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Donald Trump is expected to abandon a series of lawsuits against the federal government in exchange for the creation of a $1.7 billion taxpayer-funded compensation program benefiting allies who claim they were targeted by the Biden administration, according to sources familiar with the negotiations.
The proposed settlement would establish a commission with broad authority to distribute approximately $1.7 billion to individuals and organizations alleging harm from what Trump and his supporters describe as the “weaponization” of the federal government.
Potential recipients could include many of the nearly 1,600 people charged in connection with the Jan. 6 Capitol attack, as well as entities associated with Trump himself, sources said.
The arrangement has not yet been finalized, and sources cautioned that specific terms could still change before any public announcement.
The settlement discussions center on Trump’s ongoing $10 billion lawsuit against the Internal Revenue Service stemming from the 2019 leak of his tax records to news organizations including The New York Times and ProPublica.
Trump has also pursued approximately $230 million in additional legal claims related to the 2022 FBI search of his Mar-a-Lago estate and investigations into Russian interference during his first presidency.
According to sources familiar with the negotiations, the proposed compensation fund — along with a public apology from the IRS — is expected to serve as the primary condition for Trump dropping those legal actions.
A spokesperson for Trump’s legal team accused the IRS of improperly allowing “a rogue, politically-motivated employee” to leak confidential tax information connected to Trump, his family and the Trump Organization.
The Department of Justice declined to comment. Representatives for the IRS and Treasury Department did not immediately respond to requests for comment.
Legal and ethical concerns
The proposed arrangement is expected to face significant legal scrutiny because it would involve Trump resolving lawsuits against agencies under his own administration while retaining substantial influence over the compensation process.
Sources said the money would likely come from the Treasury Department’s Judgment Fund, a permanent appropriation traditionally used to pay legal settlements and court judgments against the federal government.
Under the proposed structure, Trump would reportedly have authority to remove commission members without cause, while the commission itself would not be required to publicly disclose how recipients are selected or how funds are awarded.
Legal experts and some administration officials have reportedly raised ethical concerns about the unprecedented arrangement, particularly because the president would effectively oversee a process involving claims against his own government.
Last month, Kathleen Williams, the federal judge overseeing Trump’s IRS lawsuit, questioned whether the case could proceed given Trump’s position as president.
“President Trump’s own remarks about this matter acknowledge the unique dynamic of this litigation,” Williams wrote in a recent court order questioning whether the parties were “sufficiently adverse.”
The judge ordered Trump and the Justice Department to explain by next week why the case should continue.
Sources described the proposed compensation structure as a hybrid between a victim compensation fund and a truth-and-reconciliation-style commission.
The five-member panel would reportedly decide claims through majority vote, and both award decisions and recipient identities could remain confidential.
Any unused funds would revert to the federal government shortly before Trump leaves office, according to sources familiar with the talks.
The fund could benefit individuals who claim they were improperly targeted by Biden-era investigations, including Jan. 6 defendants pardoned by Trump earlier this year.
Trump has repeatedly defended many Jan. 6 participants, previously describing them as “patriots” who were treated unfairly.
Since Trump issued sweeping pardons tied to the Capitol riot cases, hundreds of former defendants have reportedly explored legal claims against the federal government.
Earlier this year, House Democrats introduced legislation aimed at preventing Jan. 6 defendants from receiving taxpayer-funded compensation.
The proposal emerges as the Trump administration continues aggressively investigating what it describes as politically motivated conduct during the Biden administration.
The Justice Department’s so-called “Weaponization Working Group” has spent the past year examining allegations of anti-conservative and anti-Christian bias within federal agencies, though former Biden officials have disputed those claims.
Supporters of the proposed fund argue it would provide accountability for individuals wrongfully targeted by federal investigations.
Critics, however, warn the arrangement could create an extraordinary precedent by allowing a sitting president to influence the distribution of taxpayer money tied to his own legal and political grievances.
The proposal also comes as Trump continues reshaping federal law enforcement agencies and consolidating influence over the Justice Department during his second term.
Sources said settlement negotiations are expected to conclude in the coming days ahead of a looming court deadline in Trump’s IRS lawsuit.
If finalized, the agreement would likely trigger immediate legal and political challenges over the legality and constitutionality of the compensation fund.
Congressional Democrats are also expected to intensify scrutiny of the arrangement, particularly regarding potential payouts tied to Jan. 6 defendants and Trump-affiliated organizations.
