Acting Attorney General Blanche seemingly confirmed today that the Trump administration is walking away from the $1.8 billion fund that it sought to establish in purportedly “settling” the President’s lawsuit against the IRS while still defending the deal’s attempt to end tax audits of the President, his family and other “affiliated individuals.” Even if the administration fully abandoned the fund, that action would not by itself resolve issues the settlement raises about the way the tax and legal system can be turned into a sitting president’s personal advantage.
Fully unwinding the settlement and holding its architects accountable requires congressional action with at least three core components:
(1) Block the unprecedented sweetheart deal that tries to preclude tax audits and any other potential claims the government may have against the President, his family, and his other affiliates. The initial signals from the administration are that it intends to pursue the Acting Attorney General’s order purporting to provide an extraordinarily broad release of any and all claims—including tax audits—the government had or could have against the President and his affiliates for conduct preceding the agreement. This could eliminate substantial tax liability for the President, including a long-running audit with potentially over $100 million in dispute. Congress should act to block the IRS from implementing this release, which the Acting Attorney General does not have authority to provide on his own, and add more guardrails to prevent any future administrations from abusing the IRS’s authority to resolve taxpayer disputes.
(2) Fully investigate potential criminal violations of the tax code provisions that forbid political interference and hold any lawbreakers accountable. Given the reporting about how the agreement was reached, the circumstances raise substantial questions whether these laws (see specific provisions below) were violated, as discussed below. Oversight bodies, including Congress, and future administrations should thoroughly investigate any potential violations and hold anyone who violated the laws accountable.
(3) Fully block the $1.8 billion fund before any payments are made and ensure that this kind of presidential self-dealing cannot be attempted again. Without further intervention by either Congress or the courts, the administration could simply change its mind and attempt to move forward with the fund if the current court injunction expires on June 12, 2026. Lawmakers should also enact additional guardrails to prevent this type of collusive arrangement from coming close to succeeding again under this or any future administration.
These core components address two aspects of the settlement that have drawn less attention than the $1.8 billion fund: the potential criminal violations of the tax code stemming from the negotiations, and the legislative options available to block the audit release. Both warrant closer examination.
As more details on the settlement negotiations come to light, serious questions remain about whether criminal statutes against political interference in tax audits and tax administration were violated.
Recent reporting has shed some light on how the President reached an agreement with his own administration, raising additional alarm that the tax laws making it a crime to interfere in audits and corruptly impede tax administration may have been violated. The known circumstances of the lawsuit raise substantial questions under two criminal provisions in particular: the bar on political interference with audits, and the broader prohibition on corruptly impeding tax administration. The facts should be thoroughly investigated, as should the extent to which they may give rise to potential crimes under the following statutory provisions:
• Criminal interference in audits. Section 7217 of the Internal Revenue Code makes it a crime for the President and other specified political officials to directly or indirectly request that the IRS terminate any ongoing audit or investigation of any particular taxpayer. Section 7217 carries a three-year statute of limitations. It was enacted by Congress in the 1990s on an overwhelmingly bipartisan basis following revelations from the Watergate tapes about President Nixon’s plans to use the IRS to punish his enemies and reward his allies. We previously noted that negotiations involving President Trump and White House officials to end audits of the President, his family, and his businesses risk violating this provision. Recent reporting suggests that the President discussed the audits and his advisers received drafts of the so-called settlement agreement—indicating that covered officials may have sought to influence the Acting Attorney General’s purported release.
