The Trump administration is creating a $1.8 billion fund to compensate people who claim to have been “victims” of unfair prosecution, a condition of President Donald Trump settling his $10 billion lawsuit against the IRS, but a legal fight over the fund’s legality could still be looming—unless Trump is willing to pay taxes on the hefty fund himself.
President Donald Trump boards Air Force One on May 15 at Beijing Capital International Airport in Beijing.
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The Justice Department announced Monday it’s creating a $1.776 billion “anti-weaponization” fund for “victims of lawfare and weaponization,” which is expected to include those convicted for participating in the Jan. 6 riot, as Trump voluntarily dropped his lawsuit against the IRS in exchange for the fund being created.
It’s being funded through the DOJ’s Judgment Fund, which is what the federal government uses to pay legal claims and settlements.
Trump, his sons and the Trump Organization, also parties in the IRS lawsuit, will not receive any money themselves as part of the settlement, the DOJ said Monday, and reporting suggests Trump will not be able to request a payout himself from the $1.8 billion fund.
That could pose a legal issue: The Tax Law Center at New York University Law School noted the Judgment Fund is legally only able to pay people or entities that are direct parties in a lawsuit—which means the people who apply for payouts from the fund, who weren’t parties in the IRS lawsuit, wouldn’t actually be eligible to receive them.
One way around that, the Tax Law Center suggests, would be for the $1.8 billion to instead be treated as money Trump and the other parties won in the settlement and are now just giving away to other people.
If that’s the case, that $1.8 billion would count as income for Trump and his sons, however—which means they would be charged income tax, even if they don’t actually keep any of it.
The Justice Department has not yet responded to a request for comment on legal concerns around the use of the Judgment Fund and whether the president will be taxed on the $1.8 billion settlement. No lawsuits have yet been filed challenging the legality of the $1.8 billion fund—though such litigation is likely to come, as Democrats and ethics experts have expressed outrage about the settlement. Ethics watchdog Citizens for Responsibility and Ethics in Washington has also suggested the settlement could violate the Constitution’s Domestic Emoluments Clause, which bars presidents and other federal officials from profiting off their position, beyond their government salary.
It’s unclear. The DOJ’s announcement Monday about the “anti-weaponization” fund did not disclose whether or not the president is eligible to file a claim for a payout, though Trump has long claimed the Biden administration unfairly prosecuted him. ABC reported last week, before the settlement was formally announced, that the settlement would bar Trump from getting money from the fund, but would not prohibit entities connected to him from making claims. That means Trump could profit off the fund indirectly by using other businesses or people to request money.
Forbes estimates Trump’s net worth at $6.2 billion as of Monday afternoon, some $2.1 billion of which is in liquid assets that could be used to cover the taxes on the settlement.
Trump first sued the IRS in January, alleging the agency failed in its duty to keep his tax returns confidential after a government contractor leaked details of Trump’s taxes to news outlets. Talks of a potential settlement began even before the IRS could respond to the case, however, which raised concerns with the judge overseeing it. Judge Kathleen Mary Williams had asked Trump and the IRS to confirm whether they were actually on opposing sides of the lawsuit, which is necessary for litigation to be valid, as otherwise, parties could work together in the case. Trump ended up settling the lawsuit before Williams could rule on that issue, however, sparking widespread criticism the president was circumventing the courts by getting money out of litigation that was possibly never legal to begin with.
Trump Gets $1.8 Billion Payday With ‘Anti-Weaponization’ Fund As He Drops IRS Case (Forbes)
Updated Statement on Trump-IRS Lawsuit (The Tax Law Center at NYU Law)
Trump’s IRS Lawsuit Could Be Invalid—Here’s Why He Could Still Get $1.7 Billion Anyway (Forbes)
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