Lawyers for President Donald Trump are seeking a settlement with the Department of Justice over the president’s $10 billion lawsuit against the Internal Revenue Service (IRS), according to a court filing.
But critics say the problem is that such a settlement would leave Trump negotiating with an executive branch that is effectively under his control.
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But Friday’s court filing emphasized the efficiency of seeking a settlement.
In the document, Trump’s lawyers ask for a 90-day pause on the case to allow for a resolution.
“This limited suspension will not prejudice any party or delay final resolution,” the filing states. “Rather, this extension will promote judicial economy and allow parties to explore avenues to efficiently narrow down and resolve issues.”
How did the incident begin?
The case stems from an incident that began in 2017, when a worker named Charles “Chaz” Littlejohn was rehired as a contractor through government consulting firm Booz Allen.
Littlejohn stole copies of Trump’s tax returns, which had been a source of long-term public surveillance, while working on files for the Internal Revenue Service.
Until President Trump, every president since Richard Nixon released their tax returns to demonstrate transparency. But President Trump insisted that was not possible, citing the ongoing audit.
Littlejohn’s stolen tax returns were eventually released to the media, and in 2020, the New York Times published a series of articles showing that President Trump had paid no income taxes in 10 of the past 15 years.
In other years, he paid relatively small amounts, such as $750, because he had more losses than profits. ProPublica also published an article based on the leaked tax returns, highlighting inconsistencies and Trump’s low tax payments.
Privacy laws protect taxpayer information from being released by the IRS without explicit authorization. Littlejohn was sentenced to five years in prison in 2024.
But in late January, Trump filed a lawsuit alleging that he, his companies, and his sons Eric Jr. and Donald Jr. suffered “serious and irreparable harm” as a result of the breach.
The defendants in this case are the IRS and its regulator, the Treasury Department, both of which are part of the executive branch.
“Defendants have caused Plaintiffs reputational, financial harm, and public embarrassment, unfairly harmed their business reputations, portrayed Plaintiffs in a false light, and adversely affected the social standing of President Trump and other Plaintiffs,” the complaint states.
Ethics and legality issues
But experts have warned that the case contains flaws that would normally require the Justice Department, which also falls under President Trump’s jurisdiction, to seek removal from office.
For example, the lawsuit purports to tally up media mentions of Trump’s leaked tax returns, amounting to a whopping $10 billion.
However, experts say the formula for calculating damages is based on the number of fraudulent disclosures by government officials, not on media reprints.
Then there’s the issue of Littlejohn’s employment status. He was an outside contractor, not a civil servant.
President Trump must also challenge the two-year statute of limitations in the case. The lawsuit alleges that President Trump “did not discover numerous violations” on his tax returns until January 29, 2024.
But critics point out that as far back as 2020, during a New York Times series, he posted on social media that his tax information was “illegally obtained.”
Opponents say the lawsuit should be dismissed or at least delayed until Trump is no longer president. Otherwise, they argue, this constitutes a conflict of interest because President Trump is essentially negotiating with his own administration for the payments.
Control “both sides of the lawsuit”
Trump himself has acknowledged that such payments are “not a good thing.” However, he justified the amount by saying it would be donated to charity.
“I don’t think anyone will care because this money will go to a number of very good charities,” he said in February.
Legal experts argue that even that could violate the U.S. Constitution’s Emoluments Clause, which prohibits the president from receiving benefits from his position apart from his salary.
Government watchdogs are trying to block progress on the settlement. For example, on February 5, a group called Democracy Forward filed an amicus brief arguing that courts should act to prevent abuses of power.
“This case is unusual because the President controls both sides of the case, raising the possibility of collusive litigation tactics,” the brief said.
“Treating this case like business as usual would threaten the integrity of our justice system and the critical taxpayer and privacy protections at the heart of this case.”
But the $10 billion IRS lawsuit isn’t the only case President Trump is seeking to settle with the government. President Trump filed administrative complaints in 2023 and 2024 seeking compensation for federal investigations he considered unfair.
One of the charges relates to the FBI’s investigation into alleged Russian interference in the 2016 election, and the other relates to the FBI’s raid on Trump’s Mar-a-Lago estate after the president refused a subpoena to return classified documents.
In response to these complaints, President Trump is reportedly seeking additional damages worth $230 million.
