In Tax Notes, Mary Katherine Browne reports as follows:

President Trump has dropped his lawsuit against the IRS in exchange for a $1.8 billion compensation fund established by the Justice Department for individuals who allege they were targeted by the Biden administration.

In a May 18 filing, Trump gave notice to the U.S. District Court for the Southern District of Florida that he and his fellow plaintiffs were voluntarily dismissing their lawsuit against the government with prejudice. The Justice Department simultaneously announced the creation of the Anti-Weaponization Fund as part of the settlement in Trump v. IRS, which was met with swift legal action from House Democrats seeking to block the president’s efforts.

In the Wall Street Journal, Richard Rubin and C. Ryan Barber report as follows:

The Treasury Department’s top lawyer resigned Monday as the government announced a controversial settlement with President Trump, according to people familiar with his departure.

Brian Morrissey joined the Trump administration last year as the president’s pick to be Treasury Department’s general counsel, after previously serving at the agency and at the Justice Department during Trump’s first term.

In the New York Times, Alan Feuer and Andrew Duehren report as follows:

The Justice Department on Tuesday expanded the agreement it reached this week with President Trump to resolve his extraordinary lawsuit against the Internal Revenue Service to include a provision that would bar the agency from pursuing tax claims against the president, his family or his businesses.

In a one-page document signed by acting Attorney General Todd Blanche and quietly posted on the department’s website, officials vowed not to pursue any matters, including those involving Mr. Trump’s tax returns, that are currently pending.

* * *

Justice Department officials have in part defended the creation of the “anti-weaponization” fund by pointing to the fact that Mr. Trump and his family members will not be paid by it.

But protection from audit could be quite remunerative for Mr. Trump. In 2024, The Times reported that a loss in an I.R.S. audit could cost Mr. Trump more than $100 million.

It is unclear if that examination has concluded or if Mr. Trump, his family members or affiliated entities are under other audits. I.R.S. procedures call for the mandatory audit of the president’s tax returns annually.

Also in the New York Times, Andrew Duehren reports as follows:

Lawyers at the Internal Revenue Service sought to contest President Trump’s lawsuit against the agency, recommending several potential defenses in a case that the Justice Department nevertheless decided to resolve by creating an extraordinary $1.8 billion fund that could soon be used to pay Mr. Trump’s political allies.

I.R.S. officials prepared a 25-page memorandum outlining what they saw as flaws in Mr. Trump’s suit and advising the Justice Department to move to dismiss it, according to two people familiar with the memo.

Previous TaxProf Blog Coverage:

• NY Times: Justice Dept. Officials Consider Settling Trump Suit Against I.R.S. (May 13, 2026)
• Amici Appointed in Trump v. IRS (May 6, 2026)
• NY Times: Justice Dept. Struggles to Respond to Trump’s Suit Against I.R.S.(Apr. 1, 2026)
• Trump IRS Lawsuit Puts Him on Both Sides of the Case (Feb. 3, 2026)