IRS workers sue over Trump 'slush fund' claiming a hidden legal trap

U.S. President Donald Trump speaks during the announcement of new fuel economy standards, in the Oval Office at the White House in Washington, D.C., U.S., December 3, 2025. REUTERS/Brian Snyder

President Donald Trump's administration is being sued by a group of IRS workers because they claim his $1.776 billion slush fund for his supporters, by including a requirement that neither Trump nor his family ever be audited, requires them to break the law.

"An organization representing career Internal Revenue Service employees has joined a lawsuit over the contentious settlement reached in connection with President Donald Trump’s lawsuit against the IRS, challenging a carveout that would give him and members of his family immunity from certain tax audits," reported NBC News' Ryan J. Reilly on Thursday. "A Jan. 6 prosecutor fired by the Trump administration and others previously sued to block a fund that could have gone to Trump allies who said they were victims of weaponization, potentially including Jan. 6 rioters. A federal judge then temporarily blocked the fund from moving forward in May."

Reilly added, "Now, an amended version of lawsuit filed in the Eastern District of Virginia on Thursday afternoon alleges that the IRS audit immunity that Acting Attorney General Todd Blanche agreed to for Trump and his family members in connection with the purported settlement is unlawful and unconstitutional. The National Treasury Employees Union (NTEU), which represents career IRS auditors, has joined the litigation."

In their official filing, the National Treasury Employees Union argued that Trump is lying about canceling the slush fund and that, regardless, the demand that he not be audited is legally unenforceable.

"[The Department of Justice's] concurrent statement about the Immunity Order purports to narrow the scope of that Order but does not rescind it," the case said. "This unsigned piece of paper, which carries no more weight than a press release, confirms that the IRS will terminate tax audits and liability at the request of the President and conscript Plaintiff NTEU members into violating their oath and the Internal Revenue Code to grant the President with an unconstitutional emolument."

The lawsuit places career civil servants at the center of an unprecedented constitutional showdown over executive power and tax compliance. By forcing IRS auditors to grant lifetime immunity, the administration effectively commands them to violate their professional oaths to uphold the tax code equally. Legal experts warn that if the immunity order stands, it establishes a dangerous double standard, transforming a federal agency into a political shield. With the National Treasury Employees Union now driving the litigation, the battle moves beyond mere partisan fighting to focus on safeguarding the institutional integrity of the nation's tax system against unprecedented presidential overreach.

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