FTPB 2016 Editions Discussion of Trump v. IRS and Its Resulting Machinations (8/3/26)

I am trying to wrap up the 2026 Editions of my Federal Tax Procedure Book but the ongoing drama by DOJ’s $2.77 billion Anti-Weaponization Fund and Trump and related party tax immunity does not permit an easy stopping point. But I have to stop and have just concluded all that will be in the 2026 Editions that I hope to publish later this week. I thought I would post the discussion below (the Student Edition version without footnotes by copy and paste into the blog below) and the Practitioner Edition version with footnotes that can be downloaded here.

                   2.     Examples (Including Trump v. IRS).

          A prominent example of this remedy is a suit brought by a Kenneth Griffin, a hedge fund billionaire. An employee of a third party contractor to the IRS, Booz Allen Hamilton, Inc., illegally accessed and disclosed the tax return information of Griffin and others to a news organization, ProPublica, which in turn published some of the tax return information. Griffin sued the IRS under (i) § 7431, alleging violation of § 6103, and (ii) the Privacy Act. The employee was prosecuted and pled guilty, receiving a five-year sentence. Griffin and the IRS settled the civil action resulting in a dismissal with prejudice. All of the terms of the settlement are not available, but apparently there was no monetary consideration and the IRS agreed to and did issue a public apology. Another reputed billionaire brought related action against the employee’s employer, Booz Allen Hamilton, Inc.

          A more prominent example arising from the same mass disclosures is a 2026 suit Donald J. Trump filed in his nominal personal capacity for $10 billion damages (asserting both the minimum $1,000 per disclosure with disclosures at $1,000 justifying $10 billion or actual damages of $10 billion) and for punitive damages in an amount not stated. The Plaintiffs included Trump’s sons and The Trump Organization, LLC. (referred to collectively as the Trump Plaintiffs). Before the DOJ filed an answer, the Judge asked the parties to brief whether, given President Trump’s control over the Government parties (IRS and DOJ) and personal interest as Plaintiff, the case met the required Article III case or controversy requirement. The Court also appointed amici to provide independent briefing on that issue. Before the parties presented their briefing but after the amici provided its initial brief, the Trump Plaintiffs moved to dismiss with prejudice under FRCP Rule 41(a)(1)(A)(i) which requires dismissal with prejudice. On May 18, 2026, the Court dismissed with prejudice, noting:

District Court for SD Florida Calls Out Trump's Weaponization Fund and Get-Out-Of-Audit Free Release Order (7/13/26; 7/15//26)

The big tax-related news today is the Order issued by Southern District of Florida judge, Kathleen Williams, today effectively holding the purported settlement between Trump and related plaintiffs and the Government (through DOJ) was effectively a sham. The Court also cast doubt upon the purported get out-of-tax audit-free benefit conferred in a separate document one day after the settlement agreement (the Court calls this separate document the “Release Order,” and I will use that term in this blog).

Today’s Court Order may be viewed CL here and GS here [to come]; the docket entries may be viewed here, with the order at docket # 106.

Since the Court Order has been adequately covered in the news, I will just make some points that may resonate with tax lawyers. 

1. The Release Order conferring get out-of-tax audit-free benefit was to me the biggest deal because it benefited Trump personally, as well as persons and entities close to him. By contrast, the Weaponization Fund would have helped a category of Trump supporters prone to violence in his name and other at least antisocial acts. When I first heard about the Weaponization Fund I believed it was strange on its face. But then a day later I the Release Order surfaced, making the whole gambit understandable. The Weaponization Fund was not the real object of Trump’s gambit; rather, the Weaponization Fund was a stalking horse to draw attention from the brazen Release Order that would more directly benefit Trump. I suspected that they (being his co-conspirators) planned all along that there would be so much public angst about the Weaponization Fund that they could give it up, with the Release Order sliding under the public radar screen/attention span.

 2. Some reasons that I think the Release Order was the real motive for Trump are:

The Section 7217 Crime of Executive Office, including President, Requesting or Directing IRS to Examine or Audit (4/18/25)

I have been thinking about President Trump’s public scrap with Harvard University, In doing so, I have reviewed § 7217, titled " Prohibition on executive branch influence over taxpayer audits and other investigations," here, which makes it a felony crime (5 years) for any “applicable person”—including the President—"to request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer.” I won’t go through the “applicable person” list because the President is clearly one of them. And the crime is to "directly or indirectly" make the request.

I discuss § 7217 in my Federal Tax Procedure Book, 2023 Practitioner Edition p. 420 and Student Edition p. 291. In reviewing that discussion to see whether I should change anything in the Working Draft for the 2024 Editions, I have made minimal changes to the text but have added a footnote with respect to the exclusion of the Attorney General from the prohibition. As revised in the Working Draft for the 2024 Editions, the second sentence (with footnote for the Practitioner Edition) says:

The executive branch personnel within the scope of this prohibition are: (i) the President and Vice President and their respective executive offices; and (ii) persons at level 1 of 5 U.S.C. § 5312 (generally department heads other than the Attorney General).n1828a*
   n1818a I have not researched legislative history of this section to determine whether it explains why the Attorney General was excluded from the prohibition on Executive level actors. One reason might be that DOJ Tax, acting on behalf of the AG, must interact with the IRS often to carry out its duties and probably could and should be able to request the IRS to examine or audit. Another reason could be that the prohibition, enacted in 1998, was at a time when the norm had been established to avoid such White House or Executive Office direction of the AG and DOJ generally.
          The exclusion of the AG from the prohibition takes on great significance in the Trump Second Administration (2024-2028) where (i) Trump acts contrary to the norm, publicly claiming that the DOJ acts under his control and (ii) Trump installed a compliant AG, Pamela Bondi, willing to do his bidding or his wishes as she perceives them. Could Trump skirt the prohibition by asking or directing the AG to request an IRS examination? For example, it is widely reported that, in his attempt to make Harvard University bend the knee to him, Trump has publicly proclaimed that the IRS should revoke Harvard’s tax exempt status. E.g., Aimee Picchi, Can Trump or the IRS strip Harvard of its tax-exempt status? Here's what to know (CBS News 4/17/25). By publicly attacking Harvard’s tax exempt status, is that enough to indirectly direct the AG to make the request to the IRS or even for the IRS, “sua sponte,” to act to examine Harvard? The statute does prohibit requests “directly or indirectly.” A comparison might be made to Henry II who in a moment of pique at Thomas Becket, Archbishop of Canterbury, is  alleged to have said "Will no one rid me of this turbulent priest?” (or some variant) which some of his sycophants took as a direction or request and murdered Becket in 1170. See Wikipedia “Thomas Becket,” here (last edited 4/9/25 and viewed 4/17/25) (noting that “Regardless of what Henry said, it was interpreted as a royal command.”). Can the President avoid § 7217 in that manner? Or, to extend the thought, could the IRS begin examinations of persons with whom the President expresses displeasure? Or at least the principal actors drawing the President’s angst? Readers might also consider Trump’s Executive Order among many on the first day of office supposedly to end the weaponization of Government. See Executive Order titled “Ending the Weaponization of the Federal Government” # 14147 (1/20/25), here. I think the record to date shows at least the possibility that Trump has weaponized the Federal Government despite his own Executive Order. Of course, violating his own Executive Order merely shows that the President is a hypocrite, and, so far as I am aware, hypocrisy is not a crime, nor is violating an Executive Order.

* Note that the footnote number is consistent with the 2023 text but that footnote number will be different in 2024 final Professional Edition and the content of the footnote may even be revised before publication of the Edition.