Democrats blast Trump's $10B lawsuit vs. IRS

Sen. Ron Wyden, D-Oregon, and Elizabeth Warren, D-Massachusetts, want to know whether the Justice Department plans to defend the Internal Revenue Service and the Treasury Department against President Trump's $10 billion lawsuit over the leak of his tax returns to The New York Times.

The two senators, who are both members of the Senate Finance Committee overseeing the IRS, sent a letter Tuesday to Treasury Secretary and acting IRS commissioner Scott Bessent and Attorney General Pam Bondi raising questions about Trump's unprecedented lawsuit against the Treasury and the IRS, the first time a sitting President has sued the federal government he oversees. They also questioned the timing of the lawsuit, coming just days after the Treasury announced it was canceling $21 million worth of contracts with Booz Allen Hamilton, which employed the contractor who leaked the tax returns of Trump to the Times for an expose of his taxes and of other billionaires to ProPublica for a series of articles called the The Secret IRS Files on the tax strategies used by ultra high net worth taxpayers. Charles Littlejohn pleaded guilty in October 2023 to stealing the tax returns and was sentenced in January 2024 to five years in prison, with his lawyers saying he acted out of a "deep moral belief" that Americans had a right to know the information and sharing it was the only way to change a tax system favoring the wealthy.

In their letter to Bessent and Bondi, Wyden and Warren raised concerns that the Treasury could be taking coordinated action by canceling contracts with Booz Allen Hamilton only days before Trump filed his suit in Miami. 

"Taken in isolation this action is perhaps unremarkable, but the timing raises concerns that it is far more than a coincidence that these contract cancellations and Trump's lawsuit occurred within days of each other," the senators wrote. "Congress must understand whether there was a coordinated effort to resurrect this years-old story in order to benefit Trump, and if so, how far the coordination went."

They pointed out that the leaks occurred during Trump's first administration, when his own officials oversaw the IRS and the Treasury.

"While the Internal Revenue Code permits a taxpayer to seek redress for unauthorized disclosures, Congress designed this provision to provide compensation for proven harm — not to confer $10 billion dollar windfalls to a President seeking to line his own pockets at taxpayer expense," the senators wrote. "The leaks occurred from May 2019 through September 2020, when President Trump was in office and his hand-picked nominees, Steven Mnuchin and Charles Rettig, controlled the Treasury and IRS respectively. Trump is in essence now suing the government for his own failures during his first term. This lawsuit is a shameless and transparent act of corruption that should make any American's head spin. We fear that instead of fighting this frivolous attempt by President Trump to profit off the failures of his own administration, cabinet officials intend not only to capitulate to Trump but coordinate with him in this brazen theft from the American people." 

They called the $10 billion demanded by Trump an "absurd sum." They also cited an Associated Press article that pointed out Trump's own former personal attorneys were now top officials at the Justice Department who would be deciding how much to pay to settle the case with his current attorneys who filed the lawsuit on his behalf.

"We have long been and always will be fierce advocates for taxpayer privacy, but these moves by the President and Treasury reek of bald corruption. To sum it up, during the President's first term, under the watch of his own Treasury Secretary and his own IRS Commissioner, a rogue actor engaged in theft of private tax information. Now, more than half a decade later, the President sues the government he leads for $10 billion, a lawsuit 'that could end with the president's appointees approving a federal payout to him,'" Wyden and Warren wrote, citing a Wall Street Journal article. "We fear that instead of fighting this frivolous attempt by President Trump to profit off the failures of his own administration, cabinet officials intend not only to capitulate to Trump, but coordinate with him in this brazen theft from the American people."

They asked a series of questions, including whether the Treasury Department and the IRS intend to recommend the DOJ challenge Trump, his family and his business's demands for the payment of damages, and whether the Treasury and/or the IRS intends to advise the DOJ to enter into a settlement agreement with President Trump, his family and business, and if so, what the estimated value of the settlement offer would be.