President Donald Trump is expected to drop his $10 billion lawsuit against the Internal Revenue Service in exchange for the creation of a $1.7 billion taxpayer-funded compensation fund for political allies, ABC News reported Thursday night.

The fund would be administered by a commission empowered to pay out claims from anyone alleging they were harmed by the Biden administration’s alleged “weaponization” of the legal system — including the nearly 1,600 individuals charged in connection with the January 6 Capitol riot, virtually all of whom Trump pardoned upon returning to office.

Trump filed the IRS suit after Charles Littlejohn, a former agency contractor, leaked his tax returns to the New York Times and other outlets in 2019 and 2020. The leaked returns showed Trump paid just $750 in federal income taxes in both 2016 and 2017. Littlejohn was sentenced in 2024 to the maximum five-year prison term after pleading guilty to unauthorized disclosure of tax returns. Trump’s sons Donald Jr. and Eric filed separate suits stemming from the same leaks.

The New York Times reported Tuesday that the Justice Department had been holding internal settlement discussions. According to ABC News, the $1.7 billion fund is now the central condition for Trump to withdraw his legal actions against the federal government. The arrangement is not yet final.

Under the expected terms, Trump himself would be barred from directly receiving payments, though entities associated with him would not be explicitly prohibited from filing additional claims.

(YWN World Headquarters – NYC)