Trump Ends IRS Lawsuit as DOJ Creates $1.8B “Weaponization” Fund

U.S. President Donald Trump has agreed to drop a $10 billion lawsuit against the Internal Revenue Service after reaching a controversial settlement that includes the creation of a $1.8 billion federal “Anti-Weaponization Fund,” according to court filings and official announcements.

The lawsuit stemmed from allegations that the IRS failed to prevent the leak of Trump’s confidential tax records by a former contractor, a case that later led to criminal convictions. Under the settlement, Trump will receive no financial payout but is expected to be issued a formal apology as part of the agreement.

In exchange for withdrawing the lawsuit, the Department of Justice will establish a taxpayer-funded compensation pool designed to support individuals who claim they were unfairly targeted by government actions. The fund, estimated at $1.776 billion, will be overseen by a five-member commission appointed by the Attorney General, with broad authority to approve claims and issue payments.

Officials say the initiative is intended to address allegations of “government weaponization” and legal overreach, but critics argue it effectively creates a politically sensitive payout system outside normal congressional funding processes. Legal experts have also raised questions about oversight, transparency, and constitutionality.

The settlement also reportedly requires Trump to drop additional related claims tied to federal investigations, including disputes over the FBI raid on Mar-a-Lago and past federal probes.

The announcement has sparked intense political debate in Washington, with supporters calling it accountability for political targeting and opponents describing it as an unprecedented use of public funds for a politically influenced compensation scheme.