President Donald J. Trump, et al. v. Internal Revenue Service and U.S. Department of the Treasury was a lawsuit brought against the Internal Revenue Service (IRS) by President Donald Trump in January 2026, alleging that the agency was responsible for his tax returns being leaked to The New York Times and ProPublica.
From 2019 to 2020, IRS contractor Charles E. Littlejohn leaked the tax returns of thousands of wealthy individuals, including Trump, to the organizations. Littlejohn was later convicted and sentenced on crimes related to the disclosures. Trump, his sons, and the Trump Organization sued the IRS and the Department of the Treasury, claiming that the IRS had not prevented Littlejohn from accessing the elder Trump's tax returns. Trump's control of the federal agencies he was suing complicated the case and presented several possible conflicts of interest.
The Department of Justice (DOJ), which represented the IRS, settled the case out of court in May 2026, and the plaintiffs voluntarily dropped the lawsuit. The settlement involved establishing a billion fund for individuals claiming that the DOJ had been weaponized against them. The next day, in an addendum to the settlement, acting Attorney General Todd Blanche ordered the IRS to permanently end current and possible audits and inquiries into the Trump family and business. The lawsuit and settlement fund received criticism from Democrats, Republicans, and the judge overseeing the case for its unorthodox and unprecedented circumstances. On June 2, 2026, Blanche announced retreat from the settlement fund, but continued protection of the Trump family and business against tax audits, and the DOJ eventually stated in writing that it would cease pursuing the fund.
Background
In his first term, Trump refused to release his tax returns, although he promised to do so during his campaign. In 2017, Charles E. Littlejohn, a former contractor for the IRS, sought reemployment with the explicit intent to obtain Trump's tax returns. Littlejohn worked at the IRS for four years; in that time, he obtained the tax returns of thousands of wealthy individuals, including Trump. Littlejohn gave The New York Times Trump's tax returns dating back to 2005. He gave ProPublica the tax returns of the twenty-five wealthiest Americans by net worth. The New York Times used the tax returns offered by Littlejohn as the basis for an article that revealed Trump had repeatedly avoided paying income tax. In September 2023, Littlejohn was charged on one count of improperly disclosing tax return information. The following month, he pleaded guilty, and he was sentenced to five years in prison in January 2024.
Littlejohn's disclosure was investigated by the Treasury Inspector General for Tax Administration and the DOJ. The incident was criticized by some Republican Party congressmembers, who vowed to initiate investigations after Republicans secured a majority in the 2022 House of Representatives elections. In a letter to the judge who sentenced Littlejohn, Republicans on the House Committee on Ways and Means wrote that he should receive the maximum sentence for having taken "the law into his own hands and decided he knew what was best". In December 2022, the hedge-fund manager Kenneth C. Griffin sued the IRS and the Department of the Treasury in the District Court for the Southern District of Florida, alleging that the IRS was negligent in the disclosure of Griffin's tax returns. The IRS argued in court that it was not responsible for the incident as Littlejohn had acted alone. In July 2024, it apologized to Griffin, who promptly ended his lawsuit.
The disclosures were cited by Republicans on the House Ways and Means Subcommittee on Oversight in a hearing in February 2025, who criticized Democrats concerned about the possibility of security lapses at the Department of Government Efficiency. In June, Secretary of the Treasury Scott Bessent stated that he believed that the penalty for disclosing tax return information should be more severe; according to Bloomberg Tax, many wealthy individuals were dissuaded from suing the government over relatively insignificant compensation. In November, the Trump Organization sought to intervene in Littlejohn's sentencing appeal, arguing that he "severely impacted" the business. In January 2026, Bessent stated that the Department of the Treasury would end its contracts with Booz Allen Hamilton, the firm that Littlejohn had worked for. Booz Allen contested Bessent's response, noting that Littlejohn had exfiltrated tax returns off government servers and that the firm could not monitor its contractors.
Lawsuit On January 29, 2026, Trump; his sons, Donald Jr. and Eric; and the Trump Organization sued the IRS and the Department of the Treasury, making Trump the first and only sitting US president to sue his own administration. The plaintiffs claimed that the IRS failed to prevent Charles Littlejohn from accessing the elder Trump's tax returns and sought $10 billion over the incident. The case concerned whether the IRS was liable for Littlejohn's actions—as the agency had denied negligence in Ken Griffin's lawsuit—and whether the statute of limitations had elapsed; Trump filed his lawsuit exactly two years after his complaint had claimed he had heard of the disclosure, despite Littlejohn's guilty plea in October 2023. According to Bloomberg Tax, the case likely would have involved whether Littlejohn could be considered an agency employee; if not, the IRS may have had a sovereign immunity argument. Trump's appointment of agency leaders and control over the government departments which would oppose him in the lawsuit presented multiple conflicts of interest. Trump acknowledged that he was "supposed to work out a settlement with myself". He later stated that he would give any amount he received in the lawsuit to charity, naming the American Cancer Society as a possible beneficiary. The case was assigned to Judge Kathleen M. Williams.
