A federal judge voided President Donald Trump’s IRS audit immunity deal on July 13, finding his $10 billion lawsuit against the tax agency was filed for improper purposes, while acting attorney general Todd Blanche testified two days later that the agreement does not protect Trump from audits on his 2025 earnings.
U.S. District Judge Kathleen Williams, in a 56-page ruling, concluded that Trump and his lawyers improperly used the court system to extract personal benefits from the government. The judge barred Trump and his family from citing the settlement agreement in any future legal proceedings, potentially nullifying the portion that shields them from IRS audits into past tax claims.
Williams found that Trump’s personal lawyers and Justice Department attorneys on both sides of the case misused the legal system, with the lawsuit never seeking genuine judicial resolution of a factual dispute. “This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams wrote, saying instead it was an attempt 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.”
The judge referred Trump attorney Alejandro Brito, who filed the case, and senior Justice Department officials including Acting Attorney General Todd Blanche to state bar authorities for potential disciplinary action. The order directed that copies be sent to legal disciplinary authorities in New York, where Blanche holds his law license, and Washington, D.C., where Associate Attorney General Stanley Woodward is barred.
At his Senate confirmation hearing on Wednesday before the Judiciary Committee, Blanche testified that the immunity agreement only covers tax filings made before May 19, 2026, when he signed off on it. When pressed by Sen. Adam Schiff (D-Calif.) about Trump’s $2 billion in reported earnings from 2025, Blanche said Trump has not yet filed his taxes for that year, so no protection applies. “When he files his taxes, there’s no protection based upon this agreement,” Blanche told senators.
The settlement agreement, brokered in May 2026, came under withering scrutiny from both Democrats and some Republicans who accused the Trump administration of self-dealing. In exchange for Trump dropping his lawsuit against the IRS over the leak of his tax information, the Justice Department agreed to shield Trump, his family, and his businesses from future audits and from any IRS claims related to past tax filings. The deal also initially included plans for a $1.8 billion “anti-weaponization fund” that critics said would benefit Trump’s political allies.
Under pressure from Republican senators, Blanche agreed to scuttle the weaponization fund, though he maintained the tax protection portion remained enforceable. A federal judge in Virginia blocked the fund in June. When asked during Wednesday’s hearing whether the settlement agreement could be revived, Blanche acknowledged it remains an “enforceable document” but said Trump’s lawyers would have to pursue a breach-of-contract lawsuit if they wanted to challenge the administration’s decision to abandon the fund.
Judge Williams’ ruling came just two days before Blanche’s confirmation hearing, intensifying scrutiny of his role in crafting the settlement. Williams concluded that Trump and his administration attempted to “manipulate the judicial process,” finding that Trump and the IRS were not genuinely adverse parties as required for a valid civil lawsuit. The judge allowed outside groups that had filed court briefs raising concerns about the lawsuit to seek payment for their legal work.
Sources
- Reuters — Judge Kathleen Williams’ 56-page ruling voiding the settlement, her findings of improper purpose and bad faith, and referral of attorneys for disciplinary action
- Politico — Todd Blanche’s testimony at Senate confirmation hearing on July 15, 2026, regarding limits on immunity deal for 2025 earnings
- BBC — Confirmation of settlement amount ($1.8 billion) and immunity provisions
- The Guardian — Background on May 19, 2026 settlement and IRS audit immunity provision
- Democracy Forward — Judge Williams’ findings that settlement was product of collusion and improper purpose
