Acting Attorney General Todd Blanche has formally rescinded a $1.8 billion fund intended to compensate President Donald Trump's political allies as part of negotiations to secure his confirmation. However, a broad audit immunity plan for the president, his sons, and the Trump Organization remains in place, with modified parameters aimed at appeasing Republican senators.
In a document submitted to senators on Sunday, Blanche stated that the audit immunity, established as part of a deal to resolve Trump's $10 billion lawsuit against the IRS, would not protect the president from examinations of future tax filings. Instead, the immunity "applies by its terms only retroactively" to claims that were open at the time the lawsuit was settled. These assurances are expected to clear the path for Blanche's confirmation to serve as attorney general.
Deal Sparks Bipartisan Outrage
The political accommodation leaves intact an unusual agreement concerning the president's taxes that has drawn bipartisan criticism and raised questions about the fairness of the tax system. Trump's audit immunity was a component of the settlement crafted to resolve his lawsuit against the IRS, which was filed earlier this year following the leak of his tax returns. The deal initially sparked significant backlash, largely due to the proposed $1.8 billion "anti-weaponization fund."
Under the initial terms of the audit deal, as outlined in a document signed by Blanche, the U.S. was to be "forever barred and precluded" from examining or prosecuting the current tax filings of Trump, his sons Eric Trump and Donald Jr., the Trump Organization, and other "related or affiliated" individuals. The revised document sent to Sens. John Cornyn and Thom Tillis narrows the scope of audit protection to specifically Trump, his sons, and the Trump Organization, and limits the time frame for investigations.
While the exact amount of back taxes Trump owes remains unclear, reports suggest the latest details of the deal could eliminate more than $100 million in back taxes. Legal experts and lawmakers have voiced concerns regarding the lawfulness of such protections. Dan Greenberg, a senior legal fellow at the Cato Institute, described the immunity deal as "the product of an illegal settlement."
Legal Challenges and Historical Context
U.S. District Judge Kathleen Williams previously ruled in July that Trump's lawsuit against the IRS was filed for an "improper purpose." While Williams did not void the agreement shielding Trump from tax scrutiny, she stated that the government could not claim in official proceedings that the agreement resulted from a legitimate legal process. Trump has appealed this ruling.
Some legal and tax experts contend that the immunity agreement may contravene an IRS statute that prohibits executive branch interference in taxpayer audits and investigations. This statute, enacted after the Watergate scandal when President Richard Nixon considered using the IRS against political opponents, aims to prevent the president or their employees from initiating or terminating audits or investigations of taxpayers. However, the statute permits the attorney general to take such actions, leaving open the possibility for Blanche to halt an audit against the president once confirmed, though the legality of such an action remains a separate question.
Nina Olson, founder of the Center for Taxpayer Rights, characterized the settlement as "the lowest point for the IRS since the 1970s."
Unresolved Concerns Over Funds
Concerns about future government payouts to Trump allies have not been entirely alleviated. Blanche has maintained, under oath and in writing to lawmakers, that the Trump administration is not pursuing the $1.8 billion fund. However, Trump himself has expressed a different stance, posting on his Truth Social platform that he would "push hard" for the fund if Blanche were not confirmed. "It will immediately be back on the table, and I will get it done," Trump wrote.
Brandon DeBot, Policy Director at the NYU Tax Law Center, questioned the finality of the fund's demise, stating that "it’s abundantly clear we need congressional action" to prevent its potential resurrection. Democrats have also called for legislation to permanently bar the fund, arguing that Blanche's order does not go far enough to prevent its revival after the acting attorney general's confirmation. Furthermore, the order does not preclude the administration from compensating Trump allies through an existing process for filing claims of damages if they believe they were wronged by the government. Greenberg suggested that Blanche's assurances might serve as a way for senators to appear to have driven a hard bargain, but questioned the substance of that bargain upon closer examination.