democracy Forward, another watchdog group.
