Todd Blanche told Congress last week that the administration was walking away from plans for a $1.8bn fund, but the settlement he described did something else with real consequences: it barred the Internal Revenue Service from continuing audits of Donald Trump, his family and their affiliates.
That change is why the trump lawyers irs lawsuit settlement is drawing attention now. Blanche, who had been Trump’s personal lawyer before joining the administration, said the IRS would be blocked from going forward with audits tied to the president, his family and related companies, even as he abandoned the proposed fund that would have compensated Trump’s political allies. The audit freeze could be worth more than $100m to Trump, according to the figures tied to the case.
Trump sued the US government in January for $10bn over the unauthorized release of his tax returns by a federal contractor who worked for the IRS. The contractor was later prosecuted and sentenced to five years in prison during Joe Biden’s administration. The dispute ended with a Trump-controlled justice department settlement that created the $1.8bn fund and shut down IRS audits of Trump’s past tax returns and those of his family members and related companies.
That outcome lands awkwardly against the rules Congress wrote after Watergate. The IRS is supposed to enforce tax law without giving in to political pressure, and those restrictions were tightened in the 1990s so officials could face prison time if they carry out or end an investigation of a particular taxpayer at the White House’s request. Trump was already facing at least one tax investigation dating back to 2010, making the audit bar more than symbolic.
The unresolved question is whether Blanche, as acting attorney general, had the authority to order the IRS to stop tax investigations at all. He announced both the abandoned fund and the audit restriction last week, but it remains unclear whether a future justice department or another authority will try to unwind the decision.
