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Trump’s Power to Sue US Challenged in $10 Billion IRS Case (1)
President Donald Trump has been given a deadline of next week to respond to claims that his $10 billion lawsuit against the Internal Revenue Service poses a glaring conflict of interest, setting up an early flash point in the historic case.
President Donald Trump has been given a deadline of next week to respond to claims that his $10 billion lawsuit against the Internal Revenue Service poses a glaring conflict of interest, setting up an early flash point in the historic case.
The president’s lawyers can respond by Feb. 25 to a group of former government officials who say that the lawsuit seeking damages for the illegal leak of his tax information sets up Trump to unfairly control both sides of the case. They note that as president, he has authority over the IRS as well as the US Justice Department, which defends the government in lawsuits.
Neither Trump nor the Justice Department has offered a detailed explanation of how the apparent conflict of interest could be addressed. That means a filing by the president — or the DOJ — could be the first look at how the government will respond to claims that the case is potentially “collusive.”
Earlier this month, the former government officials asked a judge to consider appointing them — or some other independent third party — to participate in the case to provide balance, and to weigh putting the case on hold until Trump leaves office. They’re also seeking to strike Trump’s demand for $10 billion from the court record, saying it’s completely unjustified.
Since his return to office, Trump has pushed the limits of executive authority, from imposing tariffs and withholding federal funds to calling on the Justice Department to prosecute his perceived political enemies. Yet the IRS suit, which also named the US Treasury as a defendant, stands out in Trump’s use of presidential power in court — positioning himself on both sides of a legal fight with $10 billion in taxpayer money on the line.
‘Obvious’ Conflict
“Unlike many of his lawsuits, this one actually has a core of merit,” said Eric Freedman, a constitutional law professor at Hofstra University, referring to the IRS leak. Yet the conflict of interest is “obvious,” he said, because Trump could “just order the IRS to cut a check.”
When asked about the potential conflicts posed by the suit, the Justice Department issued a statement: “In any circumstance, all officials at the Department of Justice follow the guidance of career ethics officials.” The DOJ’s formal response to Trump’s lawsuit in court could come any time in the next two months.
The White House didn’t respond to requests for comment on the case, which Trump filed in a Florida federal court Jan. 29.
The president has also filed other suits against financial firms and media companies that altogether are seeking tens of billions of dollars in damages.
The IRS data leak at the center of the case was a significant blow to the agency. A former IRS contractor, Charles Littlejohn, pleaded guilty in 2023 to stealing tax records for thousands of wealthy Americans, including Trump, Ken Griffin, Elon Musk and Jeff Bezos, and leaking them to news organizations. Littlejohn was sentenced to five years in prison.
Using the leaked data, the New York Times published areport on Trump’s tax returns weeks before the 2020 presidential election, which he lost to Joe Biden. The paper reported Trump paid $750 in federal income taxes in 2016 and 2017, and no taxes in 10 of the previous 15 years, because of large losses that offset any profits.
“It’s an extraordinary case because of the scope of the leak by Littlejohn,” said Nina E. Olson, who served as the independent national taxpayer advocate at the IRS from 2001 to 2019. “It was a gross violation of taxpayer rights.”
Trump’s lawsuit cited the Privacy Act to justify his claim for $10 billion, demanding payment for each disclosure by third parties, including the Times, ProPublica and “many additional print, broadcast, cable, social media and other platforms.” He’s also seeking damages under a separate tax law.
‘Settlement With Myself’
The president has already acknowledged he’s in a unique position to win a payout because he is the head of the government. “I’m supposed to work out a settlement with myself,” Trump told reporters when asked about the case Jan. 31 on Air Force One, according to a video posted on the White House’s YouTube page. The president said he’d donate any money he gets to charity, though taxpayers would foot the bill.
In a Feb. 5 court filing, a group of former IRS officials and tax experts said Trump’s “collusive litigation threatens the integrity of the judicial process by risking the court’s entanglement in an illegitimate proceeding.”
The group, which includes ex-IRS Commissioner John Koskinen and former Assistant Attorney General for the Tax Division Kathryn Keneally, argued the suit should be put on hold until Trump leaves office in January 2029, to ensure fairness and avoid any question about the US failing to “zealously defend” the public interest.
Proving Harm
That’s not the only potential problem. They claim Trump filed his suit after a two-year statute of limitations for such cases and that he can’t prove he or his family suffered any quantifiable harm from the tax-records leak to justify his $10 billion damage claim.
