The US government will permanently drop tax claims against President Donald Trump, according to a settlement document that is part of a deal to resolve Trump's $US10 billion ($A14 billion) lawsuit against the Internal Revenue Service over the leak of his tax returns.
The sweeping document signed by acting Attorney General Todd Blanche, said the US government could not audit Trump's tax returns filed before Monday or any matters "that were raised or could have been raised".
As part of the settlement agreement, the US is "forever barred and precluded" from examining or prosecuting Trump, his sons and the Trump organisation's current tax issues, according to a one-page document posted to the Justice Department's website on Tuesday.
The settlement, which marks an extraordinary use of executive power, goes beyond resolving litigation and effectively helps shield the president from further examination of his finances and legal conduct.
The move comes after the Trump administration announced on Monday the creation of a nearly $US1.8 billion ($A2.5 billion) fund to compensate allies of the Republican president who believe they have been unjustly investigated and prosecuted, an arrangement that Democrats and government watchdogs derided as "corrupt" and unconstitutional.
The "Anti-Weaponisation Fund" of $US1.776 billion ($A2.502 billion) will allow people who believe they were targeted for prosecution for political purposes, including by the Biden administration Justice Department, to apply for payouts, creating what Blanche called "a lawful process for victims of lawfare and weaponisation to be heard and seek redress".
Blanche, who was grilled by lawmakers on Capitol Hill on Tuesday, would not rule out the possibility that people who carried out violence during the January 6, 2021, riot at the US Capitol will be considered for payouts from the new fund.
Democratic lawmakers and ethics watchdogs slammed the creation of the fund, saying it was corrupt, opaque and had the potential to become a "slush fund" for the president and his allies.
Democrats Senate leader Chuck Schumer, labelled the deal "a get-out-of-jail-free card that (Trump) negotiated with himself".
"His corruption knows no end," Schumer said.
Trump negotiated a get out of jail free card with himself. pic.twitter.com/pcMn9GG2TT
— Chuck Schumer (@SenSchumer) May 19, 2026
Democrat Senator Ron Wyden said Democrats intend to "fight every element of this self-dealing settlement".
"Not only is this another heinously corrupt act by the most corrupt administration in history, it's clearly a violation of the law that prohibits interference by executive branch officials in IRS audits."
The fund was announced after Trump, his sons Eric Trump and Donald Trump Jr, and the Trump Organization agreed to drop their lawsuit against the IRS and the Treasury Department.
The lawsuit alleged that a leak of confidential tax records caused them reputational and financial harm and negatively affected their public standing, among other allegations.
According to a separate settlement agreement posted to the Justice Department website Monday, Trump will receive a formal apology from the US government but "will not receive any monetary payment or damages of any kind", from the settlement.
Trump told reporters at the White House on Monday that the fund is dedicated to "reimbursing people who were horribly treated".
with Reuters
