Legal scholars say critics of President Donald Trump’s massive settlement with the Internal Revenue Service will encounter substantial barriers when attempting to contest its $1.776 billion compensation fund for those claiming government “weaponization” and its clause preventing tax audits of the president.
Democrats in Congress have criticized the Anti-Weaponization Fund as essentially a political slush fund designed to channel public money to Trump’s supporters, while oversight organizations have declared the tax protection agreement unlawful. Some Republicans have also voiced concerns, with Senate Majority Leader John Thune stating he was “not a big fan” of the arrangement.
A pair of law enforcement officers who protected the Capitol during the January 6, 2021 incident, when Trump supporters attempted to prevent Congress from confirming Democrat Joe Biden’s 2020 electoral win, have filed a lawsuit. These officers contend the fund will benefit and strengthen rioters who have intimidated them and issued death threats.
Legal analysts noted uncertainty about whether challengers can stop fund distributions or reverse Trump’s protection from past tax audits, particularly if the Republican-controlled Congress remains inactive.
The challenge is complicated because Trump withdrew his $10 billion IRS lawsuit before announcing the settlement, eliminating the court’s jurisdiction over the matter.
“There’s no longer a venue to challenge the legality of this settlement,” explained Danny Werfel, who served as IRS commissioner under the Biden administration.
The Justice Department revealed the fund Monday, following Trump’s voluntary dismissal of his lawsuit alleging IRS misconduct in leaking his tax documents during his initial presidency.
Trump additionally abandoned claims regarding government probes into his 2016 campaign’s Russian contacts and the FBI’s 2022 search of his Mar-a-Lago Florida residence for classified materials he kept after leaving office. The agreement also includes a government apology to Trump.
On Tuesday, the Justice Department quietly issued an addendum signed by acting Attorney General Todd Blanche, which “FOREVER BARRED and PRECLUDED” government prosecution or pursuit of outstanding tax matters against Trump, his relatives and his companies. Blanche previously worked as Trump’s personal attorney.
The $1.776 billion fund, seemingly referencing America’s founding year, will operate under Trump ally oversight.
The money will compensate individuals claiming harm from government “weaponization or lawfare.” Trump has alleged the Biden administration and other political adversaries inappropriately utilized law enforcement, intelligence and regulatory departments to target him and his supporters.
Funding will come from the Judgment Fund, established by Congress in 1956 for government legal claims.
Blanche informed senators Tuesday that precedent existed for the anti-weaponization fund, referencing a $680 million fund established in 2010 for Native American farmers during Democratic President Barack Obama’s term to settle prolonged litigation called the Keepseagle case.
While that settlement received federal court approval as fair and reasonable, Blanche said the IRS agreement won’t undergo judicial review. He also indicated January 6 defendants, already granted clemency by Trump, could receive payments.
Legal experts explained opponents will struggle establishing standing to sue, as proving harm may prove difficult.
The two officers who sued in Washington federal court argued they face injury because the fund would motivate January 6 defendants to continue threatening them and potentially commit violence.
“The increased risk of threats, harassment and violence our plaintiffs are suffering as a result confers standing,” stated Public Integrity Project CEO Brendan Ballou, who filed the suit.
Some specialists suggested the strongest challenge opportunity might arise later when claimants, including Trump critics, could argue they suffered harm through inadequate payouts.
Josh Gardner, an attorney who managed the Justice Department’s Keepseagle case, highlighted Hunter Biden, the former president’s son.
Hunter Biden faced tax and gun crime convictions during his father’s presidency through a case led by a Trump-appointed federal prosecutor later promoted to special counsel. President Biden pardoned his son seven weeks before Trump’s return to office.
“If Hunter Biden were to submit a claim and his claim were rejected, he would have standing to challenge not just his denial, but I think the entire structure of this settlement,” Gardner explained.
Should litigants establish standing, they could argue the IRS settlement breaks multiple laws, according to legal experts.
One concern involves whether the fund violates the Constitution’s Appropriations Clause, granting Congress spending authority, since lawmakers didn’t authorize it. Ninety-three Democratic legislators filed a legal brief raising this point after Trump dismissed his lawsuit but before the judge officially closed the case.
Another issue questions whether the fund might breach laws governing the Judgment Fund if payments go to people without pending or imminent federal claims.
“The real problem is, Congress has been remarkably loose in controlling these kinds of payments,” said Paul Figley, an emeritus law professor at American University. “It’s wrong, but not illegal.”
Questions also exist about whether Trump’s tax immunity provision violates laws protecting against political interference in taxpayer audits.
Werfel, the former IRS commissioner, noted that future administrations frequently reverse non-legislative actions from previous administrations.
Some experts said one or both congressional chambers, though not individual members, could challenge the fund. This appears unlikely currently, with Republicans controlling both the House and Senate.
“There’s a ferment of outrage that is justifiable against this deal, and that will bring off the sidelines many people who are hurt by it,” said Norm Eisen, co-founder of Democracy Defenders Action, a Democratic-leaning legal advocacy group representing the 93 lawmakers in the IRS case.