• Criminally corrupt interference in tax administration. The tax code also makes it a crime more generally to interfere with the administration of internal revenue laws. Under section 7212, any person who corruptly tries to impede the due administration of the tax laws is guilty of a crime, with a six-year statute of limitations. The Supreme Court has held that section 7212 prohibits only specific interference in a particular investigation or audit. Thus, if a future Department of Justice sought to prosecute anyone under section 7212, it may need to prove that the defendants negotiated the audit release knowing that the IRS already had a specific audit or audits underway that they intended to end unlawfully. Reporting suggests that those involved in negotiating the release were aware of at least one pending audit. As previously reported, President Trump was under audit as of at least 2024 for double-claiming tax deductions, with likely more than $100 million still potentially in dispute. Reporting over the weekend suggests that Trump’s company had recently entered into settlement talks with the IRS regarding this specific audit—negotiations that would no longer be necessary under the broad release of claims signed by the Acting Attorney General despite his lack of authority to do so.
Further, to the extent there was a criminal conspiracy to commit either of these crimes, the statute of limitations to prosecute them would not begin to run until the last overt act of the conspiracy. Section 7212 applies more broadly than 7217, which is limited to government officials specified in the statute. It is therefore possible that the actions of individuals not covered by section 7217 – such as the Attorney General or the President’s personal lawyers – could violate section 7212. (We bracket for now further consideration of other relevant felony offenses or whether the President would be entitled to absolute immunity, presumptive (and thus rebuttable) immunity, or no immunity at all as defined by the Supreme Court in Trump v. United States.)
Many factual questions also remain about who, exactly, was involved in the settlement agreement and thus who might have violated federal statutes against political interference in the tax system. The settlement talks were reportedly “closely held” between only a few Department of Justice officials and Trump’s personal lawyers, with some White House officials feeling “blindsided” by the final agreement. But reporting also suggests that Department of Justice officials worried that a settlement that resulted in taxpayer funds going to the President directly could “expose them to a criminal investigation of conspiracy to defraud the government,” and that “[o]ne of the questions raised was whether giving the Trump family protection against I.R.S. scrutiny would run afoul of” section 7217. And though Acting Attorney General Blanche said that settlement negotiations included “a discussion” regarding “any pending audits,” he disclaimed taking part in those discussions, despite being the sole signatory of the audit release. One interpretation of the reporting to date is that administration officials are trying to distance themselves from accusations of unlawful political interference, underscoring why oversight bodies and the public should press for a full understanding of the facts.
Lawmakers should consider legislation to more explicitly prohibit the President and other officials from effectively closing their own tax audits while in office.
Prior to the latest reporting that the Trump administration plans to drop the $1.8 billion fund, lawmakers had been considering a range of legislative options that would block or otherwise limit the fund. Proposed measures could be voted on in the Senate as early as this week as amendments to the reconciliation bill to provide immigration enforcement funding that the GOP is seeking to advance.
Despite the administration’s reported decision to back away from the fund for now, legislative action remains urgent and worthwhile. What is needed are laws to block the IRS from implementing the Acting Attorney General’s order and add barriers to make it more difficult for President Trump and future presidents to attempt this kind of self-dealing. Lawmakers should continue to consider legislation that would not only permanently block the fund but also address the extraordinarily broad release of tax audits and other legal claims the government may have against President Trump and the “affiliated individuals.”
As we previously explained, the Attorney General does not have the authority to unilaterally drop tax audits of the President or anyone else as part of settling Trump’s lawsuit against the IRS. Nevertheless, legislative action could prevent the IRS from implementing the Attorney General’s order and prevent any president from future self-dealing to obtain audit relief for himself or his allies. While section 7217 makes it a crime for the President and other political officials to interfere in an existing audit, this section of the code alone would not prevent the IRS from entering into closing agreements with the President or his relatives. Additionally, while it may be possible for a future IRS to undo such a closing agreement with a showing of fraud, malfeasance, or misrepresentation of a material fact under other sections of the code (e.g., section 7121), legislation could explicitly and specifically address and prohibit self-dealing by preventing the IRS from entering into closing agreements with a sitting president and other high-ranking officials and affiliates. This is one among a variety of legislative and oversight options that lawmakers should consider with the goal of ensuring that the IRS does not now act on the Acting Attorney General’s unauthorized directive, or any like it in the future.
