MIAMI — President Donald Trump is negotiating in federal court in Miami to drop a $10 billion lawsuit against the Internal Revenue Service in exchange for the creation of a $1.7 billion fund to compensate people he says were wrongfully targeted by the Biden administration. More than 1,500 individuals who participated in the January 6 Capitol attack would be eligible to receive compensation from the fund, which would be paid through the Treasury Department's Judgment Fund.

Trump, his two sons, and the Trump family business filed the lawsuit in January over the leak of his personal tax returns. The suit alleges that the IRS failed to prevent former IRS contractor Charles Littlejohn from unlawfully disclosing tax information to media outlets. Littlejohn was sentenced in January 2024 to five years in prison for leaking Trump's tax returns and those of other wealthy individuals.

Under the proposed settlement terms, Trump is requesting that the IRS issue a public apology for disclosing his personal financial records and waive any IRS audit of himself, his family, and his businesses. If the IRS revised its contested tax bill, Trump could owe more than $100 million in back payments on a single Chicago property.

U.S. District Judge Kathleen Williams, who is overseeing the case, has questioned whether there is a genuine controversy in the lawsuit. Williams appointed a group of lawyers to advise the court and asked both parties to submit briefs by May 20. On May 14, the court-appointed attorneys filed a brief stating there was "reason to believe that the President is, in fact, exercising his control over the Defendants in this litigation."

"Anyone who got through their first day of law school knows you can't sue yourself," said Andrew Warren, deputy legal director of the Democracy Defenders Fund. Rep. Jamie Raskin said Trump is "orchestrating a $1,700,000,000 fraud on the American taxpayer to line the pockets of his MAGA political allies."

"Worse still, this is only the beginning—a declaration that the prior payouts were just a down payment, and that he now intends to earmark billions more in taxpayer dollars for his political allies, sycophants, and private militia of unemployed insurrectionists," Raskin said.

According to ABC News, the expected deal would prohibit Trump from directly receiving payments related to three legal claims, but entities associated with Trump would not be explicitly barred from filing additional claims. Under the potential settlement, Trump would have the authority to remove members of the commission running the fund without cause, and the commission would not be required to disclose its procedures or decision-making process for awarding more than a billion dollars.

The requested $10 billion is equivalent to about two-thirds of the IRS's total budget for the 2026 fiscal year and would be five times greater than any other award paid by the Treasury's Judgment Fund from January 2020 to September 2025. A $10 billion payment would more than double Trump's family net worth. The IRS lawsuit is his third legal claim against his own administration; Trump previously asked the Justice Department to pay him about $230 million for damages related to its investigations into classified documents at Mar-a-Lago and Russian ties to his 2016 campaign.