US President Donald Trump dropped a lawsuit against the Internal Revenue Service (IRS) on Monday that was seeking $10 billion in damages for a leak of his tax returns.
In a filing with a federal district court in Florida, Trump, his two eldest sons Eric and Donald Jr. and the Trump Organization said they were withdrawing the action.
A former IRS contractor was convicted in 2023 of leaking the tax returns of Trump and other wealthy Americans to the media and received a five-year prison sentence.
Trump’s decision to withdraw the suit appeared to be linked to a move to create a $1.7 billion compensation fund for the Republican president’s political allies who were investigated under Democratic predecessor Joe Biden.
According to ABC News and other media outlets, Trump’s Department of Justice plans to create a so-called “Truth and Justice Commission” for individuals who believe they were unfairly pursued by the Biden administration.
This could include, for example, the hundreds of Trump supporters who were prosecuted for their involvement in the January 6, 2021 assault on the US Capitol, which sought to prevent congressional certification of Biden’s election victory.
Trump issued a mass pardon to the January 6 defendants on his first day in office last year.
The reported compensation plan for Trump’s political allies has prompted fierce criticism from Democratic lawmakers, with Representative Alexandria Ocasio-Cortez of New York calling it “outright corruption.”
Democratic Senator Chris Van Hollen, in a post on X, said “Trump is ‘dropping’ his bogus lawsuit against the IRS in exchange for a slush fund, courtesy of your tax dollars, that he can use to pay off his political allies.”
In their suit against the IRS, Trump and his sons claimed the tax-collecting agency “had a duty to safeguard and protect” their “confidential tax returns.”
Trump’s tax returns were the focus of much speculation during his first term in office after he broke with precedent and refused to release them as a candidate.
Since taking office for a second time, Trump has taken a number of punitive measures against perceived enemies, pushing for criminal cases against political opponents, purging government officials he deems disloyal, targeting law firms involved in past cases against him and pulling federal funding from universities.