KUALA LUMPUR – The US Justice Department is reportedly weighing a possible settlement in President Donald Trump’s US$10 billion (RM39.3 billion) lawsuit against the Internal Revenue Service (IRS), with discussions said to include a proposal that could end audits involving Trump, his family members and their businesses.
According to sources familiar with the matter cited by CNN, officials are internally discussing several possible settlement options, although no final decision has been made. It also remains unclear whether any agreement would involve financial compensation.
Among the proposals being considered is whether the IRS could drop ongoing audits involving Trump, members of his family and the family’s businesses, the sources said.
If a monetary settlement were reached, it could potentially lead to the Trump-led Justice Department paying compensation directly to the president himself — a scenario likely to trigger significant ethical concerns.
“The IRS wrongly allowed a rogue, politically motivated employee to leak private and confidential information about President Trump, his family and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally distributed to millions of people.
“President Trump continues to hold those who wrong America and Americans accountable,” a spokesman for Trump’s legal team told CNN.
Trump filed the lawsuit against the IRS and the Treasury Department in January 2026, accusing the agencies of failing to protect confidential tax information allegedly leaked during his first term in office.
The lawsuit, filed in a federal court in Florida, was brought by Trump personally alongside his sons, Donald Trump Jr. and Eric Trump, rather than in his official capacity as president.
The suit alleges that former IRS contractor Charles Littlejohn illegally accessed and leaked tax return information involving Trump and the Trump Organization to media outlets including The New York Times and ProPublica.
Littlejohn, who worked as a contractor at Booz Allen Hamilton, was later sentenced to five years in prison.
The settlement discussions come as the lawsuit itself faces legal scrutiny.
Last month, Florida District Judge Kathleen M. Williams questioned whether Trump could legally sue federal agencies that ultimately fall under his authority as president.
Williams said it remained unclear whether Trump and the agencies were “sufficiently adverse to each other” and ordered both sides to provide further clarification.
“Although President Trump avers that he is bringing this lawsuit in his personal capacity, he is the sitting president and his named adversaries are entities whose decisions are subject to his direction,” said Williams, an appointee of former US president Barack Obama.
The discussions also come amid a series of settlements involving lawsuits brought by Trump allies.
In April 2026, the Justice Department settled a lawsuit filed by former Trump campaign adviser Carter Page over government surveillance linked to his Russian contacts during the 2016 election period.
Earlier, in March 2026, the department also settled a lawsuit with former national security adviser Michael Flynn, awarding him more than US$1 million after he claimed he had been wrongfully prosecuted.
Flynn had sued the government for US$50 million, alleging that the FBI attempted to entrap him during the early days of the Trump administration. – May 14, 2026