WASHINGTON — President Donald Trump withdrew his lawsuit demanding at least $10 billion against the IRS, which could allow his private lawyers and the Justice Department to enter into a settlement agreement without feedback from the judge overseeing the case.

The dismissal is the latest legal turn in an extraordinary attempt by Trump to win billions of dollars in damages from a government agency he controls, and it appears to be part of his administration’s plan to effectively settle the case.

Administration officials have in recent days considered creating a roughly $1.7 billion fund to compensate political allies, but not Trump directly, who say they were wronged by the Biden administration. That fund is intended to resolve both Trump’s IRS lawsuit and his separate administrative claims against the Justice Department, according to three people familiar with it who described it to The New York Times last week.

The decision to dismiss the suit could also allow Trump and the Justice Department to avoid a potentially embarrassing ruling from Judge Kathleen M. Williams of the Southern District of Florida finding that Trump’s suit was invalid. Williams has considered dismissing Trump’s suit because he effectively controls both his personal lawyers bringing the complaint and the government lawyers who are supposed to respond to it.

She had ordered the Justice Department, which has yet to make an appearance or filing in the case, and Trump’s lawyers to brief her by Wednesday to explain whether they were actually in opposition — or were colluding to achieve a mutually agreeable outcome.

In their filing Monday, Trump’s lawyers said their dismissal meant that “no judicial analysis is appropriate” for the suit.

The substance of Trump’s suit stems from the leak of his tax returns to the Times in 2019. Trump, two of his sons and his family business argue that the IRS should have done more to prevent a former contractor from leaking tax information to the Times and ProPublica.

While federal law allows for people to sue the IRS when their tax information is leaked, legal experts saw clear flaws in Trump’s suit and said the Justice Department had defended other, similar cases brought by plaintiffs who were not the president.

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This article originally appeared in The New York Times.

By Andrew Duehren and Alan Feuer/Haiyun Jiang
c. 2026 The New York Times Company