NEW YORK (OnPoint) — In a move that has ignited unprecedented debate about the integrity of America's tax system, the Internal Revenue Service has agreed to drop all pending probes into former President Donald Trump’s tax practices. This settlement resolves a $10 billion lawsuit Trump filed over the leak of his tax returns to The New York Times, granting him and his family immunity from future IRS audits. Experts warn this unprecedented arrangement sets a dangerous precedent by effectively exempting Trump and his business empire from the same tax rules that apply to every other American.
Under the terms of the agreement, the IRS is 'forever barred and precluded' from examining or prosecuting Trump, his sons, or the Trump Organization for any future tax filings. The settlement was quietly added to an original agreement that established a $1.8 billion fund to compensate individuals Trump claims were improperly investigated by the government. The deal has left tax professionals stunned, with many calling it a betrayal of the principle that the tax code should be applied equally.
'This is an unprecedented remedy,' said former IRS Commissioner Daniel Werfel, who argues that the president should be subject to the same tax laws as every other citizen. 'People expect the same tax rules and enforcement framework to apply to everybody.'
The resolution of this lawsuit, which Trump filed against the IRS, is particularly remarkable because it involves challenging the agency he leads. Trump sued the agency within his own administration, a rare move that has drawn criticism from legal experts. The IRS then granted him immunity, a decision that experts describe as a historic shift in power dynamics.
The tax immunity is especially significant given Trump's history of aggressive tax practices. According to a 2024 investigation by The New York Times and ProPublica, Trump could have owed more than $100 million in taxes and penalties if the IRS had found him guilty of double-dipping in tax deductions. Specifically, the report alleged that Trump used losses from his Chicago skyscraper to cut taxes twice in future filings—a practice known as 'double-dipping' that is illegal.
The investigation revealed Trump's tax strategy involved a complex web of corporate entities and real estate holdings, making it difficult for auditors to follow. In one instance, the report found that Trump claimed the same losses multiple times across different business entities, a maneuver that could have saved him hundreds of millions in taxes. If the IRS had pursued the matter, it could have resulted in a bill of up to $100 million, including penalties and interest.
Through various tax shelters and deductions, Trump paid just $750 in federal taxes in 2016 and 2017 and zero in 2020, according to a congressional investigation after his first term. His company includes hundreds of separate businesses, making his tax returns complex. In the late 1990s, after his Atlantic City casinos collapsed, Trump claimed about $1 billion in losses to cut his tax bill, even though lenders had forgiven hundreds of millions of dollars. The IRS later determined he had abused a tax loophole that Congress closed in 2006.
The settlement does not protect Trump from all future scrutiny, however. It only addresses existing audits and does not cover alleged tax abuses in future returns. Legal challenges are already underway. The compensation fund established by the settlement is being contested by Capitol Police officers who defended the U.S. Capitol on January 6, 2021, and some legal experts expect the tax immunity to face court challenges as well.
'This is the president trying to play every role in the system, acting as plaintiff, defendant, and his own judge and jury to extract extraordinary windfalls,' said Brandon DeBot, policy director at New York University's Tax Law Center. 'Giving broad immunity stretches beyond what the DOJ actually has authority to do.'
The case raises serious questions about the separation of powers and the independence of the IRS. While the agency is part of the executive branch, it is designed to enforce the law impartially. By granting immunity to a president it serves, the IRS has effectively undermined its own mission. The settlement has also sparked fears that other wealthy individuals may seek similar arrangements, further eroding trust in the tax system.
Historically, presidents have faced IRS audits. Richard Nixon, for example, was found to have claimed dubious deductions that led to big underpayments. While Nixon famously denied any wrongdoing, he later agreed to the IRS findings and paid hundreds of thousands of dollars in back taxes. The case against Trump, however, is different because the president is seeking to shield himself from future audits.
The settlement also has implications for the broader political climate. Trump has repeatedly denied any wrongdoing in his tax practices and has called the IRS investigation politically motivated, without providing proof. However, the fact that the IRS has now agreed to the settlement, under the terms of the lawsuit, suggests the government itself believes the case has no merit.
