WASHINGTON — It would seem a surefire path to a payout.
A sitting president files suit demanding $10 billion in damages from a federal government he oversees, alleging he's been wronged in his personal capacity. That scenario would appear to give him final say on whether he walks away with a settlement and just how big it should be.
As President Donald Trump describes it, any taxpayer money that he gets from the suit that he, his two oldest sons and the Trump Organization filed last month against the IRS and the Treasury Department would go to worthy causes.
“And any money that I win, I’ll give it to charity, 100% to charities, charities that will be approved by government or whatever,” the president said Wednesday in an interview with “NBC Nightly News” anchor Tom Llamas.
If things get to that point.
Any number of developments in and out of the courtroom could sidetrack a settlement arising from Trump’s complaint, legal experts, lawmakers and ethics specialists told NBC News.
Sen. Ron Wyden, D-Ore., plans to introduce legislation next week to prohibit Trump from receiving any payout from the lawsuit, according to spokesperson Ryan Carey. The bill would propose a 100% tax on any litigation proceeds and settlement in the case, Carey said in an interview.
On Thursday, the watchdog groups Common Cause and the Project on Government Oversight, along with four former federal officials, submitted a 23-page friend of the court brief asking the court to consider delaying the case until Trump leaves office in January 2029, among other requests.
The brief contends that "the conflicts of interest make it uncertain whether the Department of Justice will zealously defend the public [treasury] in the same way that it has against other plaintiffs claiming damages for related events."
The case has its origins in Trump's first term. A former IRS contractor, Charles Littlejohn, pleaded guilty more than two years ago to stealing Trump's tax records and thousands of others in 2019 and 2020 before leaking them to news outlets. He is serving a five-year prison term.
“What’s the true harm that he [Trump] is still experiencing that requires this amount of taxpayer money at this juncture?” said Lisa Gilbert, co-president of Public Citizen.
The White House referred questions to Trump's private attorneys. A spokesman for his outside legal team wrote in an email: “The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people. President Trump continues to hold those who wrong America and Americans accountable.”
Over the years, Trump has cast himself as a careful steward of taxpayer money. He is using private donations to underwrite the massive White House ballroom he is building where the East Wing once stood.
Here, his suit demands a sum of money that exceeds 80% of the IRS’ budget last year.
The Trump complaint holds that the damages he endured from the leak were “irreparable.”
The agencies “had a duty to safeguard and protect plaintiffs’ confidential tax returns and related tax return information from such unauthorized inspection and public disclosure,” the suit says.
Critics say Trump's gambit should fail. Sen. Adam Schiff, D-Calif., said he is exploring “all options" to keep Trump from collecting. Congress could block funding for agencies that agree to a payout, or summon administration officials to answer questions about how the public’s interest is protected in any deal that’s reached, he said.
That won’t be easy; Schiff concedes: Republicans would need to go along.
"You have to give him a perverse kind of credit for the sheer audacity of the scam," Schiff said in an interview. "It’s just in-your-face."
In interviews, some Republican lawmakers have voiced misgivings about a suit that, for practical purposes, makes Trump plaintiff and defendant combined.
“If they succeed at that, that’s $10 billion coming from the pockets of the U.S. taxpayers,” Sen. Thom Tillis, R-N.C., who has been critical of Trump this term, told NBC News. “Maybe it’s a strategic move for damages, something short of that, which is OK, but you know, it just seems we’re talking about the president of the United States suing one of the agencies for which the president is responsible. So, it’s just weird.”
Another Republican senator, speaking on condition of anonymity to talk freely, said: “If I’m Pam Bondi, there’s no way I’m going to settle that lawsuit. There’s no way you can explain it.”
Bondi, the attorney general, was nominated by Trump and serves at his pleasure. Contesting a lawsuit that's important to the boss could jeopardize her position. In his last term, Trump had a falling out with then-Attorney General Jeff Sessions and wound up firing him.
Bondi’s office did not comment on Trump’s suit, nor did the Treasury Department or the IRS.
Two Democratic senators, Wyden and Elizabeth Warren of Massachusetts, sent a letter to Bondi and Treasury Secretary Scott Bessent on Tuesday asking if the agencies intend to recommend challenging the Trump suit’s demand for damages. They've not yet gotten a response, Wyden's office said.
A judge will have discretion in handling the issue and stands as a potential roadblock to a settlement that leaves taxpayers on the hook.
Presiding over the case is Kathleen M. Williams, a federal district court judge in Miami who was nominated by then-President Barack Obama in 2011. One possibility is that Williams throws out the suit on the grounds that it simply isn't a matter for the court system, said Stephen Gillers, professor of legal ethics at NYU School of Law.
Under the Constitution, federal judges are supposed to adjudicate disputes between “adverse” interests, Gillers said. Because Trump is on both sides of the issue, “it’s not a real dispute” and thus isn’t something the court is permitted to resolve, he said.
If she chose, Williams could appoint an outside counsel to brief her on the potential conflicts of interest that the case presents, legal experts said. Something similar happened last year. A federal judge appointed an attorney, Paul Clement, to offer counterarguments in the Justice Department’s bid to drop a criminal case against then-New York City Mayor Eric Adams.
“A judge, for starters, could ask the parties to brief the conflict of interest issue and could appoint someone as a friend of the court to address the issue as well, since you can bet that both President Trump and the IRS will downplay the problem,” said Bruce Green, a specialist in legal ethics at Fordham School of Law.
If Trump's deputies settle the lawsuit with the president, the judge wouldn't necessarily have to bless it, others said. She could conclude it’s unjustified and throw it out, they said.
A judicial verdict would give any payout a certain legitimacy. Trump could argue that a judge — an Obama-appointed judge at that — looked at the case and agreed he had been wronged and deserves compensation. But the flip side presents a more vexing problem for Trump.
“A judge can say, ‘No, it’s not a reasonable settlement,’” said Richard Painter, former chief ethics lawyer in George W. Bush’s White House and now a law professor at the University of Minnesota.
In that instance, Trump could drop the suit and settle the case with his subordinates out of court. Yet, if he goes that route, a future president might try to claw back any money that was paid out through a legal challenge of their own, Painter said.
Alternatively, whistleblowers could come forward and file suits alleging that Trump's payout amounted to a false claim, he said. Known as qui tam actions, these types of suits allow successful plaintiffs to keep a certain percentage of the award, with the rest going back into the government’s coffers.
Before returning to office last year, Trump submitted a separate legal complaint against the government over the FBI’s search for classified documents at his Mar-a-Lago home, among other issues.
He mentioned that case in his interview with NBC News, saying, “I sued because they broke into Mar-a-Lago. That was before I became president. Now it goes along, and it turned out that the suit is a very strong suit.”
Presiding over the very government he's suing, Trump acknowledged, "Well, there’s never been anything like it. In all fairness."
Will he direct his subordinates to pay him? Llamas asked.
“What I would do, tell ‘em to pay me, but I’ll give 100% of the money to charity," Trump replied. "I don’t want any of that money.”
In December, he appeared at a rally in North Carolina and, in his speech, brought up the case unprompted.
He noted that he is now in the “strange position” in which, as chief executive, he has to “make a deal — negotiate with myself.”
As to what he'd do with any money that comes his way, Trump took a cheekier tone.
“I hereby give myself $1 billion,” he told the crowd in Rocky Mount. “Actually, maybe I shouldn’t give it to charity. Maybe I should keep the money. No. A lot of people say, ‘Do it.’ No, I don’t want to do it. But whatever happens, it’s all going to good charities. Is that OK? It’s all going to good charities.”
