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Trump’s slush fund is gone – but his IRS agreement is a new level of self-dealing | Mohamad Bazzi

Last week, Todd Blanche, the acting US attorney general, told Congress that he was abandoning plans to establish a $1.8bn fund to compensate Donald Trump’s political allies. The administration’s attempt to use taxpayer money to pay people who claimed to have been unfairly prosecuted by the government – possibly including those convicted of violence during the January 6 Capitol riot that Trump incited – was too much for Senate Republicans.

But Blanche, who served as Trump’s personal lawyer before joining his administration, made another announcement that got far less attention than scrapping Trump’s “anti-weaponization fund”: the Internal Revenue Service (IRS) will be barred from continuing audits into the president, his family and their “affiliates”. In other words, Trump secured something most Americans can only dream of: immunity from IRS audits of his past tax returns.

It’s bewildering to keep up with the potential conflicts that Trump has created in his second term, and all the ways he has used the presidency for personal profit. But this is a new level of self-dealing. Trump sued the US government in January for $10bn over the unauthorized release of his tax returns by a federal contractor, who worked for the IRS and was later prosecuted and sentenced to five years in prison during Joe Biden’s administration.

Trump was famously litigious long before he became president, but it was the first time a US president had sued the government he leads. Trump was effectively on both sides of the lawsuit – a fact pointed out by legal scholars, Democrats in Congress and the federal judge who oversaw the case.

The Trump-controlled justice department ultimately settled his lawsuit by creating the $1.8bn fund to compensate the president’s allies – and barring the IRS from auditing Trump’s past tax returns, and those of his family members and “related companies”. That immunity from ongoing IRS audits could be worth more than $100m to Trump, who was facing at least one tax investigation dating back to 2010. The deal is the equivalent of Trump forgiving himself for any past tax debt or penalties in his years-long battle with the IRS, an agency that is supposed to ensure compliance with tax laws without succumbing to political pressure.

The immunity agreement raises other potential conflicts, and wider questions about whether the Trump administration is violating laws intended to prevent political interference with the IRS. In the 1970s, Richard Nixon tried (and largely failed) to deploy the IRS against his opponents, asking the agency to snoop on tax returns and investigate targets from his “enemies list”. After the Watergate scandal and Nixon’s resignation, Congress passed laws that prohibit the president, vice-president and their aides from directing or interfering with IRS audits. In the 1990s, these laws were strengthened so that IRS officials could face prison time if they carry out, or terminate, an investigation of a particular taxpayer at the White House’s request.

A future justice department, led by a Democratic administration, could use these laws to investigate any IRS decision to end ongoing audits of Trump and his family. It’s also unclear if Blanche, as the acting attorney general, even has the authority to order the IRS, a separate agency that reports to the treasury department, to stop tax investigations that began years ago. The one-page document that confers tax immunity for Trump, his family members and related businesses was signed by Blanche, and quietly posted on the justice department’s website on 19 May, a day after many media outlets and members of Congress were focused on the boondoggle of Trump’s “anti-weaponization fund”.

Since Watergate, the IRS has made a point of not giving special treatment to the White House, and it requires a mandatory audit of all tax returns filed by a sitting president or vice-president. Blanche has said the immunity agreement applies to all of Trump’s previously filed returns, but not future ones. It’s unclear if the IRS will continue with reviews of the president’s tax returns from his first term.

The vague document signed by Blanche leaves other unanswered questions: who exactly is covered by an audit protection order that applies to Trump and “related or affiliated individuals” and their entities? The agreement applies to Trump, his children and the businesses they run – including the Trump Organization, the main family firm which has negotiated real estate deals worth billions of dollars, some of which involve companies and foreign governments that have dealings with the Trump administration. But does the agreement also cover the president’s extended family, such as his cousins, aunts or uncles?

And does the protection from past IRS audits extend to Jared Kushner, the president’s son-in-law and former senior adviser, who owns a Miami-based private equity firm that has secured billions of dollars in funding from three authoritarian Arab states and US allies: Saudi Arabia, Qatar and the United Arab Emirates? Over the past year, Kushner has emerged as Trump’s unofficial peace envoy, helping broker a ceasefire in Gaza and later playing a central role in negotiations between the US and Iran over its nuclear program. At the same time, Kushner approached investors, including governments in the Middle East, about raising $5bn in new financing for his firm, Affinity Partners.

Trump has a history of using aggressive strategies to avoid paying taxes. (“That makes me smart,” he boasted during a presidential debate with Hillary Clinton in 2016.) In 2022, the Trump Organization was convicted in a New York criminal court of tax fraud, conspiracy and falsifying business records. While Trump was not personally charged in that case, his longtime chief financial officer, Allen Weisselberg, pleaded guilty and the Trump family company was hit with the maximum fine of $1.6m.

While every other modern president has voluntarily released his tax returns, Trump has fought for years to keep his records hidden from the public. Trump and his aides often argue that he could not share them because of ongoing IRS audits. But there’s no law or policy that prevents a taxpayer from releasing his returns during an investigation or dispute with the IRS.

Trump was probably more concerned with revealing how little he had paid in tax over many years. In 2020, the New York Times published parts of Trump’s leaked tax returns, which showed that he paid only $750 in federal income taxes in 2016, when he first won the presidency, and another $750 in 2017, his first year in office. The Times found that in 10 of the previous 15 years, Trump paid no income taxes to the US government at all – mainly by reporting large losses from his business empire.

How can Trump, the first convicted felon ever elected president, get away with violating so many presidential practices set in the post-Watergate era and avoid paying a political price for perceived self-dealing?

Trump is emboldened by a Congress led by Republicans who fear his wrath, and a 2024 supreme court ruling that shields the president from criminal prosecution for official acts. While Republicans in Congress zealously investigated corruption allegations against Biden and his family, they have shown far less interest in examining the ways Trump has profited from the presidency. By some estimates, Trump has used his second term to enrich himself and his family by at least $1.4bn, mostly through cryptocurrency and real estate deals.

Republicans in the Senate finally showed some backbone in resisting Trump’s attempt to create his “anti-weaponization fund”. But so far, they have looked the other way as the president’s lawyers negotiated his deal for immunity from ongoing IRS audits, which could save him more than $100m. The message to Americans is that the rules, written or unwritten, don’t apply to Trump.