A federal judge voided President Donald Trump’s $1.8 billion IRS settlement on Monday, finding that his lawsuit was filed for improper purposes and barring him from citing the deal in any future legal proceedings. U.S. District Judge Kathleen M. Williams ruled that Trump cannot refer to the settlement or its terms in official matters, including litigation, effectively opening the door for the IRS to resume audits of his tax returns.
The settlement, negotiated in May 2026, had granted Trump and his two oldest sons immunity from tax audits and created an “anti-weaponization” fund worth $1.776 billion. The fund was intended to compensate people who claimed they were unfairly targeted by the government, though it drew sharp bipartisan criticism after questions arose about whether it could benefit individuals convicted of attacking Capitol police on January 6, 2021.
Williams wrote in her ruling that Trump’s lawsuit, which he filed in January 2026 for $10 billion against the IRS and Treasury Department, was never a genuine dispute between opposing parties. Instead, she described it as a manufactured action to legitimize what she called an improper agreement to “confer immunity to people and entities affiliated with the President” and to “earmark billions of dollars from American taxpayers” for unclear grievances.
The lawsuit originally stemmed from a leak of Trump’s tax returns by former IRS contractor Charles Littlejohn. Information leaked in 2019 and 2020 formed the basis of a New York Times investigation revealing that Trump paid only $750 in federal income taxes in 2016 and no taxes in 10 of the previous 15 years. Trump claimed the IRS had failed to protect his confidential tax information.
Williams found a critical flaw in the case: Trump, as president, controlled the Justice Department officials who were defending the government against his own lawsuit. She noted that the DOJ never filed a response indicating the government’s position in the case during the 109 days it was pending before the settlement was announced. This meant Trump and the DOJ were acting as a single unit, creating what she called a lawsuit he could not lose.
“In sum, the facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” Williams wrote, according to retrieved court documents.
The judge also imposed sanctions on Trump’s legal team. She referred attorney Alejandro Brito to the Florida State Bar for potential disciplinary action and barred another lawyer who signed the settlement from representing plaintiffs in new cases in her Southern District of Florida court for one year.
Trump’s legal team responded in a statement saying the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information” to news outlets they characterized as “left-wing.” The team said Trump “continues to hold those who wrong America and Americans accountable.”
The administration had abandoned the “anti-weaponization” fund in early June after another federal judge temporarily blocked it. That order came after two men alleged the fund was discriminatory and would exclude people they said had been targeted for political retribution by the Trump administration.
Tax Law Center Policy Director Brandon DeBot called the original settlement a “sweetheart deal” that violated “the tax system’s protections against political interference.” He noted that while the court’s decision was important, it did not eliminate the need for congressional action to fully nullify the agreement and prevent similar attempts at presidential self-dealing in the future.
Sources
- BBC — Judge Kathleen Williams voiding Trump’s $1.8 billion IRS settlement, finding improper purpose, referring lawyer for disciplinary action
- USA Today — Judge Williams prohibiting Trump from citing the settlement in future legal proceedings, details of the ruling and sanctions on attorneys
- Reuters — Confirmation of the $1.776 billion settlement amount and the IRS audit immunity provisions
- NBC News — Judge finding Trump attempted to manipulate the judicial process, lack of adverseness between parties
