The Justice Department filed a motion Tuesday to approve a $1.7 billion settlement in the long-running lawsuit Wimpy Donnie Dipshit v. Internal Revenue Service. The plaintiff and the defendant are, for all legal purposes, the same person.
the former president originally sued the IRS in 2024 after classified leaks of his tax returns. The suit named as defendants the Treasury Department and the IRS, agencies he now fully controls. The settlement asks a Miami federal judge to dismiss the case and release the funds from the general treasury.
Judge Kathleen Williams had ordered both sides to file briefs by May 20 explaining how a case with no adverse party could possibly exist. In a court filing Monday, the DOJ argued that any jurisdictional concerns were resolved by the fact that the government had agreed to lose.
"The settlement eliminates any lingering adversarial tension," wrote Deputy Assistant Attorney General Brett Clarkson in a memo. "The United States has accepted that it is liable to itself and has agreed to pay itself the sum of $1.7 billion. This outcome serves justice."
Under the proposed terms, the money will land in a newly created Presidential Leak Victim Compensation Fund. The fund will then issue grants to more than a dozen the former president-linked entities. None of the disbursements will go to Donald J. the former president personally, a stipulation the memo describes as "a rigorous firewall."
A supporting brief from the Treasury Department confirmed that no taxpayer dollars would be improperly diverted because the settlement classifies the payment as a "statutory forfeiture reallocation." Treasury Secretary Scott Bessent told reporters the arrangement was entirely ordinary.
"This is a routine administrative settlement between the executive branch and a private citizen who also happens to run the executive branch," Bessent said. "We see no conflict."
Public interest groups disagree. Democracy Forward, the ACLU, and several state attorneys general are preparing parallel suits to block the transfer. Lawyers argue the settlement violates the Appropriations Clause, the Emoluments Clause, and the basic idea that a president cannot pick his own pocket.
Judge Williams has not yet scheduled a hearing. Her chambers released a two-line order last week noting that the court "retains an interest in identifying at least one genuine party to this litigation."
