The justice department quietly added a provision barring the IRS from auditing Donald Trump’s tax returns on Tuesday, amending a widely criticized agreement that creates a secretive and loosely controlled $1.776bn fund to compensate allies of the president.

The addendum, signed by Todd Blanche, the acting attorney general, says the government is “forever barred” and “precluded” from examining the tax returns of Trump, his family, company and “related companies”. The agreement applies to anything filed before the agreement was reached. It was posted on the justice department website on Tuesday morning, a day after the department announced creation of the fund.

The inclusion only adds to mounting scrutiny of the wider agreement reached on Tuesday. The arrangement was announced after Trump said he was dropping a $10bn lawsuit against the IRS and other specious claims against the government in exchange for creating the compensation fund. IRS officials recommended fighting Trump’s lawsuit, the New York Times reported on Tuesday, but the agency decided to settle it anyway, raising further questions about improper interference.

The fund will be run by five people – all subject to be fired at will by the president – and does not have to make public who it awarded money to or its reason for doing so.

The Tuesday amendment was released shortly after Blanche testified in a Senate hearing in which Democrats harshly criticized the agreement. “This is an outrageous, unprecedented slush fund that you set up,” said Chris van Hollen, a Maryland senator.

Pressed by Democrats on whether those convicted of assaulting police officers on January 6 would be able to obtain money from the fund, Blanche said there were no limitations on who could seek a claim from the fund. He also said neither Trump personally nor his sons would receive compensation, though it is unclear from the agreement whether they could file a claim.

The text of the agreement released on Monday night says the fund will produce quarterly confidential reports to the attorney general on amounts paid out by the fund and to whom, despite that confidentiality provision, Blanche said on Tuesday.

“There’s accountability that the commission has, a quarterly report that has to come to the attorney general, which will certainly be public,” he said. “There’s a process that you all will get information, and there’s a Foia [Freedom of Information Act] process. So I very much anticipate that the claims that are awarded, the basis and the amount will for sure be made public along the way.”