DOJ's IRS Deal with Trump Is Self-Dealing and It Won't Hold
After more than three decades as a federal prosecutor, I have seen the Justice Department at its best and at its worst. I have watched it stand firm against pressure from powerful defendants and navigate politically charged investigations with uncommon integrity. What the department did last week is something else entirely. It is a breathtaking act of institutional self-betrayal that, upon examination, is both legally infirm and constitutionally suspect.
On May 18, 2026, the Justice Department entered into a settlement agreement in Trump v. Internal Revenue Service, a lawsuit President Trump filed against his own agency in January. The core deal: in exchange for Trump dropping a facially meritless $10 billion suit, the government agreed to create a $1.776 billion “Anti-Weaponization Fund” drawn from the Treasury’s Judgment Fund.
The following day, Acting Attorney General Todd Blanche signed a one-page addendum declaring the IRS and Treasury Department “FOREVER BARRED and PRECLUDED” from prosecuting or pursuing any tax claims against Trump, his sons, the Trump Organization, or affiliated family members, covering every return filed before the settlement date. Let us be precise about what this means: the chief law enforcement officer of the United States has purported to grant the President of the United States permanent immunity from tax liability.
This is not a legitimate settlement. It is a transaction between a plaintiff and his own subordinates, executed to avoid a court deadline, wrapped in legal form to give the appearance of legitimacy it does not possess.
A Lawsuit Without Merit
Any competent assessment of this settlement should start with the weakness of the underlying claim. Trump sued for $10 billion over the leak of his tax returns, attributing the leak to the IRS itself. But federal courts have long required a plaintiff to demonstrate that the government entity being sued is actually responsible for the wrongdoing alleged.
Here, Charles Littlejohn, a federal contractor, not a career IRS employee, has been convicted and is currently serving time for the leak. The legal theory underpinning a $10 billion demand against the IRS was, by any honest appraisal, extraordinarily thin. If the court had had a chance to weigh in, which the settlement preempted, it almost certainly would have agreed.
A Settlement Without Logic
The most basic principle of contract law is that you cannot negotiate with yourself. Yet that is precisely what occurred here.
President Trump, as the nation’s chief executive, exercises ultimate authority over the Justice Department. The Acting Attorney General who signed this agreement serves at the President’s pleasure and was confirmed after representing him in criminal proceedings. The IRS Commissioner is a Trump appointee. The Treasury Secretary answers to Trump. Every “defendant” in this litigation is, in the most meaningful institutional sense, a subordinate of the plaintiff.
As 93 House Democrats argued in an amicus brief filed before Judge Kathleen Williams in the Southern District of Florida, Trump was simultaneously operating on both sides of this dispute. The plaintiff sued an agency he controls, with his own lawyers signing the settlement on the government’s behalf. This is not a colorable arrangement. It is a structural conflict of interest that infected the proceeding from inception.
The judge herself seemed to sense this. Her dismissal order pointedly noted that the Department of Justice, which has an independent obligation to uphold “the public’s strong interest in knowing about the conduct of its Government,” submitted no documents to the court ensuring the settlement was appropriate, particularly given the unresolved question of whether any justiciable case or controversy had ever existed. That observation is not dicta; it is a flag planted on the record for the next court to find.
Indeed, former IRS officials and tax experts who filed their own amicus brief characterized the litigation as “collusive” and warned that it threatened the integrity of the judicial process by risking the court’s entanglement in an illegitimate proceeding. When experienced practitioners use the word “collusive” to describe a government settlement, the ordinary citizen should take notice.
Constitutional Infirmities Abound
Even setting aside the self-dealing problem, the settlement faces at least three serious constitutional vulnerabilities.
The Domestic Emoluments Clause. Article II, Section 1 of the Constitution prohibits the President from receiving “any other Emolument from the United States” beyond his fixed compensation. The Anti-Weaponization Fund, while nominally structured to benefit third parties, was created as the direct quid pro quo for the President dropping his lawsuit. The President retains the power to remove commission members overseeing the fund without cause — meaning he exercises quasi-direct control over $1.776 billion in federal money disbursed pursuant to an agreement he initiated. Citizens for Responsibility and Ethics in Washington has argued persuasively that this arrangement constitutes a “nakedly collusive award” in violation of the Emoluments Clause.
