A legal settlement between President Donald Trump and the Justice Department over his federal tax records has been described by a former Department of Justice tax litigator as 'not worth the paper it's written on' the moment a new administration takes office. Stuart Bassin, a former Justice Department tax litigator, said the agreement, which halted all active IRS audits on Trump, his family and his businesses, cannot bind future federal or state authorities.
The settlement, which directed $1.8 billion (£1.45 billion) in taxpayer funds to a newly established anti-weaponisation fund, emerged after Trump agreed to drop a $10 billion (£8.1 billion) lawsuit against the Internal Revenue Service following the leak of his tax returns in 2019. Legal analysts are now questioning the long-term durability of the agreement, warning that its protections may prove temporary.
Why the $1.8 Billion Settlement Fails to Guarantee Immunity
Legal analysts have described the agreement as effectively granting what some have called 'tax immunity', covering the president, his family and his corporate businesses. The Wall Street Journal reported that the federal government abandoned multiple 'plausible defenses that it never asserted' as part of the deal.
The funds were directed to a newly established anti-weaponisation fund designed to compensate individuals who claim they faced unfair targeting by previous officials, a group that notably includes individuals involved in the 6 January Capitol riot.
Bassin highlighted the limits of what the federal government can actually guarantee. '[Acting Attorney General Todd] Blanche signed an agreement that is not worth the paper it's written on — except that government personnel at present will not challenge it,' he said. He added: 'Trump and Blanche can give away federal stuff. They can't give away the state stuff.'
Unresolved Legal Defences and the Threat of State Audits
Beyond the payout, the agreement mandated the termination of all active IRS audits concerning the Trump family and their businesses. Despite these federal concessions, legal scholars argue the framework contains structural vulnerabilities, most significantly that state-level tax jurisdictions operate independently of any federal agreement and are not bound by its terms.
State tax authorities in New York and other jurisdictions where Trump has held business interests retain full authority to conduct their own investigations, regardless of what the federal settlement stipulates.
How Gift Tax Returns Could Expose Future Finances
Professor Lawrence Zelenak, a tax law expert at Duke University, identified a further risk regarding unfiled gift tax returns. The IRS does not impose a strict filing deadline for such transfers, meaning future regulatory authorities could argue the settlement money technically passed through the president's control before reaching the fund.
Writing in a legal analysis, Zelenak said: 'A future IRS could contend that Trump effectively received the $1.8 billion (£1.45 billion) in the settlement agreement and directed it as gifts to fund recipients. Under that argument, which the settlement attempts to prevent, Trump could have taxable income and taxable gifts.'
🇺🇸 Trump turned a $10 billion lawsuit against the IRS into a $1.8 billion fund for his own supporters, all without Congressional approval.
— Mario Nawfal (@MarioNawfal) May 30, 2026
The deal also requires the IRS to drop all pending audits involving Trump, his family, and his businesses.
So Trump used a lawsuit against… https://t.co/hbr8ZENcNH pic.twitter.com/lPowOQP4ye
Statute of Limitations Exceptions Leave Future Investigations Possible
Once the current administration departs, an incoming administration could direct the agency to initiate fresh audits on recent filings. According to the Wall Street Journal, standard IRS procedure provides a three-year window to audit a return, which would keep returns from tax years 2025 and beyond open to examination.
However, the agency retains statutory authority to extend that window under specific conditions. The IRS has six years to act where there are substantial omissions of income, and an unlimited period to pursue tax fraud, exceptions that legal analysts say significantly narrow the settlement's protective scope.
This arrangement leaves the federal government and the Trump organisation navigating untested legal waters. While the current Justice Department remains compliant, the settlement's rigid constraints appear remarkably fragile.
Future political shifts could easily trigger the financial reckoning these protections were designed to prevent. When it comes down to it, whether this agreement actually holds up depends entirely on the continued cooperation of future authorities.
