Trump Faced a $100 Million Tax Bill Until the IRS Was Ordered to Stop Auditing Him

For years, Donald Trump sat at the centre of one of the most consequential tax disputes in American political history. A years-long audit battle tied to his troubled Chicago skyscraper had put the president in line for a tax bill that could exceed $100 million (£79 million) — a figure that stemmed from an accounting manoeuvre investigators concluded amounted to claiming the same massive write-off twice.

That audit is now, by order of his own Justice Department, finished. On 19 May 2026, the DOJ issued an addendum to a broader settlement agreement, signed by acting Attorney General Todd Blanche, declaring that the IRS is 'forever barred and precluded' from pursuing any examination or review of tax returns filed by Trump, his family, and affiliated businesses.

A Tower Built on Borrowed Losses

The origins of the audit trace back to Trump International Hotel and Tower in Chicago, a 92-storey skyscraper along the Chicago River that opened in 2009 after years of cost overruns and construction delays. The project was financed with up to $770 million (£609 million) in loans and was intended to generate sufficient sales to cover its debt service. It did not.

When sales lagged badly in 2008, Trump claimed his investment in the tower met the tax code definition of 'worthless,' allowing him to report losses as high as £515 million ($651 million) for that year alone, according to ProPublica and the Times. Then, in 2010, his tax advisers merged the tower's ownership into a separate partnership he also controlled — a move the IRS later concluded had no apparent business purpose — and used that restructuring to declare an additional £133 million ($168 million) in losses over the following decade.

'I think he ripped off the tax system,' said Walter Schwidetzky, a law professor at the University of Baltimore and an expert in partnership taxation. Six tax experts consulted for that investigation said the accounting manoeuvres appeared unlikely to survive scrutiny.

Unprecedented and Hard to Reverse

Legal and tax experts have described the DOJ's move to end all audits of Trump as without modern precedent. Danny Werfel, who served as IRS commissioner from 2023 to 2025, told Politico he was 'unaware of a single precedent where the IRS has agreed in advance to permanently forgo examination of previously filed tax returns for a specific person or business.'

Reversing the ban would face significant legal and practical obstacles. Tax Law Center policy director Brandon DeBot noted that any future effort could only succeed with 'a showing of fraud, malfeasance, or misrepresentation of a material fact.' Former IRS Commissioner John Koskinen warned that 'by the time a new IRS commissioner shows up, the money from the contested tax returns will be gone, and tracking it down will be difficult.'

The audit ban sits within a broader settlement that also establishes a $1.776 billion (£1.4 billion) 'Anti-Weaponization Fund,' resolving Trump's £7.9 billion ($10 billion) lawsuit against the IRS over the leak of his tax records by a government contractor who pleaded guilty in 2023.

Political Fallout

The deal has drawn sharp criticism from Democrats, with a group of House members calling it 'collusive litigation to force the American people to put money into his pockets, and the pockets of his family and friends.' They also argued the arrangement violates the separation of powers and the Domestic Emoluments Clause.

Eric Trump, executive vice president of the Trump Organisation, had previously told ProPublica and the Times that the audit matter 'was settled years ago, only to be brought back to life once my father ran for office,' adding that the company was 'confident in our position, which is supported by opinion letters from various tax experts, including the former general counsel of the IRS.'

The permanent bar on IRS audits of a sitting president is without modern precedent. It removes a key mechanism through which past financial conduct could be examined and sets a standard that would be difficult for future administrations to undo — particularly as statutes of limitations on the underlying returns continue to expire. For a president who spent years citing ongoing audits as the reason he could not release his tax returns, the outcome is a striking one: the audits are now gone, and so is any realistic path to public accountability over them.