IRS Drops Tax Audits of Trump in Settlement Over Leaked Returns
The IRS agreed to end pending tax investigations of Trump and grant immunity from future audits as part of a $1.8 billion settlement over leaked tax returns.
The Internal Revenue Service has agreed to drop all pending tax investigations of President Donald Trump and grant him immunity from future audits as part of a settlement resolving his lawsuit over leaked tax returns.
Under the settlement announced Tuesday, the U.S. is "forever barred and precluded" from examining or prosecuting Trump, his sons and the Trump Organization's current tax filings, according to a one-page document. The immunity provision was added to an original settlement establishing a $1.8 billion compensation fund for individuals Trump claims were improperly investigated by the government.
The agreement stems from Trump's $10 billion lawsuit against the IRS over the 2018 leak of his tax returns to The New York Times. Trump sued the federal agency despite it being part of the executive branch he oversees as president. The case involved whether Trump used the same losses from his Chicago skyscraper to reduce taxes twice in future filings, which could have resulted in penalties exceeding $100 million.
Tax experts have criticized the immunity agreement as unprecedented in scope. Former IRS Commissioner Daniel Werfel called it an "unprecedented remedy," noting that Trump should be treated like any other taxpayer. Brandon DeBot, policy director at New York University's Tax Law Center, described the Justice Department's decision as "extraordinary" and warned it could undermine public confidence in the tax system's fairness.
Trump has maintained a history of aggressive tax strategies. Congressional investigations revealed he paid $750 in federal taxes in 2016 and 2017, and zero in 2020. In the 1990s, he claimed approximately $1 billion in losses from his Atlantic City casino bankruptcies, using techniques that Congress later banned as abusive tax loopholes.
The settlement only covers existing audits and does not provide immunity for future tax returns. Parts of the agreement face legal challenges, including from Capitol Police officers who oppose the compensation fund potentially benefiting January 6 participants.