President Donald Trump’s lawyers are seeking a settlement with the Justice Department on a $10 billion lawsuit filed against the Internal Revenue Service (IRS), court filings indicate.
But critics say the trouble is that such an agreement would essentially require Trump to negotiate with an executive branch under his control.
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However, Friday’s court petition emphasizes the efficiency of seeking a solution.
In the document, Trump’s lawyers call for the case to be put on hold for 90 days so a settlement can be reached.
“This limited stay will neither prejudice the parties nor delay final resolution,” the filing said. “Rather, the extension will boost judicial economy and allow parties to explore avenues that may reduce or efficiently resolve issues.”
How did the matter start?
The case stems from an incident that began in 2017, when an employee named Charles “Chase” Littlejohn was re-hired as a contractor through government consulting firm Booz Allen.
While working on the IRS files, Littlejohn stole copies of Trump’s tax returns, which had long been the source of public scrutiny.
Until Trump, every president since Richard Nixon had released their tax returns as a sign of transparency. However, Trump claimed he could not do so, citing the ongoing audit.
The tax returns stolen by Littlejohn were eventually released to the media, and in 2020, The New York Times released a series of articles showing that Trump paid no income taxes in 10 of the past 15 years.
In other years, they paid relatively smaller amounts, such as $750, because they reported greater losses than profits. ProPublica also ran stories based on leaked tax returns, highlighting discrepancies and Trump’s underpayment of taxes.
Privacy laws protect taxpayer information from being released by the IRS without express permission. Littlejohn was sentenced to five years in prison in 2024.
But in late January this year, Trump filed a lawsuit arguing that he, his businesses and his sons Eric and Donald Jr. had suffered “significant and irreparable harm” from the leak.
The defendants in the lawsuit were the IRS and the agency that oversees it, the Treasury Department, both of which are part of the executive branch.
“Defendants have caused Plaintiffs reputational and financial damages, public embarrassment, wrongfully tarnished their business reputations, falsely portrayed them, and negatively affected the public reputations of President Trump and other Plaintiffs,” the lawsuit reads.
Questions of morality and legality
But experts have warned that the lawsuit contains flaws that would normally prompt the Trump-controlled Justice Department to seek dismissal.
For example, the lawsuit reaches a whopping $10 billion by allegedly matching media references to Trump’s leaked tax returns.
However, experts say the damage formula is calculated by the number of unauthorized disclosures made by a government employee and not by the number of reprints by the media.
Then there’s the question of Littlejohn’s employment status. He was an outside contractor, not a government employee.
Trump will also have to contend with the two-year statute of limitations in the case. The lawsuit argues that President Trump did not discover many of the violations in his tax returns until January 29, 2024.
But critics say he had Posted It was not until 2020 that his tax information was posted on social media about being “illegally obtained”, when The New York Times published its series.
Opponents say the trial should be dismissed or at least delayed until Trump is no longer president. Otherwise, they argue that it represents a conflict of interest, with Trump basically negotiating with his own administration for payment.
Controlling ‘both sides of the litigation’
Trump himself has acknowledged that such a payment would “never look good”. But he has justified this amount by saying that it will be given to charity.
“Nobody’s going to care because it’s going to go to a lot of really good charities,” he said in February.
Even legal experts argue that this may violate the emoluments clause in the US Constitution, which prohibits the President from making profits from his office other than his salary.
Government watchdogs have tried to prevent any agreement from emerging. For example, on February 5, the group Democracy Forward filed an amicus brief arguing that the Court should take action to prevent abuses of power.
“This case is extraordinary because the President controls both sides of the litigation, increasing the possibility of collusive litigation tactics,” the brief states.
“Treating this case as business as usual would threaten the integrity of the justice system and the important taxpayer and privacy protections at the heart of this case.”
But the $10 billion IRS lawsuit isn’t the only matter Trump wants to settle with his own government. In 2023 and 2024, Trump filed administrative complaints seeking compensation for federal investigations he considered unfair.
One complaint relates to the FBI investigation of alleged Russian interference in the 2016 election, and the other is about the FBI raid on Trump’s Mar-a-Lago property after he refused a subpoena to turn over classified documents.
For those complaints, Trump is reportedly seeking additional damages of $230m.
