Democrats Criticize Potential Trump IRS Settlement

Congressional Democrats on Friday criticized a potential settlement in former President Donald Trump's lawsuit against the Internal Revenue Service (IRS), which could establish a $1.7 billion compensation fund. The criticism follows reports on Thursday that Trump might settle his $10 billion lawsuit against the IRS in exchange for this fund, which some Democrats have termed a "slush fund." Trump initiated the lawsuit in January 2026, alleging an improper leak of his 2019 tax returns.

Senator Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, stated that the potential settlement, if it involves a $1.7 billion taxpayer-funded compensation, would represent a highly corrupt act. The proposed settlement, which has not been finalized, could include a victim compensation fund and a commission authorized to issue monetary awards. The reported on Tuesday that the Justice Department was considering settling the suit.

The development precedes a May 20 deadline set by U.S. District Court Judge Kathleen Williams. Judge Williams had questioned whether the case, involving the sitting president suing a federal agency under his executive authority, met the constitutional requirement for adversarial parties in federal court. Attorneys for both Trump and the IRS had previously requested a 90-day pause in proceedings to explore a resolution.