On January 29, 2026, President Donald Trump, alongside along with his sons Donald Jr. and Eric, and the Trump Group, filed a lawsuit within the U.S. District Court docket for the Southern District of Florida in opposition to the Inner Income Service (IRS) and the Treasury Division. The swimsuit seeks at the very least $10 billion in damages as a consequence of reputational hurt, monetary losses, and public embarrassment.
The swimsuit alleges that the companies failed to stop the unauthorized leak of their confidential tax returns by Charles Littlejohn between 2018 and 2020. Littlejohn, who pleaded responsible in 2023 and was sentenced to 5 years in jail, disclosed the knowledge to shops like The New York Occasions and ProPublica, revealing particulars akin to Trump’s minimal tax funds in a number of years.
Nonetheless, this unprecedented motion of a sitting president suing his personal govt department raises authorized and moral battle of curiosity questions. Can this lawsuit succeed? Can the lawsuit proceed pretty for each side?
First, the lawsuit may very well be dismissed earlier than it will get to trial. The statute of limitations permits taxpayers to sue for unauthorized disclosures however requires claims to be filed inside two years after the date of discovery. The Trump grievance argues that the clock started for President Trump in January 29, 2024 (precisely two years earlier than the lawsuit was filed), when the IRS formally notified him of the breach by way of letter. Nonetheless, contemplating that the leaked returns date back to September 2020, it’s debatable that he ought to have recognized about it then. Since Trump was the sitting president on the time, the IRS might have notified Trump as quickly because it knew his returns had been leaked.
Assuming Trump succeeds on the statute of limitations challenge, he should show precise damages enough to justify the $10 billion he’s demanding. The swimsuit alleges broad harms like tarnished enterprise reputations and unfavorable public standing, however quantifying these shall be tough. The leaking of the tax returns didn’t appear to have harm him financially. Additionally, his profitable the 2024 presidential election might undermine claims of diminished public standing. And assuming he can show monetary losses or tarnished enterprise reputations, the federal government might argue that any damages had been self-inflicted contemplating that Trump has made quite a few bombastic and generally offensive statements over time.
Lastly, the statute offers that an officer or worker of america have to be liable for the unauthorized disclosure. The federal government might argue that Littlejohn was a contractor employed by Booz Allen Hamilton, which might elevate questions on whether or not Littlejohn was a direct IRS worker.
As a result of Trump might doubtlessly management each side of the litigation, it will probably create a battle of curiosity state of affairs, particularly the place Trump can merely order the Treasury Division to concede the case and award Trump no matter quantity he needs. The commonly accepted technique to mitigate that is to have the Division of Justice appoint impartial counsel to signify the federal government. The decide assigned to the case can’t appoint a particular impartial counsel to signify the federal government.
However since Trump appears to worth loyalty to him greater than the rest, any particular counsel Lawyer Basic Pam Bondi appoints shall be scrutinized with nice skepticism. He may also be the butt of each speak present host’s opening monologue. Sure, that features Greg Gutfeld.
One possibility steered was to let the lawsuit proceed however have the decide schedule the trial date after Trump leaves workplace and reject questionable settlements provided whereas Trump is in workplace. If Trump’s successor in 2029 occurs to be somebody who labored carefully with him — akin to JD Vance or Marco Rubio — any settlement gives made throughout their tenure also needs to be permitted by the courtroom. The issue with this technique is that Rule 41(a)(ii) of the Federal Guidelines of Civil Process permits dismissal of a lawsuit with out courtroom approval if each events conform to the dismissal.
One other steered possibility was to have a 3rd celebration intervene within the litigation to make sure that the federal authorities’s pursuits are independently protected. Whereas the intervention guidelines are past the scope of this column, it must be recognized that the potential intervenor must have standing to sue. To have standing, the intervenor will need to have concrete, particularized, precise or imminent damage pretty traceable to a celebration’s conduct which might solely be remedied by a courtroom. A person is not going to have standing just because she or he is a taxpayer or as a result of they’re involved in regards to the potential battle of curiosity.
When Trump was requested in regards to the potential battle of curiosity, he said he’s contemplating giving a considerable portion of the lawsuit proceeds to charity. That raises quite a few questions, akin to whether or not Trump really will give the cash to charity, and to which of them. Additionally, whether it is supposedly not in regards to the cash, why is that this lawsuit essential, particularly when Trump can direct the IRS to enhance its safety protocols to make sure this doesn’t occur once more?
The Trump household’s lawsuit must be allowed to proceed. Whereas many individuals would discover the lawsuit preposterous, it isn’t frivolous. However President Trump’s place of being each the plaintiff and the defendant’s boss makes this lawsuit look sketchy as a result of battle of curiosity. It isn’t a slam dunk case as a result of President Trump has a statute of limitations challenge and the Trumps might not have suffered damages value $10 billion. Due to this, the events have to be adversarial to make sure that any decision — settlement or in any other case — is honest to the taxpayers. Accordingly, each side ought to conform to guidelines to make sure there is no such thing as a battle of curiosity, ideally by appointing a good impartial counsel to signify the federal government.
Steven Chung is a tax lawyer in Los Angeles, California. He helps folks with fundamental tax planning and resolve tax disputes. He’s additionally sympathetic to folks with massive scholar loans. He could be reached by way of electronic mail at [email protected]. Or you may join with him on Twitter (@stevenchung) and join with him on LinkedIn.
