Donald J. Trump moved to dismiss his $10 billion [1] lawsuit against the Internal Revenue Service on Monday.

The decision ends a high-stakes legal battle over the alleged leak of the former president's private tax returns. This move suggests a resolution between Trump and the federal government, potentially avoiding a protracted court battle over government privacy breaches.

The lawsuit was originally filed by the Trump family on Jan. 29, 2026, seeking $10 billion [1] in damages. The filing alleged that the IRS and the Treasury Department failed to protect sensitive financial data, leading to the unauthorized disclosure of tax records to the public.

Reports indicate that the dismissal follows a settlement or resolution between the parties. This agreement reportedly includes a proposed billion-dollar compensation fund intended to address the grievances cited in the original suit [1], [3].

The IRS and the U.S. Department of Justice had previously defended the agency's handling of the records. However, the move to drop the case on May 18, 2026 [1], [2], [3], signals that the parties have reached a private or structured agreement to resolve the dispute outside of a full trial.

Legal analysts said that the scale of the requested damages was unprecedented for a privacy-related claim against a federal agency. The resolution of the case prevents further discovery processes that could have forced the government to reveal internal protocols regarding the handling of high-profile tax documents.

“Trump moved to dismiss his $10 billion lawsuit against the Internal Revenue Service”

The dismissal of this lawsuit indicates a strategic pivot by Donald Trump and a desire by the U.S. government to mitigate the risk of a massive financial judgment. By settling or resolving the matter through a compensation fund, the government avoids a public trial that would likely expose the internal vulnerabilities of the IRS's data security systems and the specific mechanisms by which sensitive tax returns are leaked.