Here is the level of absurdity presented by President Donald Trump’s lawsuit against the IRS and the Treasury Department: Imagine a casino owner loses at his own blackjack table, orders the pit boss to refund his losses and announces that this was a fair interaction.
Or say a bank president applies for a loan from his own bank, chairs the loan committee, approves the application and calls it an arm’s-length transaction.
The case may be Trump v. IRS. But the practical reality is closer to Trump v. Trump’s own government, defended by Trump’s own Justice Department, paid from a Treasury Department within Trump’s own executive branch. And potentially, The New York Times reported this week, all this is poised to be settled on terms favorable to Trump himself.
In January, Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization sued the IRS and Treasury Department for $10 billion over an unauthorized leak of tax information. Former IRS contractor Charles Littlejohn, who pleaded guilty, is serving a five-year sentence for leaking to media outlets tax information about the Trumps and other wealthy Americans.
To be clear, revealing confidential tax records is not acceptable. If Trump has a legitimate claim for damages, he is entitled to pursue it. But he should not be permitted to pursue it while he is president given all the power of his office: while the agencies he is suing answer to him, while the lawyers defending the lawsuit ultimately work within an executive branch he controls and while any settlement could result in taxpayer money, tax relief, audit relief or some other benefit flowing to himself, his family or his businesses.
Another media report makes the problem even starker. According to ABC News, Trump may drop his lawsuit in exchange for a $1.7 billion taxpayer-funded “weaponization” fund for political allies. That, too, would not cure the self-dealing problem; it would turn a personal lawsuit against agencies Trump controls into a vehicle for distributing public money to people aligned with him.
If Trump has a legitimate claim for damages, he is entitled to pursue it. But he should not be permitted to pursue it while he is president given all the power of his office.
Nothing about this should require an elaborate constitutional seminar. Trump does not get to be the plaintiff, the defendant’s boss, the supervisor of the defense lawyers, the beneficiary of the settlement, and then ask a federal judge to pretend this is an ordinary lawsuit.
U.S. District Judge Kathleen Williams appears to understand the problem. She has ordered the parties to explain whether there is even an Article III case or controversy here. Federal courts have jurisdiction only over real disputes between genuinely adverse parties. Williams noted that Trump is suing in his personal capacity but that his named adversaries are agencies whose decisions are subject to his direction. She questioned whether the parties are “sufficiently adverse” for the lawsuit to proceed at all.
That question should answer itself unless everyone involved is committed to pretending not to understand how the federal government works. Namely: The IRS is part of the Treasury Department, which is part of the executive branch. The Justice Department represents the United States. Trump is president of the United States. If this lawsuit settles, who, exactly, is sitting on the other side of the table opposing Trump?
In a normal case, settlement can be efficient, responsible and entirely appropriate. The parties assess risk. They value the claims, and they compromise. But that assumes the parties are actually adverse. It assumes the defendant has an independent incentive to resist. It assumes the government lawyer is defending the public fisc, not managing a politically delicate claim by the person atop the chain of command.
Here, a settlement could be the very mechanism by which the constitutional problem becomes real.
Here, a settlement could be the very mechanism by which the constitutional problem becomes real. A trial would require evidence. Motions would require legal argument. A settlement could do more than avoid both. It could convert a disputed, untested, potentially dubious claim into a taxpayer-funded payout under the label of compromise.
The reported possibility that settlement discussions could include audit relief for the president, his family or their businesses makes the situation even worse. The Tax Law Center at NYU has warned that Justice Department settlement authority would not ordinarily extend to resolving tax liabilities or audits that are not part of the litigation, and that federal law restricts presidential interference with specific IRS audits or investigations.
The $10 billion Trump is seeking is grotesque enough. But potentially even more corrosive is the possibility that a lawsuit nominally about a leak of tax records could become a vehicle for resolving, narrowing or eliminating tax scrutiny of the president, his family or their businesses.
The problem does not go away if Trump promises to donate the money. A president cannot launder a conflict of interest through a charitable press release. The problem is not simply where the money ends up but the transaction itself. If the president controls both sides of the negotiation, the public should not be asked to trust that everything is fine because he pledges to be generous with any proceeds.
Fortunately, there is a clear, legally sound alternative to all this: Stay the case until Trump is no longer president.
Doing so would not decide whether Trump was wronged. It does not excuse the leak or deprive him of access to court. It simply recognizes the obvious structural problem created when a sitting president sues his own agencies and then seeks to negotiate with his administration as if this were a normal case between strangers.
Courts stay cases all the time for practical, constitutional and institutional reasons. This would be one of the easiest stays a court could enter. Trump is not seeking emergency surgery. He is not trying to stop an imminent foreclosure. He is not an indigent plaintiff whose rights will vanish if the case is not resolved immediately.
The alleged harm occurred during the time between Trump’s presidencies. The legal theory can still be tested, the damages can still be challenged and the government can still decide whether to litigate or settle. But at that point, there would at least be a real adversary: an IRS that does not answer to the plaintiff, a Treasury Department outside his chain of command and a Justice Department that is not part of his own administration.
Courts already recognize that the presidency can affect the timing and mechanics of legal proceedings.
Courts have already wrestled with difficult timing questions regarding Trump. During the New York criminal case against him, there was serious debate over whether a sitting president could be sentenced, whether sentencing should be delayed and how the legal system should account for the unique burdens of the office. (One answer, of course, is that a person can avoid many of these complications by not committing crimes in the first place.)
The broader point is that courts already recognize that the presidency can affect the timing and mechanics of legal proceedings. Sometimes that creates pressure to delay a case so that the legal system does not impair the office of the presidency. Here, the logic runs in the opposite direction. The case should be delayed so that the office of the presidency is not used as a litigation weapon for the personal benefit of the officeholder.
Trump’s defenders may say that he is suing in his personal capacity. But formal labels do not solve structural conflicts. Calling something a personal lawsuit does not change the fact that the defendants are federal agencies controlled by the plaintiff in his official capacity, and that any settlement — paid with public funds — would be negotiated by officials operating within the administration he leads.
If Trump wants to sue the IRS, let him sue when the IRS no longer works for him, when he can prove damages against a real adversary and, if he wants to settle, when he would negotiate with a government he does not control.
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