President Donald Trump’s lawyers asked a federal judge on Friday to give the Justice Department 90 extra days before it has to respond to his $10 billion lawsuit against the IRS.
The bigger picture here is that both sides are now discussing how to end the case and avoid a long court fight.
The lawsuit was filed against the IRS and the Treasury Department for failing to protect Trump’s tax returns, as well as those of his two oldest sons and the Trump Organization. It was filed in late January in the Miami federal court.
A former IRS contractor, Charles Littlejohn, leaked the records to The New York Times and ProPublica between 2018 and 2020.
The leaks led to stories showing Trump paid little or no federal income tax in several recent years. Littlejohn pleaded guilty and is serving a five-year prison sentence.
What Trump is demanding.
Trump’s team is pushing for massive statutory damages under a federal law that allows for $1,000 in damages per unauthorized disclosure.
Their argument inflates the count by treating each person who viewed the published articles as a separate violation. That math produced the eye-popping $10 billion figure, money that would ultimately be paid by taxpayers.
What makes the case stand out now is the setting, considering he is president again. The same administration he leads would have to defend the IRS or approve any settlement that sends public funds to him and his family.
Justice Department lawyers normally defend federal agencies, but here they report to the plaintiff. That built-in conflict has left officials searching for the right way forward.
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Instead of the government asking for more time, Trump’s lawyers filed the motion themselves. They said the Justice Department agreed to the delay because “the parties are engaging in discussions” aimed at settling the matter without drawn-out litigation.
As first reported by The New York Times, the court filings describe the talks as productive and focused on settlement.
Legal experts and former IRS officials have questioned the strength of the claim from the start. They point out that Littlejohn was a contractor, not a direct employee, and that the leaks happened years ago during Trump’s first term.
Some argue the two-year statute of limitations may have already run. Others call the per-reader damages theory a stretch that courts have never accepted at this scale.
Reactions
Democrats in Congress reacted sharply after the suit was filed. Sen. Ron Wyden and others introduced the Stop Presidential Embezzlement Act, a bill designed to block any payout to Trump from this or similar suits.
They argue no president should be able to direct his own appointees to cut him a check from the Treasury.
The Treasury Department recently canceled all contracts with Booz Allen Hamilton, the firm that employed Littlejohn.
That move came just days before Trump filed the suit. Other wealthy individuals whose data Littlejohn leaked have filed their own cases, but none approach $10 billion.
If the parties settle, Trump’s appointees at the Justice Department and Treasury would sign off on the terms.
Any payment would draw from taxpayer dollars at a moment when IRS funding and backlog issues remain hot topics during tax season.
It is clear that the 90-day extension gives everyone a break during these early stages of the case.
Lawyers on both sides are trying to determine whether they can reach an agreement or whether a different outcome is required, including a delay until Trump’s second term ends.
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Trump has long called the original leaks an attack on his privacy and a politically motivated move.
His suit alleges that the IRS’s security failures constitute costly negligence that harmed his reputation and business.
The discussions now underway will test how far that claim can go when the plaintiff holds the executive power.
