More: The dismissal came on the heels of controversy over reports that the Department of Justice was negotiating a settlement with the president that could see the federal government pay $1.7 billion toward a fund to compensate allies of Trump who allege wrongful treatment by the Biden administration.

Democratic members of Congress said that would be a "slush fund."

CNBC has asked the DOJ if Trump's dismissal of the suit is being made in conjunction with a settlement by the government of his claims outside of court.

The court filing on Monday said Donald Trump, Donald Trump Jr., Eric Trump, and The Trump Organization were voluntarily dismissing the lawsuit against the IRS "with prejudice."

"With prejudice" means the plaintiffs can not renew the same claims in another civil complaint.

The notice of dismissal came two days before a deadline set by U.S. District Court Judge Kathleen Williams for the DOJ and Trump's attorneys to answer whether a "case and controversy exists in this matter so as to establish the Court's jurisdiction."

Williams' question suggested that because Trump is suing "entities whose decisions are subject to his direction," there might not be enough actual adversity between the parties to satisfy a constitutional requirement that federal courts only adjudicate cases or controversies.

The filing on Monday said Trump's dismissal means "no judicial analysis is appropriate, and any "subsequent order purporting to dismiss all claims' . . . [would be] a nullity."