Trump’s Justice Department is exploring a deal that would end IRS audits of Trump and his family and potentially hand him taxpayer money

The Department of Justice is considering settling Donald Trump’s lawsuit against the IRS, which could send taxpayer money directly to the president. According to The New York Times, the DOJ is weighing the possibility of the IRS ending all audits of Trump, his family members, and his businesses.

Trump is suing the IRS and the Treasury Department for $10 billion, accusing them of failing to prevent a leak of his tax information during his first term. The lawsuit was filed in January, and the DOJ is now holding internal discussions about potentially settling the case. These talks come as a court deadline approaches, with the judge ordering Trump’s personal lawyers and the DOJ to submit briefs by May 20 explaining whether they are in conflict.

If a settlement is reached, one option being considered is for the IRS to end all audits of Trump and his family. This would likely save Trump millions of dollars in potential tax liabilities, as a previous audit found that he may have claimed improper tax breaks from his failed Chicago tower, which could result in a tax bill of over $100 million.

A settlement would let Trump escape an audit that found he claimed the same massive write-off twice

The IRS audit has been ongoing for several years, with the agency concluding that Trump effectively claimed the same massive write-off twice on his failed Chicago tower. Trump has already been ordered to pay over $500 million in a defamation case and an additional $454 million in a civil fraud case brought by the New York attorney general, making the audit another major financial threat.

The write-off in question involves a worthlessness deduction, which allows a taxpayer to benefit from an expected total loss on an investment before the final results are known. In Trump’s case, the IRS argued that he went too far and wrote off the same losses twice. 

The agency released a Technical Advice Memorandum in 2019 explaining that Trump’s 2010 merger violated a law meant to prevent double-dipping on tax-reducing losses. Meanwhile, Trump has also been making headlines on other fronts, with reports that he is seriously considering adding another country as the 51st US state.

Tax experts support the IRS’s position and believe Trump’s tax advisers pushed beyond what was defensible. Monte Jackel, a veteran of the IRS and major accounting firms, said that including debt in the worthlessness deduction was “just not right.” Jackel also said that the IRS’s difficulty keeping up with Trump’s maneuvers showed that this gray area of tax law was too easy to exploit.

Reporting by The New York Times has previously found that Trump often used aggressive accounting maneuvers to avoid paying taxes. Tax experts consulted for a previous article described Trump’s Chicago accounting maneuvers as “questionable and unlikely to withstand scrutiny.” In other news about the president’s unfiltered moments, Trump said something surprising at a White House dinner despite Melania’s warnings beforehand.

A settlement could set a precedent for wealthy individuals seeking tax benefits from the complex laws governing partnerships, which are notoriously difficult to navigate and under constant pressure from lawyers pushing boundaries for their clients. 

The IRS has further invited aggressive positions by rarely auditing partnership tax returns. In a statement, a spokesperson for Trump’s personal lawyers said, “President Trump continues to hold those who wrong America and Americans accountable.” Trump has also said he would donate “100 percent” of any $10 billion settlement money to charity.