Stop Settlement Slush Funds Act of 2026

This bill aims to restrict how funds are distributed in settlement agreements involving the United States government. It prohibits federal officials from entering or enforcing settlement agreements that direct payments to any person or entity other than the United States, except for restitution for actual harm directly caused by the paying party or for services rendered . Violations by government officials would incur penalties similar to those for misappropriation of federal funds, and these restrictions apply to agreements made after the act's enactment. The legislation also establishes new oversight requirements for federal agencies. Agencies must annually report to the Congressional Budget Office on qualifying settlement agreements, detailing fund sources and distribution, though this reporting provision sunsets after seven years. Concurrently, the Inspector General of each federal agency is mandated to conduct annual audits and publicly report to Congress on any settlement agreements entered into in violation of these new restrictions.