“It didn’t do him any political damage,” said Frank Agostino, an attorney at the tax law firm Kostelanetz LLP who isn’t involved in the case. “His net worth has gone up, not down. Can he articulate any business deal that he lost as a result of the disclosure?”
In a separate filing, the nonprofit Citizens for Responsibility and Ethics in Washington argued that any payment of public funds to Trump through a “nakedly collusive award” would violate what’s known as the “emoluments clause” of the Constitution. The clause bars the president from receiving public funds beyond their salary and was intended to limit the risk of official corruption.
“President Trump is asking his own administration to award him a massive windfall payment of taxpayer funds to settle legally and factually dubious claims, contrary to how the government has defended similar suits,” CREW said in the Feb. 12 filing.
Griffin Settled
Under Biden, the Justice Department argued against a suit filed in 2022 by Griffin over private tax data leaked by Littlejohn to ProPublica, which used the information on stories about how wealthy people avoid taxes.
A judge ruled the billionaire Citadel founder had failed to sufficiently allege the damages element of his claim, but allowed Griffin to pursue his claim that the IRS unlawfully disclosed his tax information. Griffin settled the case two months later. The IRS apologized but paid no money. The agency also agreed to create more safeguards.
Under Trump, the Justice Department has continued to vigorously fight claims for damages over the IRS leak. The government is seeking dismissal of a class action suit filed by multiple companies impacted by the leak, saying in court filings last year that the US isn’t liable for the actions of a contractor.
That argument is now diametrically opposed to Trump’s arguments in his lawsuit, which says the IRS is liable for Littlejohn’s actions. Critics of Trump’s lawsuit say any change of position by the Justice Department now would be a clear sign of improper influence from the president.
Tax attorney Michael Burke of DarrowEverett LLP said the Justice Department won’t necessarily roll over and take Trump’s position right away. He said a judge would look at any settlement “very carefully” to see if it is fair.
“I certainly don’t see the IRS handing over exactly what he asked for 30 days into the case,” Burke said.
The case is Trump v. Internal Revenue Service, 26-cv-20609, US District Court, District of Southern Florida (Miami).
(Updates with details on Griffin ruling and attorney comment.)
To contact the reporters on this story:
Erik Larson in New York at elarson4@bloomberg.net;
David Voreacos in New York at dvoreacos@bloomberg.net
To contact the editors responsible for this story:
Ben Bain at bbain2@bloomberg.net
Steve Stroth, Anthony Aarons
© 2026 Bloomberg L.P. All rights reserved. Used with permission.
Judge: Bondi 'thumbed nose' at court after sealed case details shared
Two federal judges are raising concerns about Attorney General Pam Bondi’s use of social media to publicize a string of arrests tied to the Trump administration’s immigration enforcement surge in Minnesota.
In a recent order, U.S. Magistrate Judge Dulce Foster said Bondi’s posts on X – which included names and, in many cases, photographs of defendants shortly after their arrests – “violated a court order” sealing the cases, Politico reported Friday. The criticism came in connection with the prosecution of Nitzana Flores, who is accused of attacking two Border Patrol agents during a scuffle.
Foster said the government “failed to respect Ms. Flores’s dignity and privacy, exposed her to a risk of doxxing, and generally thumbed its nose at the notion that defendants are innocent until proven guilty.”
“The post also directly violated a court order sealing the case,” the judge wrote. “Notwithstanding, the government now seeks an accommodation from the Court that it blatantly failed to give Ms. Flores and her codefendants.
She added that the government’s request for court-order discretion was “eyebrow-raising, to say the least.”
In a separate Minneapolis case, Magistrate Judge Shannon Elkins directed prosecutors to address whether Bondi’s public posting of arrest photos violated another sealing order, according to the Politico report. The government initially missed a response deadline before receiving an extension that pushed the deadline until Monday, the report said.
Justice Department officials did not immediately respond to requests for comment.
Two federal judges are raising concerns about Attorney General Pam Bondi’s use of social media to publicize a string of arrests tied to the Trump administration’s immigration enforcement surge in Minnesota.
In a recent order, U.S. Magistrate Judge Dulce Foster said Bondi’s posts on X – which included names and, in many cases, photographs of defendants shortly after their arrests – “violated a court order” sealing the cases, Politico reported Friday. The criticism came in connection with the prosecution of Nitzana Flores, who is accused of attacking two Border Patrol agents during a scuffle.
