A US federal judge has struck down a settlement between President Donald Trump and the Internal Revenue Service (IRS), ruling that Trump's underlying lawsuit had been filed for an "improper purpose" and amounted to a brazen exercise in self-dealing. In a scathing 56-page ruling issued on Monday, US District Judge Kathleen Williams of Miami voided the agreement entirely and referred several attorneys involved to legal disciplinary authorities.
The case began when Trump, two of his sons and the Trump Organization filed a $10 billion lawsuit against the IRS, accusing the agency of failing to prevent a former contractor, Charles Littlejohn, from leaking Trump's private tax records to journalists. Those leaked records formed the basis of a 2020 New York Times investigation revealing that Trump paid just $750 in federal income taxes in the year he won the 2016 presidential election and nothing at all in 10 of the previous 15 years. The suit was resolved in May with a settlement that granted Trump, his family and affiliated businesses sweeping immunity from tax audits, and established a $1.776 billion taxpayer-funded "anti-weaponisation" fund intended to compensate people who claimed they had been unfairly targeted by the government.
Judge Williams found the entire arrangement to be a fiction. Because Trump, as president, effectively controls both the IRS and the Treasury Department, she concluded there was never a genuine legal dispute between opposing parties. "This matter was brought for an improper purpose — to gain the imprimatur of judicial legitimacy for a 'settlement' that had no viable basis in law or fact," she wrote. She also accused Justice Department officials of abandoning their duty to defend the public interest and of pursuing objectives that exceeded, or in some cases violated, their legal authority. One of Trump's private attorneys, Alejandro Brito, was referred to the Florida Bar for potential disciplinary action, while another lawyer was barred from appearing in Williams's South Florida court for one year. The judge also ordered copies of her ruling sent to bar authorities in New York and Washington DC, where acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward hold their law licences.
The ruling has wide-ranging consequences. It bars Trump, his sons and his company from citing the settlement's terms in any future legal proceedings, potentially leaving the way open for the IRS to resume audit activity related to the president's tax affairs. The anti-weaponisation fund had already been abandoned in early June after a separate federal judge in Virginia temporarily blocked it, following a lawsuit by two individuals who argued they would be excluded from claiming compensation despite having been subjected to political retaliation. The fund had drawn criticism from Democrats and some Republicans alike, with concerns it could end up paying those convicted in connection with the 6 January 2021 attack on the US Capitol.
A spokesman for Trump's legal team did not directly address the ruling but said the IRS had "wrongly allowed a rogue, politically-motivated employee" to leak confidential information, and that Trump "continues to hold those who wrong America and Americans accountable." Legal analysts welcomed the decision but warned it may not be sufficient on its own. Brandon DeBot of the Tax Law Center at New York University described the original settlement as a "sweetheart deal" that had given Trump "unauthorized and unprecedented" exemptions from audit rules, adding that congressional action would still be needed "to nullify the entire deal and to prevent any similar attempts at presidential self-dealing in the future."