In February 2026, several former government tax officials, including John Koskinen, the former commissioner of internal revenue, and Kathryn Keneally, the former assistant attorney general for the Tax Division, argued that the case should be placed on hold until Trump's term ends in January 2029. They said that neither Trump nor his family could prove they suffered demonstrable harm, that the demand for $10 billion in compensation was unjustified, and that Judge Williams should appoint an independent third-party. The officials noted that Alina Habba, a Trump lawyer, attended Littlejohn's guilty plea, possibly invalidating the case on the basis that the statute of limitations had elapsed. In a separate filing, Citizens for Responsibility and Ethics in Washington argued that the use of public funds to pay Trump would violate the Domestic Emoluments Clause of the Constitution. According to The New York Times, officials within the White House and the DOJ were uncertain over how to proceed in the case; assigning a lawyer to contest the lawsuit would possibly cause a conflict of interest and could violate an executive order forcing government lawyers to accept Trump's interpretation of the law.
In April 2026, Trump's lawyers requested that Judge Williams extend a deadline to respond to the case by ninety days. The filing indicated that several federal agencies were in discussions to resolve the lawsuit. Judge Williams delayed the deadline but did not respond to Trump's request to allow for negotiations. The following week, Judge Williams questioned whether any court had jurisdiction over the lawsuit, expressing skepticism that the parties were "sufficiently adverse to each other" for subject-matter jurisdiction. She ordered the parties in the case to submit filings on the issue by the following month and appointed six private attorneys to produce a memorandum on whether the lawsuit was legitimate. According to The New York Times, lawyers at the IRS believed that the DOJ could have defended the government from the lawsuit. Lawyers at the DOJ initially believed that the conflict of interest was unavoidable, citing the rule of necessity.
Lawsuit responses After Donald Trump filed his lawsuit, Wisconsin senator Ron Johnson argued that the IRS should have been sued, but that the United States federal government lacked $10 billion to pay Trump and his family. He called for the IRS to conduct a "robust investigation" into the individual responsible for leaking Trump's tax returns. Oregon senator Ron Wyden, the ranking member of the Senate Committee on Finance, and Massachusetts senator Elizabeth Warren, a member of the committee, sent a letter to Secretary of the Treasury Scott Bessent and Attorney General Pam Bondi requesting information on Trump's involvement in the lawsuit. In April 2026, Warren and Senate Minority Leader Chuck Schumer, as well as Maryland representative Jamie Raskin and California representative Dave Min, introduced the Ban Presidential Plunder of Taxpayer Funds Act in their respective chambers. The bill would prevent the president and vice president, as well as their families, from receiving payments from a settlement agreement involving parties they control, unless a judge appoints an independent counsel to represent the government and court proceedings are made public.
Voluntary dismissal of lawsuit
Before the issues of the suit's merits were addressed in court, the parties announced an out-of-court settlement, and the plaintiffs dropped the lawsuit on May 18, 2026. Judge Williams's order closing the case was critical of the private settlement, stating that the United States had an "obligation" to resolve the "public's strong interest in knowing about the conduct of its government and expenditure of its resources" and the "fair administration of justice". She added that the government had not gone through the procedure of ensuring that a settlement was appropriate.
Attempted out-of-court settlement
Anti-Weaponization Fund
On May 19, 2026, The New York Times reported that the DOJ was considering settling Donald Trump's lawsuit against the IRS, a move that would possibly involve forcing the agency to permanently end any audits of Trump, his family, and his businesses. ABC News later reported that the DOJ was considering establishing a $1.776 billion fund for Trump allies who were investigated in the Biden administration, in addition to issuing a public apology; the specific amount was chosen as a reference to the year the United States Declaration of Independence was signed. The fund would use the Department of the Treasury's Judgment Fund. According to ABC News, the DOJ was set to establish a commission to disperse the fund. The commission would have five members appointed by the attorney general, that Trump could remove without cause.
The DOJ formally announced the fund in a filing on May 18, 2026. The fund, known as the Anti-Weaponization Fund, would compensate individuals who claim that the DOJ had been weaponized against them, and is set to end in December 2028. As part of the settlement, Trump dismissed his complaints filed against the government over the FBI search of Mar-a-Lago and the Mueller special counsel investigation. According to the Justice Department, Trump and his sons would receive a formal apology, but not monetary payment or damages, although the publicly available terms of the fund do not prohibit Trump or his family from receiving payments from it, according to legal observers. A subsequent addendum issued the next day that ends active or future audits of Trump, his family and their associated and his businesses has the potential to provide a large financial benefit to Trump, an analysis by the New York Times showed.
Tax audits of Trump family addendum