Foster said the government “failed to respect Ms. Flores’s dignity and privacy, exposed her to a risk of doxxing, and generally thumbed its nose at the notion that defendants are innocent until proven guilty.”
“The post also directly violated a court order sealing the case,” the judge wrote. “Notwithstanding, the government now seeks an accommodation from the Court that it blatantly failed to give Ms. Flores and her codefendants.
She added that the government’s request for court-order discretion was “eyebrow-raising, to say the least.”
In a separate Minneapolis case, Magistrate Judge Shannon Elkins directed prosecutors to address whether Bondi’s public posting of arrest photos violated another sealing order, according to the Politico report. The government initially missed a response deadline before receiving an extension that pushed the deadline until Monday, the report said.
Justice Department officials did not immediately respond to requests for comment.
Judge slams brakes on Trump plan to lock up lawful refugees
A federal judge in Minnesota has blocked President Donald Trump's plan to arrest thousands of legal refugees for questioning and re-evaluation, calling the plan a "dystopian nightmare."
The order was first reported by Chris Geidner, who runs the Law Dork blog.
Also Read: Trump's reliance on this old lie shows his entire project is bankrupt
"In a pair of memos issued in December 2025 and February 2026 — which Law Dork has covered extensively — the Department of Homeland Security has purported to change that policy by rescinding and re-rescinding the 2010 U.S. Immigration and Customs Enforcement policy that most recently enunciated that policy for applying the relevant provision — 8 U.S.C. 1159 — of the Refugee Act of 1980," wrote Geidner. The policy, known as Operation PARRIS (Post-Admission Refugee Reverification and Integrity Strengthening), seeks to throw out the longstanding rule that legal refugees cannot be detained solely on the basis of their status.
The plaintiffs, noted the court order, identified one case of a refugee “arrested on January 11, 2026, without a warrant, transported to a detention center in Minnesota, then flown in shackles to Texas, where he was questioned about his refugee status.”
This change of policy is not supported by federal statute, wrote U.S. District Judge John Tunheim, an appointee of former President Bill Clinton.
“The Government’s startling theory — that the statute silently grants DHS the power to seize a refugee the moment the clock strikes midnight on the 366th day after admission — is wrong,“ concluded Tunheim. “This theory finds no support in the text, the history, or the purpose of § 1159(a)(1) and marks a sharp break from more than four decades of agency practice.”
Operation PARRIS is part of a massive change of policies designed to curtail the freedom of people born outside the United States to come and live there; the Trump administration has also ramped up mass deportation proceedings and huge surges of federal immigration agents to cities that protest him. A long string of courts have found the administration in violation of several laws.
A federal judge in Minnesota has blocked President Donald Trump's plan to arrest thousands of legal refugees for questioning and re-evaluation, calling the plan a "dystopian nightmare."
The order was first reported by Chris Geidner, who runs the Law Dork blog.
Also Read: Trump's reliance on this old lie shows his entire project is bankrupt
"In a pair of memos issued in December 2025 and February 2026 — which Law Dork has covered extensively — the Department of Homeland Security has purported to change that policy by rescinding and re-rescinding the 2010 U.S. Immigration and Customs Enforcement policy that most recently enunciated that policy for applying the relevant provision — 8 U.S.C. 1159 — of the Refugee Act of 1980," wrote Geidner. The policy, known as Operation PARRIS (Post-Admission Refugee Reverification and Integrity Strengthening), seeks to throw out the longstanding rule that legal refugees cannot be detained solely on the basis of their status.
The plaintiffs, noted the court order, identified one case of a refugee “arrested on January 11, 2026, without a warrant, transported to a detention center in Minnesota, then flown in shackles to Texas, where he was questioned about his refugee status.”
This change of policy is not supported by federal statute, wrote U.S. District Judge John Tunheim, an appointee of former President Bill Clinton.
“The Government’s startling theory — that the statute silently grants DHS the power to seize a refugee the moment the clock strikes midnight on the 366th day after admission — is wrong,“ concluded Tunheim. “This theory finds no support in the text, the history, or the purpose of § 1159(a)(1) and marks a sharp break from more than four decades of agency practice.”
Operation PARRIS is part of a massive change of policies designed to curtail the freedom of people born outside the United States to come and live there; the Trump administration has also ramped up mass deportation proceedings and huge surges of federal immigration agents to cities that protest him. A long string of courts have found the administration in violation of several laws.
