U.S. President Donald Trump reacts as he and Canada's Prime Minister Mark Carney (not pictured) meet in the Oval Office at the White House in Washington, D.C., U.S., October 7, 2025. REUTERS Evelyn Hockstein
President Donald Trump’s Justice Department is discussing settling his $10 billion lawsuit, potentially costing each taxpayer roughly $100 — and doing so despite a judge’s attempt to protect the public interest.
“The Justice Department is holding internal discussions about settling President Trump’s lawsuit against the Internal Revenue Service in the coming days, according to three people familiar with the deliberations, a move that could involve the government directly providing taxpayer funds or another public benefit to the president,” reported The New York Times’ Andrew Duehren and Alan Feuer on Tuesday. “Whether to settle the suit and on what terms remains up in the air. One of the settlement options the Justice Department and White House officials are reviewing is the possibility of the I.R.S. dropping any audits of Mr. Trump, his family members or businesses, according to two of the people.”
Trump, his two sons and his family business are suing the Internal Revenue Service for $10 billion by arguing the agency should have done more to prevent the leak of his tax returns. Because Trump oversees the Justice Department, which is assigned to defend the IRS, in April Judge Kathleen M. Williams appointed three law firms to serve as friends of the court to iron out the complex legal and logistical details involved in the unprecedented case.
“For a lawsuit to be valid, the two parties must actually be on opposite sides, otherwise the judge can throw out the case,” the Times reported. “The judge has ordered Mr. Trump’s personal lawyers — along with the Justice Department, which represents the I.R.S. in federal court — to submit briefs by May 20 explaining whether they are in conflict with one another.”
In addition to potentially promising to cease all audits on the Trumps, the settlement could still require the government to pay the Trump family, marking the first time in American history that a sitting president received a large legal settlement from US taxpayers while in office. Even though settling before the deadline would leave all of the potential ethical issues unresolved, experts believe Williams would be powerless to stop it.
“She would not likely be able to prevent Mr. Trump from simply withdrawing the suit and coming to a private agreement with the federal government,” the Times reported. “Even if the judge were to ultimately find that the settlement was collusive or reached in bad faith, she would likely be hamstrung in any effort to stop money or other benefits from changing hands.”
The legal consensus from experts is that the Justice Department would not normally settle a case like the one presented by the Trumps, with a group of former IRS and Justice Department officials filing an amicus brief pointing out that Trump filed the suit too late and his request for $10 billion is far too large. Indeed, a similar case by hedge fund billionaire Ken Griffin was settled without any financial compensation; Griffin instead received a public apology.
As the libertarian commentator James Bovard recently pointed out in USA Today, if Trump’s lawsuit prevails and he receives $10 billion, that would require every American to pay him roughly $100 directly.
“Roughly 100 million Americans pay federal income taxes annually (not counting people who receive more in earned income tax credits than they pay in income taxes),” Bovard wrote. “A $10 billion settlement divided by 100 million taxpayers works out to about $100 per taxpayer, or $200 per couple.”
He added, “If congressional Democrats are savvy, they would mandate that the payout to Trump be financed by IRS penalty letters sent directly to 100 million taxpayers. To add salt to the wound, citizens could be compelled to send their payments directly to his Mar-a-Lago estate in Florida.”
Although Trump has defended the potentially unprecedented sum by arguing he would donate the money to charities, conservative commentator Andrew Egger pointed out that “Trump had been using his personal charity, it came to light after a lawsuit from the state of New York, to pay his business debts, make political contributions, and buy things for himself.”