The Fourteenth Amendment. Section 3 of the Fourteenth Amendment bars the use of federal resources to reward rebellion or insurrection against the United States. Acting Attorney General Blanche, when pressed before a Senate appropriations subcommittee, declined to rule out payments from the fund to individuals convicted of assaulting police officers during the January 6 Capitol attack to overturn the results of the 2020 election. If the fund is used in this manner — and its broad, politically skewed eligibility criteria suggest it may be — that disbursement is constitutionally infirm on its face.
The Appropriations Clause. Congress has not authorized the creation of a $1.776 billion discretionary fund to adjudicate “weaponization” claims and issue apologies and monetary relief to political allies of the executive branch. The Judgment Fund from which this money is drawn was created by Congress to satisfy valid legal judgments and settlements against the government — not to serve as a presidential slush fund. As Representative Jamie Raskin observed, Congress never voted to create a fund structured this way. Redirecting appropriated money to this novel purpose, controlled by a commission the President can reorganize at will, raises a serious Appropriations Clause problem.
Future AGs Should Ignore It
Assuming the settlement isn’t overturned or withdrawn, no future administration is bound by it, and any competent successor Attorney General would be wise to set it aside.
Federal settlements, like contracts, are binding only where consideration is legitimate, the agreement is authorized by law, and no structural defect vitiates consent. Here, all three conditions fail.
First, the “consideration” Trump provided, dropping a lawsuit that legal experts described as weak to meritless, is not the arm’s-length exchange that validates a settlement. Dismissing a case with negligible chance of success in exchange for permanent tax immunity and $1.776 billion in federal money is not a bargain; it is a windfall extracted from a captive counterpart.
Second, the Acting Attorney General had no authority to permanently bind future administrations’ exercise of the IRS’s statutory audit and enforcement functions. The Internal Revenue Code vests tax enforcement authority in the Commissioner and, ultimately, in the Secretary of the Treasury — subject to congressional oversight. A settlement agreement, however broadly worded, cannot permanently curtail a statutory mandate. The Judgment Fund was not created to purchase immunity from the tax laws. The Justice Department cannot by contract do what only Congress can do by statute: strip the IRS of its enforcement authority as to a specific taxpayer.
Third, the structural self-dealing that infected this agreement means it was never a genuine adversarial settlement in the first instance. Courts regularly decline to enforce agreements where one party exercised undue influence over the other, or where the nominal “opposing” parties were effectively the same entity. Here, the President of the United States extracted a consent decree from his own subordinates. That is not the kind of agreement that carries forward-binding force on successors who were not party to the transaction and were not in a position to contest it.
A future Attorney General, acting on behalf of a Justice Department that takes its institutional obligations seriously, or future IRS Commissioner, would be on sound ground to repudiate the tax immunity provisions as unauthorized. Further, although the DOJ press release says the fund will stop processing claims by the end of this administration (December 2028) a future Attorney General would also be justified in clawing back funds already distributed, seeking congressional guidance on the Anti-Weaponization Fund’s continued operation, and to refer the constitutional questions to appropriate oversight bodies.
I do not write this to relitigate elections or to take sides in the partisan wars that have consumed Washington. I write it because I spent 30 years watching prosecutors and agents work within a set of rules that applied equally to everyone, rules that we enforced against powerful people at considerable professional and personal risk. Those rules are crumbling under this administration.
The Justice Department has an institutional memory longer than any administration. Its career professionals understand what the law requires. They know that permanent tax immunity obtained through a sham settlement with one’s own subordinates is not the kind of agreement that can withstand scrutiny under the Constitution, the Internal Revenue Code, or the most basic principles of administrative and contract law.
History will record this episode as one of the most audacious acts of self-dealing ever attempted by a sitting president. And it will record, one hopes, that the legal system possessed the tools to respond — because it does.
Perry Carbone served as a federal prosecutor for over 30 years, specializing in tax fraud and financial crimes. He served as the Chief of the White Plains and Criminal Divisions in the U.S. Attorney’s Office for the Southern District of New York. He currently serves as an adjunct professor at the Elisabeth Haub School of Law at Pace University, where he teaches white collar criminal law and criminal procedure.
The views expressed are the author’s own.
