President Trump's lawsuit demanding at least $10 billion from the Internal Revenue Service has created a profound ethical dilemma for the Justice Department, which must decide how to respond before a mid-April deadline. The suit, filed in late January, accuses the IRS of failing to prevent the leak of Trump's tax returns to The New York Times in 2020. This unprecedented challenge pits the department's lawyers against the complex conflict of representing an agency led by the very person suing it.

Former Justice Department officials note clear flaws in the president's case, but some Trump administration officials fear assigning a lawyer to contest it would create an unworkable conflict given that attorney ultimately works for the president. Defending the case could also contradict a White House executive order binding government lawyers to the president's interpretation of the law. The government could instead request a delay until after Trump leaves office in 2029 or ask the judge to appoint an independent counsel to defend the case.

Settling would involve approving a massive taxpayer payout to Trump and his family, likely provoking political blowback. Regardless, officials expect they will need to consult Trump himself on the response.