U.S. government agrees to drop tax claims against Trump in broadening of IRS lawsuit settlement

Trump tax settlement: IRS drops disputed $100 million claims in lawsuit expansion

Muhammad Asghar | GlobalBeat

The U.S. government agreed to dismiss $100 million in disputed tax claims against Donald Trump as part of an expanded lawsuit settlement with the Internal Revenue Service.

The agreement covers tax years from 2004 through 2022, including disputed deductions tied to Trump’s Chicago condo development and conservation easement donations on his Mar-a-Lago estate.

The deal widens a prior small-dollar settlement between Trump and the Treasury to cover years when he paid tens of millions of taxes before and during his White House term, the Justice Department said in court filings. It ends a six-year audit battle that Trump allies had slammed as partisan harassment.

The IRS had argued Trump’s team inflated charitable conservation values to claim roughly $21 million of deductions on his Palm Beach property. Auditors also sought to recast losses from the Chicago condo project as nondeductible personal expenditures. The amount at stake grew to roughly $100 million with penalties and interest, according to Justice Department briefs.

Trump’s 2024 campaign welcomed the news. “This total vindication proves President Trump paid his taxes and the IRS witch-hunt was always bogus,” senior campaign aide Steven Cheung told reporters. He said Trump would explain particulars today.

Tax analysts say the settlement spares both sides a drawn-out trial and removes a liability cloud from the former president. “The government saved years of litigation risk, while Trump cuts an eight-figure exposure to zero,” said Jeremy Johnson, a tax controversy lawyer who reviewed the filing.

Neither side admitted fault. In a two-page stipulation the IRS “retires” all outstanding notices of deficiency for the 2004-2022 period, while the former president “agrees not to seek interest or legal fees.” The deal must be signed by a federal judge in Washington, D.C., but parties expect rapid approval.

The widening of the settlement follows months of closed-door talks. Government lawyers filed a motion on March 3, telling the court a “potential global accord” was near. Judge Ana Reyes ordered the parties to submit the final paperwork before summer recess.

Justice Department spokesman Brian Nettle stressed that the settlement “protects taxpayer dollars that would have been spent litigating complex appraisal questions into the 2030s.” Nettle added that IRS analysts decided Trump had a near-credible position on most items, making outright victory in court doubtful. Defense lawyer Sally Freeland echoed that, saying “the IRS wisely chose certainty over long-shot claims.”

Background

Trump faced at least 9 individual tax audits since 2011, according to House Oversight Committee memos. IRS rules say every president’s returns receive mandatory inspection, but audits of Trump began years earlier, drawing GOP complaints that even during his presidency the probes were intensified.

A 2020 New York Times investigation reported Trump paid no federal income taxes in 10 of 15 years, using large real-estate depreciation deductions and carryforwards. The 2017 tax law that Trump signed retained many of those real-estate benefits that developers rely upon.

What’s Next

In addition to a proposed Chicago real-estate appeal, Trump still faces a criminal case in New York over 2016 hush-money payments and a civil inquiry into asset valuations at his Manhattan properties. But the IRS settlement erases what had been his single largest personal liability, removing a concrete sum from the campaign attack playbook.

The deal is likely to embolden the former president’s legal team as it fights the remaining cases. “We enter those combat zones lighter,” one Trump lawyer said last night. Democratic lawmakers who vowed expanded oversight may now have to dig elsewhere in his business empire for new material.