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Trump Administration Ends IRS Lawsuit, Creates $1.8B Anti-Weaponization Fund

Trump Administration Ends IRS Lawsuit, Creates $1.8B Anti-Weaponization Fund
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The Treasury Department’s top lawyer resigned Monday just hours after the Trump administration agreed to end the president’s $10 billion lawsuit against the IRS and to create a nearly $1.8 billion “Anti‑Weaponization Fund” for people claiming they were unfairly targeted by federal authorities nytimes +1. President Donald Trump will receive a formal apology but no direct payment under the settlement, which will be financed from existing federal judgment accounts rather than new congressional spending seattletimes +1.

The civil suit, filed in January by Trump, his sons and the Trump Organization, stemmed from the leak of Trump’s tax returns and other confidential data by former IRS contractor Charles Littlejohn, who was later sentenced to five years in prison seattletimes +1. U.S. District Judge Kathleen Williams had questioned whether a sitting president could bring a genuine case against agencies he controls and ordered additional briefing on whether the litigation was constitutionally valid, before Trump’s team moved to dismiss it on May 18 wsj.

How the $1.8 Billion ‘Anti‑Weaponization Fund’ Would Work

Under the settlement, the Justice Department says Treasury will deposit about $1.776 billion into a new fund designed to compensate people who can show they were targeted for “improper and unlawful political, personal and/or ideological reasons” seattletimes +1. The money will come from the long‑standing Judgment Fund, which allows the government to pay legal settlements without specific new appropriations from Congress npr +1.

A five‑member commission will decide who gets paid, with four of the commissioners appointed by Acting Attorney General Todd Blanche, a Trump loyalist now overseeing the department seattletimes +1. Officials say the fund is formally open to all claimants, but examples cited by the Justice Department include Trump allies investigated during the Biden administration, such as anti‑abortion activists prosecuted for clinic blockades seattletimes +1. Blanche said the move was meant “to make right the wrongs that were previously done while ensuring this never happens again” seattletimes.

Resignation at Treasury and Warnings of a ‘Slush Fund’

Brian Morrissey, the Treasury Department’s Senate‑confirmed general counsel, resigned within hours of the fund’s announcement, after roughly seven months in the role msn. People familiar with his decision told reporters he had raised concerns about Treasury’s role in moving $1.8 billion into a program largely controlled by the White House and Justice Department, though he has not publicly explained his departure msn. His exit underscored internal unease over the legality and optics of a president suing, then settling with, agencies he oversees.

Democrats and ethics lawyers denounced the arrangement as unprecedented self‑dealing that blurs constitutional lines between the branches. Representative Jamie Raskin, the top Democrat on the House Judiciary Committee, called the plan “a racket designed to take $1.7 billion of taxpayer dollars out of the Treasury and pour it into a huge slush fund” seattletimes. Legal experts warn that using the Judgment Fund to create a broad, politically defined compensation pool, overseen almost entirely by appointees of the president’s own attorney general, could invite court challenges over Congress’s power of the purse and the requirement that government settlements resolve real legal disputes rather than serve political goals npr +2.

The Bigger Picture

The settlement closed Trump’s extraordinary suit before Judge Williams could rule on whether it presented a legitimate “case or controversy,” avoiding a potential opinion that might have limited presidents’ ability to sue their own agencies wsj. But the creation of a billion‑dollar fund for alleged victims of “weaponization” — many of them likely to be Trump allies — is expected to spark new litigation, investigations on Capitol Hill and a broader fight over whether the administration is rewriting the rules of federal accountability to favor its supporters seattletimes +2.