WASHINGTON – In negotiations with Republican senators whose support he needs to be confirmed as attorney general, Todd Blanche formally rescinded a $1.8 billion fund meant to compensate President Donald Trump’s political allies.
But a sweeping audit immunity plan conferred on the president, his sons and the Trump Organization remains in place — given new parameters to appease the senators but still with the potential to wipe away millions of dollars of Trump’s back taxes.
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In a document Blanche sent to the lawmakers Sunday, he said the audit immunity, struck as part of a deal to resolve the president’s $10 billion lawsuit against the IRS, would not protect the president from the examination of future tax filings. Instead, he noted, it “applies by its terms only retroactively” to claims open at the time of the lawsuit’s settlement.
For the holdout GOP lawmakers who opposed both the fund and the audit deal, those assurances were enough and are expected to clear the way for Blanche’s confirmation to serve as attorney general.
But the political accommodation leaves in place a highly unusual agreement over the president’s taxes that has spurred bipartisan outrage and tested confidence in the fairness of the tax system.
The original audit deal promised broad protections for Trump
Trump’s audit immunity came as part of the controversial settlement crafted to resolve Trump’s $10 billion lawsuit filed earlier this year against the IRS over his leaked tax returns. The deal drew furor from lawmakers on both sides of the aisle, largely over the $1.8 billion “anti-weaponization fund.”
According to the initial outline of the audit deal, spelled out in a one-page document signed by Blanche, the U.S. was “forever barred and precluded” from examining or prosecuting any of the plaintiffs — Trump, his sons and the Trump Organization’s — current tax filings, as well as other “related or affiliated” individuals.
The document sent to Republican Sens. John Cornyn and Thom Tillis Sunday limits both the time frame for investigations and the scope of people who would receive audit protection to Trump, his sons Eric Trump and Donald Jr. and the Trump Organization.
It’s unclear how much Trump owes the federal government in back taxes, but the latest details of the deal could wipe away what could be more than $100 million in back taxes, according to previous New York Times and ProPublica reporting.
Lawmakers and legal experts questioned the lawfulness of such protections.
“The good news is that Todd Blanche confirmed in writing that the anti-weaponization slush fund is dead. The bad news is that tax immunity for the president, his sons, and his family business is still alive,” said Dan Greenberg, a senior legal fellow at the Cato Institute, calling the immunity deal ”the product of an illegal settlement.”
U.S. District Judge Kathleen Williams ruled in July that Trump’s lawsuit against the IRS was filed for an “improper purpose.” Williams did not void the deal shielding Trump from tax scrutiny but said the government cannot claim in official proceedings that the agreement was the result of a legitimate legal process. Trump has appealed the ruling.
Representatives from the White House, IRS, Treasury and Trump’s personal attorneys did not immediately respond to Associated Press requests for comment.
Concerns that Blanche’s assurances aren’t enough to stop the fund
Some legal and tax experts say the immunity agreement could violate an IRS statute barring executive branch interference in taxpayer audits and investigations.
The statute says it’s against the law for the president or the president’s employees to start or stop an audit or some other investigation of a taxpayer. But the attorney general is allowed to do so, leaving the door open for Blanche to step in to halt an audit against the president, once he is confirmed. Whether he has legal authority to do so is a separate question not resolved by the statute itself.
The rule barring executive influence over directing tax audits comes after the Watergate scandal, when then-President Richard Nixon discussed using the IRS against political opponents and groups on the administration’s “enemies list.” Congress moved to tighten taxpayer privacy protections in 1976.
Nina Olson, founder of the Center for Taxpayer Rights, which has sued the Trump administration over IRS disclosures to immigration enforcement, called the settlement “the lowest point for the IRS since the 1970s.”
Concerns over the future of government payouts to Trump allies have also not been entirely eased after Blanche’s assurances.
Blanche has maintained under oath in Congress and in his latest writing to lawmakers that the Trump administration is not pursuing the fund.
However, Trump has been less clear about its demise. On Saturday he posted on his Truth Social platform that he would “push hard” for the fund if Blanche were not confirmed. “It will immediately be back on the table, and I will get it done,” Trump wrote.
NYU Tax Law Center Policy Director Brandon DeBot questioned whether the fund was actually dead and said “it’s abundantly clear we need congressional action” to ensure it cannot be resurrected.
Democrats say Blanche’s order doesn’t go far enough to prevent the administration from reviving plans for the fund after the acting attorney general’s confirmation and have called for legislation to permanently bar it.
The order also doesn’t stop the administration from compensating Trump allies -- including people who attacked the Capitol on Jan. 6, 2021 -- through a previously established process that allows people to file claims for damages if they believed they were wronged by the government.
Greenberg said he believes Blanche’s assurances are “a way for the senators to demonstrate that they’re driving a hard bargain.
“But once you become familiar with the particulars of this situation, it doesn’t really look like they’re driving much of a bargain at all,” he said.