Court filings have indicated that lawyers for President Donald Trump are seeking a resolution with the Department of Justice over a $10bn lawsuit he filed against the Internal Revenue Service (IRS).
But the trouble, critics say, is that such a settlement would leave Trump essentially negotiating with an executive branch under his control.
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Friday’s court filing, however, emphasises the efficiency of seeking a settlement.
In the document, Trump’s lawyers call for the case to be paused for 90 days to allow a resolution to be hammered out.
“This limited pause will neither prejudice the parties nor delay ultimate resolution,” the filing says. “Rather, the extension will promote judicial economy and allow the Parties to explore avenues that could narrow or resolve the issues efficiently.”
How did the case start?
The case stems from an incident that began in 2017, when a worker named Charles “Chaz” Littlejohn was re-hired as a contractor through the government consulting firm Booz Allen.
While working on IRS files, Littlejohn stole copies of Trump’s tax returns, which had been the source of prolonged public scrutiny.
Until Trump, every president since Richard Nixon had released their tax returns as a gesture of transparency. Trump, however, claimed he could not, citing ongoing audits.
The tax returns Littlejohn stole were ultimately released to the media, and in 2020, The New York Times released a series of articles that showed Trump paid no income taxes in 10 of the 15 preceding years.
Other years, he paid relatively small sums, like $750, because he reported more losses than gains. ProPublica also ran stories based on the leaked tax returns, highlighting inconsistencies and Trump’s low tax payments.
Privacy law protects taxpayer information from being released by the IRS without explicit permission. Littlejohn was sentenced to five years in prison in 2024.
But in late January of this year, Trump filed a lawsuit arguing that he, his businesses and his sons Eric and Donald Jr had suffered “significant and irreparable harm” from the leaks.
The defendants in the lawsuit were the IRS and its overseeing body, the Treasury Department, both of which are part of the executive branch.
“Defendants have caused Plaintiffs reputational and financial harm, public embarrassment, unfairly tarnished their business reputations, portrayed them in a false light, and negatively affected President Trump and the other Plaintiffs’ public standing,” the lawsuit reads.
Questions of ethics and legality
But experts have warned that the lawsuit contains flaws that would normally prompt the Justice Department, also under Trump’s control, to seek dismissal.
The lawsuit, for instance, arrives at its whopping $10bn sum by supposedly tallying up media references to Trump’s leaked tax returns.
However, experts say the formula for damages is calculated by the number of unauthorised disclosures by a government employee, not by media re-printings.
Then there is the question of Littlejohn’s employment status. He was an outside contractor, not a government employee.
Trump also has to contend with the two-year statute of limitations in the case. The lawsuit contends that “President Trump did not discover the numerous violations” of his tax returns until January 29, 2024.
But critics point out he had posted on social media about his tax information being “illegally obtained” as far back as 2020, when The New York Times published its series.
Opponents say the lawsuit should be dismissed or at least delayed until Trump is no longer president. Otherwise, they argue it represents a conflict of interest, with Trump fundamentally negotiating with his own administration for a payout.
Controlling ‘both sides of the litigation’
Trump himself has acknowledged that such a payment would “never look good”. But he has justified the sum by saying it would be donated to charity.
“Nobody would care because it’s going to go to numerous very good charities,” he said in February.
Even that, legal experts argue, could run afoul of the Emoluments Clause in the US Constitution, which prohibits the president from profiting off his position, apart from his salary.
Government watchdogs have attempted to stop a settlement from unfolding. On February 5, for instance, the group Democracy Forward filed an amicus brief arguing the court should act to prevent an abuse of power.
“This case is extraordinary because the President controls both sides of the litigation, which raises the prospect of collusive litigation tactics,” the brief explains.
“To treat this case like business as usual would threaten the integrity of the justice system and the important taxpayer and privacy protections at the heart of this case.”
But the $10bn IRS lawsuit is not the only case Trump is seeking to settle with his own government. In 2023 and 2024, Trump filed administrative complaints seeking compensation for federal investigations he considered to be unfair.
One complaint concerns an FBI investigation into alleged Russian interference in the 2016 election, and the other is about the FBI’s raid of Trump’s Mar-a-Lago estate after he refused a subpoena to return classified documents.
For those complaints, Trump is reportedly seeking additional damages to the tune of $230m.
