Inside Trump’s $US10b tax case: How loyalists cut a secret deal to drop audits

US President Donald Trump had sued the US Internal Revenue Service (IRS) for $US10 billion ($13.9 billion), and a federal judge was pressing the Justice Department to explain how it could muster an independent defence of the agency against the man who ultimately controlled it.

Behind the scenes, the job of addressing the vexing problem of how to settle the lawsuit fell to a tight-knit group of lawyers, all of whom had allegiance to Trump.

On one side of the talks was a Justice Department run by Todd Blanche, the acting attorney-general who once served as Trump’s criminal defence lawyer.

On the other was the president’s private lawyers, among them Boris Epshteyn, who was a former client of Blanche’s. Epshteyn played a significant role in advancing the deal to end the suit, co-ordinating and holding discussions with all sides involved: Trump, the president’s personal lawyers, and Justice Department officials, according to people familiar with the matter.

The discussions were so closely held that some senior White House officials told others that they were blindsided, learning of them only once the agreement was nearly complete.

Senior fellow at the US Studies Centre and former political staffer

In the end, the lawyers’ solution did not give Trump what his lawsuit had demanded: simply moving funds from the Treasury Department into his own pocket. But the agreement that was reached was still a big victory for the president and his allies: it set up a $US1.8 billion fund to pay people deemed to have been harmed by so-called government weaponisation – possibly including hundreds of rioters charged with storming the Capitol on January 6, 2021 – and released Trump and his businesses from potentially costly IRS audits.

This article is based on interviews with more than a dozen people who discussed internal deliberations about the IRS suit on the condition of anonymity.

A spokesperson for the Justice Department said anyone who believed they were a victim of government weaponisation could apply for money from the fund, claiming that many people had been victimised by the Biden administration.

Much is still unknown about how the arrangement came about. But the plan drafted by a group of Trump allies posed conflicts of interest that are remarkable, even for an administration riddled with them.

As questions have mounted about the nature of the deal, the federal judge who oversaw the lawsuit, Kathleen Williams, took the extraordinary step on Friday (Washington time) of revisiting the case, asking whether the parties had deceived her.

When the details of the