The U.S. Department of Justice has announced the creation of a $1.776 billion “Anti-Weaponization Fund” as part of a sweeping settlement agreement that resolves President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service.
According to the Justice Department, the fund is intended to compensate individuals who claim they were unfairly targeted by federal agencies during the Biden administration. The announcement came shortly after attorneys representing Trump informed a federal court that the president was voluntarily dismissing his lawsuit against the IRS.
Following the filing, U.S. District Judge Kathleen Williams ordered the case closed, effectively ending court oversight of the dispute. In her ruling, Williams stated that she no longer had jurisdiction because the settlement agreement itself was never formally entered into the court record.
The judge noted that without a settlement on record, there was no legal basis for the court to review or enforce the agreement, leaving the parties free to resolve the matter privately.
Under the settlement terms, Trump agreed to drop not only his $10 billion lawsuit against the IRS but also two separate civil claims totaling $230 million. Those claims were related to investigations surrounding allegations of Russian election interference during his first term and the 2022 FBI search of his Mar-a-Lago estate.
The IRS lawsuit originated after a government contractor pleaded guilty in 2023 to stealing confidential tax information belonging to Trump and other wealthy Americans before leaking the records to media organizations in 2019 and 2020.
While Trump will not be eligible to receive money directly from the Anti-Weaponization Fund, the agreement has sparked intense political and legal debate due to the size of the fund and the authority behind its creation.
According to the Justice Department, the program will be overseen by a five-member commission appointed by the attorney general. However, the settlement also reportedly grants Trump the authority to remove commission members.
Funding for the initiative is expected to come from the federal Judgment Fund, a permanent appropriation traditionally used to pay court judgments and settlements involving the federal government.
The Department of Justice said the commission will provide quarterly reports to the attorney general detailing how much money has been awarded. The fund will also be subject to audits and oversight measures.
Officials say the program was modeled after a settlement reached during the Obama administration that provided approximately $760 million in compensation to Native American farmers who faced discrimination in federal agricultural lending programs.
Under the current framework, the Anti-Weaponization Fund will cease operations on December 15, 2028. Any remaining funds at that time would be returned to the federal government.
The settlement has generated strong opposition from lawmakers, particularly congressional Democrats, who argue that the arrangement exceeds executive authority and raises serious constitutional concerns.
A coalition of 93 House Democrats filed an amicus brief criticizing the settlement, describing it as unlawful and warning that it could create a mechanism for directing taxpayer money toward political allies and associates of the president.
The lawmakers argued that the lawsuit and resulting settlement amounted to a coordinated effort designed to achieve objectives that could not otherwise be authorized through normal legislative channels.
In their filing, the Democrats claimed the arrangement potentially violates the separation of powers, the Domestic Emoluments Clause, and statutory limitations governing federal civil claims.
Criticism has not been limited to Democrats. Some Republicans have also questioned the legality of the fund, with opponents characterizing it as a political slush fund created without congressional approval.
Representative Jamie Raskin, the ranking member of the House Judiciary Committee, argued that only Congress has the constitutional authority to appropriate federal funds and that lawmakers never approved the creation of the $1.776 billion program.
Even before dismissing the case, Judge Williams had expressed concerns about the unusual nature of the litigation. She questioned whether the parties involved were genuinely adversarial, given that Trump was suing agencies that ultimately fall under the executive branch he leads as president.
Last month, the judge ordered attorneys for both sides to explain why the case met the legal requirement of having genuinely opposing parties. However, that deadline was canceled once the case was formally dismissed.
The court had also appointed independent attorneys to examine ethical and legal questions surrounding the lawsuit. In a filing submitted last week, those attorneys raised concerns about the degree of influence the president could exercise over the government agencies named as defendants.
The independent review suggested that the circumstances surrounding the settlement raised questions about whether government officials were acting independently or under direct presidential influence.
As scrutiny intensifies, legal experts expect continued debate over the authority used to establish the fund, the constitutional issues raised by the settlement, and the broader implications for executive power and government accountability.