President Donald Trump voluntarily dismissed a $10 billion lawsuit against the Internal Revenue Service on Monday [4].
The move coincides with the U.S. Department of Justice establishing a compensation fund for individuals who say they were targeted by political weaponization. This resolution settles a long-standing legal battle over the leak of Trump's tax records, and establishes a financial mechanism to address grievances from the previous administration.
According to court filings from May 18, 2026, the lawsuit was dropped in a federal court in Washington, D.C. [4]. The dismissal comes as the Justice Department unveiled a fund designed to compensate those who claim they were harmed by the Biden-era Justice Department's alleged weaponization of the IRS [5].
Reports on the exact size of the compensation fund vary. Reuters reported the fund is nearly $1.8 billion [1], while U.S. News & World Report cited a figure of $1.76 billion [3]. The Washington Post reported the fund at $1.7 billion [2].
The fund is intended for individuals who believe the federal government used tax audits or other IRS mechanisms for political purposes. By dismissing the $10 billion claim [4], Trump has cleared the way for the DOJ to administer these payments to a broader group of alleged victims.
The Justice Department said it created the fund to address these systemic concerns. The settlement allows the current administration to resolve the high-value litigation while implementing a policy of restitution for those claiming political persecution through the tax system.
“Trump voluntarily dismissed a $10 billion lawsuit against the Internal Revenue Service”
This settlement represents a strategic shift from individual litigation to a systemic government fund. By trading a massive personal lawsuit for a multi-billion dollar federal compensation program, the administration is institutionalizing the claim that the IRS was weaponized during the Biden era, potentially setting a precedent for how future political disputes involving federal agencies are settled financially.
