The Justice Department is considering whether to settle Donald Trump’s lawsuit against the IRS, a dispute that could end with the agency dropping any audits of Trump, his family members or his businesses. The talks come as the court has set a May 20 deadline for Trump’s personal lawyers and the DOJ to explain whether they are in conflict.
Trump sued the IRS and the Treasury Department for $10 billion in January, accusing the agencies of failing to stop a leak of his tax information during his first term. On Tuesday, reported that people familiar with the matter said internal settlement discussions are under way inside the Justice Department.
The case grew out of a leak that has already led to a criminal conviction. Former IRS contractor Charles Edward Littlejohn provided and ProPublica with stolen confidential tax information from Trump and the Trump Organization between 2018 and 2020, and he was sentenced in 2024 to five years in prison after pleading guilty.
That background makes the lawsuit unusual even by Washington standards. Trump effectively sits above the IRS as president, yet he is also suing the government he leads, turning a tax dispute into a test of how far the administration is willing to go to resolve a case that normally would put the taxpayer and the government on opposite sides.
Trump has already signaled how he would handle any payout. He told News that if he reached a $10 billion settlement, he would donate 100 percent of the money to charity. His personal lawyers said in a statement that “President Trump continues to hold those who wrong America and Americans accountable.”
The reported talks do not guarantee a deal, but they do show the administration is weighing a path that could sharply narrow the dispute before the May 20 filing deadline. If the IRS does agree to end audits tied to Trump or his family, it would be the most direct sign yet that the government is trying to close down one of the most awkward lawsuits now facing it.
