President Donald Trump is suddenly dropping his $10 billion lawsuit against the Internal Revenue Service after weeks of backlash over reports that his administration was quietly discussing a massive taxpayer-funded payout tied to the case, and critics are already demanding answers about what was hap pening behind closed doors.  According to court documents filed Monday morning, Trump dismissed the lawsuit “with prejudice,” meaning he cannot bring the case again. The filing gave almost no explanation for the abrupt reversal other than noting the case was still in its early stages and did not require approval from either the judge or the IRS to end it.  U.S. President Donald Trump arrives for a Medal of Honor Ceremony in the East Room of the White House on March 02, 2026 in Washington, DC. (Photo by Win McNamee/Getty Images) Trump Goes Completely Off the Rails When Asked About Gas Prices, Struggles to String Together a Sentence, Then Viewers Zoom In on What He’s Clutching in His Hand The sudden move comes after reports that the Trump administration was exploring a controversial plan to create a massive compensation fund that could have distributed money to Trump allies and others claiming they were unfairly targeted by previous administrations. Trump Abruptly Pulls Plug on Explosive IRS Lawsuit Trump originally filed the lawsuit in January alongside Donald Trump Jr., Eric Trump and the Trump Organization, accusing the IRS and Treasury Department of failing to protect his confidential tax information after former IRS contractor Charles Littlejohn leaked Trump’s tax returns and the tax records of thousands of Americans.  Littlejohn was sentenced to five years in prison for the leak. But the lawsuit immediately raised eyebrows because Trump sued the IRS as a private citizen while simultaneously serving as president — effectively suing an agency within his own executive branch.  Federal Judge Kathleen Williams reportedly questioned whether the case even belonged in her courtroom and asked outside lawyers to weigh in on the unusual legal situation. Those attorneys also raised concerns about the propriety of a sitting president seeking billions in personal damages from the federal government.  Democrats Accuse Trump of ‘Blatant Self-Dealing’ Minutes after Trump’s lawyers filed paperwork ending the case, nearly 100 House Democrats fired back with a “friend-of-the-court” brief accusing Trump of attempting “blatant self-dealing.”  Lawmakers reportedly urged the court to scrutinize whether Trump attempted to manipulate the legal process in order to pave the way for a settlement arrangement tied to taxpayer money. The filing intensified criticism that had already exploded online after reports surfaced that Trump’s Justice Department had discussed resolving the case through what critics labeled a massive “slush fund.”  ‘He Finally Went Low’: Obama Stops Playing Nice, Publicly Humiliates Trump Over Iran Disaster and Exposes the One Petty Obsession That Keeps Him Spiraling Trump’s ‘Charity’ Defense Triggered Instant Backlash Before dropping the lawsuit, Trump aggressively defended the case during an exchange aboard Air Force One after reporters questioned whether taxpayers should foot the bill for any settlement.  “Well, anything I win I’m going to give 100 percent to charity,” Trump claimed.  But when a reporter pointed out that the money would still ultimately come from American taxpayers, Trump launched into a confusing tangent about government charity spending while repeatedly insisting he would donate the money to “very, very good and respected charities.”  View on Threads That explanation detonated online almost instantly. “The last time Trump gave money to charity, it was his own charity scam that was shut down,” one Threads user wrote.  Critics Resurface Trump Foundation Scandal Opponents quickly resurrected the history of the Donald J. Trump Foundation, which New York investigators accused of operating with a “shocking pattern of illegality.”  The foundation was dissolved in 2018 after a judge ordered Trump to pay $2 million in damages for misusing charitable funds for political and personal purposes.  Social media users openly mocked Trump’s promise to donate settlement money. “This ‘charity’ will conveniently be formed within 24 hours prior to his settlement,” one critic joked.  Others demanded Trump identify exactly which charities would supposedly receive the money. “What charity? Name the charities. I want to know where it goes,” another user wrote before referencing past accusations that Trump used charitable funds to buy portraits of himself.  Another furious poster blasted Trump directly: “Pig really thinks we’re ALL stupid.”  Now, with the lawsuit suddenly dead and no settlement publicly announced, critics are asking an even bigger question: what exactly changed behind closed doors? ‘Really Thinks We’re ALL Stupid’: Trump Suddenly Drops $10 Billion IRS Lawsuit After the Internet Revives the One Scandal He Could Never Fully Bury ...read more read less