Washington DC - The US Internal Revenue Service (IRS) will not pursue President Donald Trump, his family, or companies for back tax claims under an agreement announced on Tuesday by the Justice Department.

Trump, his sons Eric and Donald Jr., and the Trump Organization filed a lawsuit against the tax-collecting agency in January seeking $10 billion in damages following a leak of his tax returns.

A former IRS contractor pleaded guilty in 2023 to leaking the tax returns of Trump and other wealthy Americans to the media and received a five-year prison sentence.

Trump dropped the lawsuit against the IRS on Monday in exchange for the creation of a $1.7 billion fund to compensate political allies who believe that they were unfairly prosecuted under the Biden administration.

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Trump himself is not eligible for compensation from the "Anti-Weaponization Fund," which Democrats have denounced as a "slush fund" that would reward the Republican president's loyalists with taxpayer money.

An addendum to the settlement agreement signed by Acting Attorney General Todd Blanche and released on Tuesday says the IRS is "forever barred" from pursuing any tax claims against Trump, his family, or his businesses that were pending as of the May 18 settlement date.