Leaked IRS Memo Undermines Legal Basis for Trump's $1.8 Billion Slush Fund

Internal IRS lawyers identified multiple fatal flaws in Trump's $10 billion lawsuit—but the Justice Department handed him his nearly $1.8 billion slush fund regardless.

Attorneys at the Internal Revenue Service tried to persuade the Justice Department to seek dismissal of President Trump's $10 billion lawsuit against the agency, identifying several major vulnerabilities in the case that could have formed the basis of a strong defense. Rather than fight the suit, however, the DOJ opted to settle, granting the president roughly $1.8 billion through what has been branded an "Anti-Weaponization Fund"—effectively a pool of money available to reward Trump's allies and associates.

The IRS attorneys laid out their reasoning in a 25-page memorandum delivered to senior Treasury officials last month. Whether that document ever reached the Justice Department remains uncertain. Among its central arguments: Trump had waited too long to sue. Under federal law, anyone bringing a claim against the IRS over the improper disclosure of tax records has a two-year window from the date of the violation to file. Although Trump asserted that he was unaware of the leak of his tax information until January 2024, the memo points out that Alina Habba, one of his personal attorneys, attended the October 2023 trial of Charles Littlejohn, the IRS contractor convicted of leaking the records. Trump waited until January 2026—well past the two-year deadline—to file suit.

The memo also flagged a separate problem for Trump's case: the IRS may not bear legal responsibility for Littlejohn's conduct at all, given that he worked as a contractor through Booz Allen with access to IRS systems rather than as an agency employee. Whether or not these defenses would ultimately have prevailed in court, the outcome makes one thing plain—the Justice Department, now run by one of Trump's former personal lawyers, had no intention in raising them.