As the debate over the settlement intensifies, one thing is clear: the American public is watching closely. The fairness of the tax system depends on the government applying the same rules to everyone, including the most powerful. If Trump's immunity holds, it could set a troubling standard for how the U.S. government handles tax enforcement in the future—threatening the bedrock principle that the law treats all citizens equally.}
Under the terms of the agreement, the IRS is 'forever barred and precluded' from examining or prosecuting Trump, his sons, or the Trump Organization for any future tax filings. The settlement was quietly added to an original agreement that established a $1.8 billion fund to compensate individuals Trump claims were improperly investigated by the government. The deal has left tax professionals stunned, with many calling it a betrayal of the principle that the tax code should be applied equally.
'This is an unprecedented remedy,' said former IRS Commissioner Daniel Werfel, who argues that the president should be subject to the same tax laws as every other citizen. 'People expect the same tax rules and enforcement framework to apply to everybody.'
The resolution of this lawsuit, which Trump filed against the IRS, is particularly remarkable because it involves challenging the agency he leads. Trump sued the agency within his own administration, a rare move that has drawn criticism from legal experts. The IRS then granted him immunity, a decision that experts describe as a historic shift in power dynamics.
The tax immunity is especially significant given Trump's history of aggressive tax practices. According to a 2024 investigation by The New York Times and ProPublica, Trump could have owed more than $100 million in taxes and penalties if the IRS had found him guilty of double-dipping in tax deductions. Specifically, the report alleged that Trump used losses from his Chicago skyscraper to cut taxes twice in future filings—a practice known as 'double-dipping' that is illegal.
The investigation revealed Trump's tax strategy involved a complex web of corporate entities and real estate holdings, making it difficult for auditors to follow. In one instance, the report found that Trump claimed the same losses multiple times across different business entities, a maneuver that could have saved him hundreds of millions in taxes. If the IRS had pursued the matter, it could have resulted in a bill of up to $100 million, including penalties and interest.
Through various tax shelters and deductions, Trump paid just $750 in federal taxes in 2016 and 2017 and zero in 2020, according to a congressional investigation after his first term. His company includes hundreds of separate businesses, making his tax returns complex. In the late 1990s, after his Atlantic City casinos collapsed, Trump claimed about $1 billion in losses to cut his tax bill, even though lenders had forgiven hundreds of millions of dollars. The IRS later determined he had abused a tax loophole that Congress closed in 2006.
The settlement does not protect Trump from all future scrutiny, however. It only addresses existing audits and does not cover alleged tax abuses in future returns. Legal challenges are already underway. The compensation fund established by the settlement is being contested by Capitol Police officers who defended the U.S. Capitol on January 6, 2021, and some legal experts expect the tax immunity to face court challenges as well.
'This is the president trying to play every role in the system, acting as plaintiff, defendant, and his own judge and jury to extract extraordinary windfalls,' said Brandon DeBot, policy director at New York University's Tax Law Center. 'Giving broad immunity stretches beyond what the DOJ actually has authority to do.'
The case raises serious questions about the separation of powers and the independence of the IRS. While the agency is part of the executive branch, it is designed to enforce the law impartially. By granting immunity to a president it serves, the IRS has effectively undermined its own mission. The settlement has also sparked fears that other wealthy individuals may seek similar arrangements, further eroding trust in the tax system.
Historically, presidents have faced IRS audits. Richard Nixon, for example, was found to have claimed dubious deductions that led to big underpayments. While Nixon famously denied any wrongdoing, he later agreed to the IRS findings and paid hundreds of thousands of dollars in back taxes. The case against Trump, however, is different because the president is seeking to shield himself from future audits.
The settlement also has implications for the broader political climate. Trump has repeatedly denied any wrongdoing in his tax practices and has called the IRS investigation politically motivated, without providing proof. However, the fact that the IRS has now agreed to the settlement, under the terms of the lawsuit, suggests the government itself believes the case has no merit.
As the debate over the settlement intensifies, one thing is clear: the American public is watching closely. The fairness of the tax system depends on the government applying the same rules to everyone, including the most powerful. If Trump's immunity holds, it could set a troubling standard for how the U.S. government handles tax enforcement in the future—threatening the bedrock principle that the law treats all citizens equally.}
