The I.R.S. Thought It Could Fight Trump's Lawsuit, but It Reached a Deal Anyway

https://www.nytimes.com/2026/05/19/admin/irs-trump-lawsuit-deal.html

No paywall link
https://archive.md/20260519185326/https://www.nytimes.com/2026/05/19/admin/irs-trump-lawsuit-deal.html

Lawyers at the Internal Revenue Service sought to contest President Trump’s lawsuit against the agency, recommending several potential defenses in a case that the Justice Department nevertheless decided to resolve by creating an extraordinary $1.8 billion fund that could soon be used to pay Mr. Trump’s political allies.

I.R.S. officials prepared a 25-page memorandum outlining what they saw as flaws in Mr. Trump’s suit and advising the Justice Department to move to dismiss it, according to two people familiar with the memo. That memo was provided to Treasury officials in April, and it is unclear if they passed it along to its intended recipients at the Justice Department, according to the people, who spoke anonymously to discuss internal government deliberations.

No lawyers from the Justice Department ever appeared in court to respond to the suit or disputed any of Mr. Trump’s claims, which demanded at least $10 billion from the I.R.S. for not doing enough to prevent the leak of his tax information. The Justice Department instead made a highly unusual deal in the case. In exchange for Mr. Trump dropping the suit, the Trump administration created the $1.776 billion “anti-weaponization” fund for people who say they were wrongly targeted by the federal government.

The existence of the internal memo, which has not been previously reported, shows that the Trump administration disregarded readily available defenses to a lawsuit filed by the president against an agency he controls. While the Justice Department has said that Mr. Trump will not receive money from the new fund, critics have slammed the arrangement as a corrupt attempt at paying Mr. Trump’s political supporters, including, potentially, those who were convicted and later pardoned for storming the Capitol on Jan. 6, 2021.

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