Judge Reopens Trump IRS Lawsuit, Questions $1.8B Weaponization Fund
A federal judge in Miami has reopened President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service, ordering an investigation into allegations that the settlement creating a $1.776 billion “Anti-Weaponization Fund” was “premised on deception” and potentially a “fraud on the court.” The ruling, issued on May 29 by U.S. District Judge Kathleen M. Williams, represents a significant legal and political setback for both Trump and the Justice Department.
Background: The IRS Leak and Unprecedented Lawsuit
The case traces back to 2019–2020, when IRS contractor Charles Littlejohn leaked Trump’s tax returns to The New York Times and ProPublica. Littlejohn was sentenced to five years in prison in January 2024. In January 2026, Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization sued the IRS and Treasury Department for $10 billion, alleging the agencies failed to prevent the leak — marking the first time a sitting U.S. president sued his own administration.
According to The New York Times, the IRS had prepared a 25-page memorandum outlining defenses against Trump’s lawsuit, but the Justice Department never used it in court.
The Settlement and Anti-Weaponization Fund
On May 18, 2026, Trump voluntarily dismissed the lawsuit. The Justice Department simultaneously announced a settlement creating the “Anti-Weaponization Fund” — a $1.776 billion fund (the number referencing the year of American independence) to compensate individuals claiming they were victims of government “weaponization” under Democratic administrations.
The following day, Acting Attorney General Todd Blanche issued a supplemental order permanently barring the IRS from auditing or investigating Trump, his family, his businesses, and related associates — effectively granting the Trump family immunity from tax scrutiny. The Guardian reported that this addendum likely eliminated a dispute over a $72.9 million tax refund Trump claimed from his time hosting “The Apprentice.”
Judge Williams’ Reopening of the Case
Judge Williams reopened the case after a bipartisan group of 35 former federal judges filed a motion arguing the settlement was “a product of collusion and is itself a fraud on the Court.” The group includes conservative former appellate judge J. Michael Luttig, a longtime Trump critic, as well as former district judges Nancy Gertner and Shira Scheindlin.
In her order, Judge Williams cited the “grievous allegations that Plaintiffs voluntarily dismissed this litigation solely to avoid judicial scrutiny of a lawsuit that ‘was collusive from the start’ and was only filed to provide the imprimatur of legality for an unlawful settlement,” as reported by SAN.com. She wrote that “a court is empowered to investigate serious misconduct as a collateral issue” and ordered Trump’s lawyers to respond by June 12, 2026.
Simultaneous Legal Blow
On the same day, U.S. District Judge Leonie M. Brinkema of the Eastern District of Virginia temporarily blocked the creation of the fund, pending a hearing. The dual rulings dealt a significant blow to the administration’s efforts to establish what critics have called a “slush fund” for Trump allies.
Bipartisan Criticism and Political Fallout
The fund drew criticism from across the political spectrum. Senate Majority Leader Mitch McConnell called it “a slush fund to pay people who assault cops,” calling it “utterly stupid, morally wrong.” An Economist/YouGov poll found that 52% of Republicans and 45% of MAGA supporters opposed the fund.
Capitol Police officers Harry Dunn and Daniel Hodges, who were injured during the January 6, 2021 attack, sued to block the fund, arguing in their filing that “in the most brazen act of presidential corruption this century, President Donald J Trump has created a $1.776bn taxpayer-funded slush fund to finance the insurrectionists and paramilitary groups that commit violence in his name.”
What’s Next
Judge Williams has given Trump’s legal team until June 12 to respond to the allegations. If she finds the settlement was fraudulent, she could void it entirely. Separately, Judge Brinkema’s temporary block on the fund remains in place pending further hearings. Multiple other lawsuits are pending, and Representative Jamie Raskin has introduced legislation to block the fund in Congress.
The case raises fundamental constitutional questions: whether a president can settle a lawsuit against his own administration without independent representation, whether the executive branch can create a $1.776 billion fund without congressional approval, and whether the Attorney General can legally order the IRS to stop mandatory audits of the president. These questions are now squarely before the courts.