President Donald Trump is expected to drop his $10 billion lawsuit against the Internal Revenue Service, according to an ABC News report citing sources familiar with the matter.
The proposed arrangement could include the creation of a $1.7 billion compensation fund for allies who claim they were targeted by the Biden administration and what Trump allies have described as the "weaponization" of the legal system.
According to ABC News, the compensation program could include individuals charged in connection with the Jan. 6 Capitol attack as well as entities associated with Trump himself.
The settlement terms are still being finalized and have not been officially announced, the report said.
The White House and IRS did not immediately respond to requests for comment.
Proposed Settlement Structure
The proposed settlement would also include a public apology from the IRS. In exchange, Trump would reportedly drop several legal claims tied to the 2019 leak of his tax returns, the FBI's 2022 Mar-a-Lago search and the Russia investigation during his first term.
The report said the compensation fund could draw money from the Treasury Department's Judgment Fund, which is typically used to pay government settlements and court judgments.
A spokesperson for Trump's legal team told ABC News that the IRS improperly allowed confidential tax information tied to Trump and the Trump Organization to be leaked and said Trump "continues to hold those who wrong America and Americans accountable."
The proposed arrangement has reportedly raised ethical concerns among some administration officials because Trump would retain authority to remove members overseeing the compensation process.
The report also said the identities of recipients and details surrounding payouts could remain private.
Political And Legal Backlash
The development follows earlier reports that the Justice Department was considering settling Trump's IRS lawsuit ahead of an upcoming court deadline.
Earlier this week, Sen. Elizabeth Warren (D-Mass.) criticized the potential settlement, calling it a "massive, unprecedented scandal" and accusing Trump of attempting to use taxpayer funds for personal benefit.
Trump originally filed the lawsuit in January alongside Donald Trump Jr., Eric Trump and the Trump Organization, seeking at least $10 billion over the leak of confidential tax information by former IRS contractor Charles Littlejohn.
