Judge Voids Trump IRS Settlement, Refers Lawyer for Discipline
A federal judge has ruled that President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service was filed for an “improper purpose” — a scathing legal rebuke that voids the settlement granting the president immunity from tax audits and refers one of his attorneys for possible disciplinary action. U.S. District Judge Kathleen Williams issued the 56-page ruling on Monday, finding that the lawsuit was a coordinated effort to use the court system to legitimize a deal that benefited Trump personally, according to AP News.
The Lawsuit and Settlement
In January 2026, Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization filed a $10 billion lawsuit against the IRS and Treasury Department, alleging they failed to prevent the leak of Trump’s tax information to news outlets between 2018 and 2020. The leaked data, disclosed by former IRS contractor Charles Littlejohn, formed the basis of a New York Times investigation revealing Trump paid just $750 in federal income taxes in 2016 and no taxes in 10 of the previous 15 years.
In May 2026, the Trump administration announced a settlement that dropped the lawsuit in exchange for two extraordinary provisions: permanent immunity from IRS audits for Trump, his two oldest sons, the Trump Organization, and affiliated companies; and the creation of a $1.776 billion “Anti-Weaponization Fund” to compensate individuals who alleged the federal government had been “weaponized” against them. The fund amount was a symbolic nod to the year of American independence, 1776.
The Anti-Weaponization Fund was abandoned in early June 2026 amid bipartisan backlash, though the tax audit immunity provisions remained in place. The fund drew criticism not only from Democrats but also from some Republicans, including former Vice President Mike Pence.
The Court’s Ruling
Judge Williams, an Obama appointee, ruled that the lawsuit was never a genuine legal dispute. She found that because Trump, as president, controls the executive branch agencies he sued, there was never a true adversarial relationship between the parties — a constitutional requirement for federal court jurisdiction.
“Whether Executive Branch actors can privately agree to give themselves and their former clients blanket immunities and billions of dollars in tax monies for legally undefined grievances was never an issue advanced to this Court,” Williams wrote in her ruling, as reported by BBC News. “The question is whether the Parties could do so by claiming to be adverse and engaging the legitimacy of a court proceeding. The answer is a resounding ‘no.’”
The judge determined that the lawsuit was “an attempt to use the Court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the President and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law.”
Williams also noted that Trump “did not pursue his claims until he once again occupied the White House and had appointed his former lawyer” to prominent positions in the Department of Justice. She described the suggestion that there was ever adverseness between the parties as “risible.”
Attorney Sanctions and Ethics Referrals
The judge referred Trump attorney Alejandro Brito, who filed the case, to the Florida Bar for potential disciplinary action. Another lawyer, Daniel Epstein, was barred from practicing in the Southern District of Florida for up to one year.
Copies of the order were also sent to the New York State Bar and the District of Columbia Bar, where ethics complaints are already pending against Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward, respectively. Blanche, Trump’s former criminal defense lawyer, signed the settlement agreement and faces a Senate confirmation hearing on Wednesday to become permanent Attorney General.
Williams pointed to Blanche’s congressional testimony in early June, in which he revealed the fund was no longer moving forward despite nothing having been filed in court. “Acting Attorney General Blanche’s apparent capacity to speak for both Plaintiffs and Defendants, sign a ‘settlement’ document on behalf of all Parties to this action, and then repudiate part of that agreement, demonstrates that there was only one party whose interests were being represented throughout this case,” the judge wrote.
Implications and Next Steps
The ruling prevents Trump and the administration from citing the settlement as a legitimate resolution in any future proceedings, potentially allowing the IRS to resume audits of Trump’s tax returns. However, experts caution that the ruling alone may not fully nullify the settlement’s provisions.
Brandon DeBot, Policy Director of the Tax Law Center at NYU, said in a statement: “The court’s decision is important, but does not remove the need for congressional action to nullify the entire deal and to prevent any similar attempts at presidential self-dealing in the future.”
The ruling also creates a politically charged backdrop for Blanche’s Senate confirmation hearing on Wednesday, where he is expected to face sharp questions about his role in negotiating the settlement. Norm Eisen and Matt Platkin, attorneys for the 35 former federal judges who filed an amicus brief urging the court to reopen the case, called the ruling “a resounding victory for the rule of law.”
A spokesperson for the Trump legal team defended the original lawsuit, stating that the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump.” The DOJ has denied any collusion, with a spokesperson saying “there was a live dispute because the plaintiffs sought relief that the government had not provided.”
What to Watch For
Key questions remain in the aftermath of the ruling: whether the IRS will resume audits of Trump’s tax returns; what action the Florida Bar will take regarding Alejandro Brito; how the Blanche confirmation hearing will be affected; and whether Congress will take legislative action to fully nullify the settlement and prevent similar arrangements in the future.