By: Paul Goldberg – Senior Correspondent | LGBT Politics News
WASHINGTON, D.C. — (May 14,2026) — A new report is raising serious questions in Washington after revelations that President Donald Trump may abandon a major legal battle against the Internal Revenue Service in exchange for a multibillion-dollar compensation framework benefiting political allies — including individuals tied to the January 6 Capitol riot.
According to reporting from ABC News, the proposed arrangement would center on the creation of a $1.7 billion taxpayer-funded pool designed to compensate individuals who claim they were unfairly targeted by the federal government.
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The potential deal stems from Trump’s $10 billion lawsuit against the IRS, filed after the unauthorized release of his tax return data from 2019 and 2020. The leak, attributed to former IRS contractor Charles Littlejohn — who later pleaded guilty and received a five-year sentence — reignited scrutiny over Trump’s financial disclosures, including reports that he paid $750 in federal income taxes in both 2016 and 2017.
Negotiations surrounding the lawsuit appear to be ongoing inside the Department of Justice, which is representing the IRS. According to multiple reports, internal discussions have explored settlement options that would resolve the case while introducing a broader claims-based compensation system.
ABC News reported the following details, citing sources familiar with the matter:
President Donald Trump is expected to drop his $10 billion lawsuit against the Internal Revenue Service in exchange for the creation of a $1.7 billion fund to compensate allies who claim they were wrongfully targeted by the Biden administration, sources familiar with the matter told ABC News.
The commission overseeing the compensation fund would have the total authority to hand out approximately $1.7 billion in taxpayer funds to settle claims brought by anyone who alleges they were harmed by the Biden administration’s “weaponization” of the legal system, including the nearly 1,600 individuals charged in connection with the Jan. 6 Capitol attack as well as potentially entities associated with President Trump himself.
If finalized, the proposed fund could extend to more than 1,500 individuals who were charged or convicted in connection with the January 6 attack — many of whom were pardoned by Trump shortly after returning to office in January 2025.
ABC News emphasized that the agreement is not yet final, noting that the compensation fund remains “the main condition” tied to Trump’s willingness to withdraw his legal claims.
At the same time, Trump is reportedly pursuing additional financial claims against the federal government, including a $230 million demand tied to the FBI’s investigation into his 2016 campaign and the execution of a search warrant at his Mar-a-Lago residence in 2022.
While Trump himself may be restricted from directly receiving funds under the proposed settlement terms, questions remain about whether affiliated entities could still pursue related compensation claims.
ABC News added:
“The settlement terms are expected to prohibit Trump from directly receiving payments related to those three legal claims; however, entities associated with Trump are not explicitly barred from filing additional claims, sources said.”
The potential structure of the agreement — particularly its use of taxpayer funds and the scope of eligible recipients — is expected to face intense political scrutiny if formally introduced.
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