This bill imposes a 100% tax and new public reporting requirements on certain settlement payments received by former Presidents, their family members, and related entities.
Ron Wyden
Senator
OR
The SLUSH FUND Act of 2026 imposes a 100% tax on certain settlement payments received by taxpayers from funds derived from civil lawsuits against the United States filed by former Presidents or their families. This legislation also establishes strict new reporting requirements for these payments, including public disclosure of the filed returns. The bill aims to prevent unauthorized and nontransparent financial arrangements benefiting specified individuals.
SLUSH FUND Act Imposes 100% Tax on Federal Lawsuit Settlements for Former Presidents and Their Families Starting May 2026
The SLUSH FUND Act of 2026 introduces a massive shift in how the government handles legal payouts to former Commanders-in-Chief and their inner circles. Starting May 20, 2026, any money received from a settlement fund resulting from a civil lawsuit against the United States will be hit with a 100% tax if the lawsuit was filed by a "specified person." In plain English, if a former President or their relative wins a case against the government and gets a payout, the IRS effectively takes every penny of it back immediately. While the bill technically excludes these payments from regular income tax, that is a moot point when the special tax rate is set at the maximum possible limit.
Expanding the Family Tree and Business Circle
This isn't just about the person who lived in the Oval Office; the bill casts a wide net. Under Section 2, a "specified person" includes the former President, their spouse, and a long list of relatives like children, grandchildren, and other dependents. It also covers any "controlled" entities—think family businesses, private trusts, or LLCs where these individuals hold the reins. For example, if a former President’s adult daughter runs a consulting firm that wins a settlement against the U.S. government for a contract dispute, that entire settlement would be subject to the 100% tax. The bill uses complex tax code definitions for "control," which means determining who actually owes this tax could require a deep dive into a family’s business structure.
The End of Private Payouts
Beyond the tax itself, Section 3 of the bill pulls back the curtain on these legal deals. Any trustee or administrator who cuts a check from one of these settlement funds is required to file a report with the IRS detailing exactly how much was paid and to whom. The kicker? The Treasury Secretary is mandated to make these reports public within one month of receiving them. For a family used to private legal settlements, this means their financial dealings with the government become a matter of public record almost instantly. If a fiduciary fails to file these reports, they face a $10,000 penalty per violation, ensuring there is a high price for keeping these payments quiet.
Enforcement and Hefty Penalties
This legislation doesn't just ask for the money; it brings a heavy hammer for those who try to sidestep the rules. If a taxpayer willfully fails to pay this 100% tax or tries to evade it, Section 2 adds a 50% penalty on top of the original tax amount. This means an individual could end up owing the government 150% of the settlement they were originally awarded. For a small business owner or a family member caught in the "controlled entity" definition, the financial stakes are absolute. The bill is designed to ensure that for this specific group of people, suing the federal government for a cash payout becomes a zero-sum game.