Imagine a courtroom. A lawyer is negotiating a settlement on behalf of his client.
Then he walks across the room, sits down at the opposing counsel’s table, and negotiates with himself.
Lawyer: “My client deserves $1.8 billion for his trouble.”
Opposing lawyer (same guy): “Agreed. And while we’re at it, I’ll also stop the IRS from looking at any of his old tax returns. Forever.”
Lawyer: “Well, if you insist.”
That’s roughly the deal the U.S. government just made with President Donald Trump.
On Tuesday, the Justice Department posted a one-page document on its website. It declared the U.S. government was “forever barred and precluded” from pursuing any tax claims against the president, his sons Eric and Donald Jr., or the Trump Organization.
The kicker: It covers every return they’ve filed before Monday.
As tax exemptions on past filings go, that one’s tough to top.
The settlement closes out Trump’s $10 billion lawsuit against the IRS and Treasury (his own government) over the 2020 leak of his returns. Trump gets a formal government apology. He doesn’t get a check.
But the broader deal, announced Monday, also creates a $1.776 billion Anti-Weaponization Fund.
It’s meant to compensate people who say they were unfairly investigated or prosecuted for political reasons. Any of the president’s allies (or, technically, anyone at all) can apply to draw from it before it closes in December 2028.
One note on scope, because it matters. A U.S. Justice Department spokesperson later told reporters the deal applies “only with respect to existing audits, not future.” So whatever Trump files in 2027 or 2028 is, in theory, still fair game.
But everything filed up to this week is off-limits — forever. And everything reportedly includes a long-running audit that ProPublica and The New York Times in 2024 estimated could result in a tax bill north of $100 million.
That part should stop any taxpayer cold.
What 45 years of practice and common sense tell me
I’ve been a CPA since 1981. In 45 years of doing this work, and 30+ as a consumer reporter, I’ve never seen the IRS sign away its examination authority over a named taxpayer’s prior returns. Not once.
What makes this one stranger still: Since June 1977, the IRS’ own Internal Revenue Manual has required mandatory annual audits of the sitting president and vice president. The policy was adopted in the wake of Richard Nixon’s tax troubles.
It still sits in the manual today at IRM 4.8.4.
It’s never been written into federal law, though.
The House passed a bill to do exactly that in December 2022. The Senate let it die. So the mandatory presidential audit lives on as agency policy — not statute.
The settlement now permanently kills any such audit the IRS has open on Trump’s past returns. The same returns the manual says had to be examined in the first place.
The ‘dormant’ precedent
This isn’t entirely uncharted ground.
A 2022 House Ways and Means Committee investigation found that the IRS opened exactly one audit of Trump during his entire first term. The date? April 3, 2019 — the same day Chairman Richard Neal formally requested the returns from the IRS.
The committee described the mandatory audit program as “dormant, at best.” Tuesday’s document takes “dormant” and makes it permanent for everything filed up to this week.
Daniel Werfel, who ran the IRS during the Biden administration, told the Associated Press he was unaware of any case where the agency had agreed in advance to permanently stop examining a specific taxpayer’s previously filed returns.
His point landed cleanly: “Whether you are the president or Joe the Plumber, people expect the same tax rules and enforcement framework to apply to everybody.”
Now, for one taxpayer’s past returns, they don’t.
And the man who signed it? Trump’s former lawyer
Now consider who signed it.
The document barring the IRS from examining Trump’s past returns was signed by acting Attorney General Todd Blanche.
Before he ran the Justice Department, Blanche ran Trump’s criminal defense team. He was Trump’s lead lawyer in the New York hush-money trial — the one that ended in 34 felony convictions.
He also defended Trump in the federal classified documents and election obstruction cases that special counsel Jack Smith later abandoned after Trump won re-election.
In March 2025, within two weeks of Blanche becoming deputy attorney general, the Justice Department’s top ethics lawyer told him he’d need to recuse himself from cases involving Trump in his personal capacity. CNN reported the meeting last week.
Blanche signed the addendum anyway. Asked about it in Senate testimony the same day, he told lawmakers: “I am the Acting Attorney General. The fact that I used to be President Trump’s lawyer is just a fact.”
So here’s the structure. The taxpayer getting the permanent shield is the president. The lawyer signing that shield into existence is the president’s former personal attorney. The agency now barred from collecting is the agency that lawyer runs.
In any other practice, an arrangement like that doesn’t get past first-year ethics.
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What this means at ground level
Here’s what makes this so unusual in practice.
The IRS picks returns for audit using a battery of triggers — discriminant function scores, related-party matches, income that doesn’t reconcile with the information returns the agency already has on file. Anybody can come up.
When a return does, the taxpayer responds, hands over records, and either resolves the issue or appeals. That’s the framework every other American filer operates under.
Tuesday’s settlement pulls the Trumps out of that framework for everything they’ve already filed. The IRS can’t pursue any claims that “have been or could have been” asserted against them on returns predating May 18.
Future returns, the Justice Department says, remain subject to normal exam.
But there’s a fair question. Will the IRS — having just established that this taxpayer’s audits can be made to disappear — actually pursue those future audits aggressively? The Ways and Means findings on Trump’s first term suggest “dormant” is at least possible.
The legal and political questions are separate
A federal judge handling the case prior to this settlement had already raised an eyebrow before the dismissal. She questioned whether the parties were sufficiently adverse to satisfy Article III’s case-or-controversy requirement. That’s the legal piece. It’ll get sorted out, or it won’t.
The political question — whether a $1.8 billion taxpayer-funded payout to a president’s allies, distributed by a commission appointed by the president’s former personal attorney, is an appropriate use of public money — will get fought out elsewhere.
The tax question is simpler.
For everything Trump has filed up to this week, the United States now runs a two-tier audit system: one for the Trumps, and one for everyone reading this.
If you get an IRS notice in the mail next April on a return you filed last year, feel free to cite the new precedent. Let me know how it goes.
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