A federal judge voided President Trump’s $1.8 billion settlement with the Internal Revenue Service on July 13, finding the lawsuit was filed for an improper purpose and describing the agreement as collusive. U.S. District Judge Kathleen Williams ruled that Trump had misused the court system to extract personal benefits from a federal agency he controls, preventing the settlement terms from taking legal effect and barring Trump from citing them in future proceedings.
Trump filed the original lawsuit on January 29, 2026, seeking $10 billion from the IRS over the leak of his confidential tax returns. The leak came from Charles Littlejohn, a former IRS contractor who was sentenced in January 2024 to five years in prison for stealing and disclosing tax records of Trump, his family, and other wealthy Americans. The leaked information had formed the basis of a New York Times investigation published before the 2020 election, revealing Trump paid only $750 in federal income taxes in 2016 and no taxes in 10 of the previous 15 years.
In May 2026, Trump and the Department of Justice reached a settlement in which Trump dropped his lawsuit in exchange for immunity from future IRS audits and the creation of a $1.776 billion “anti-weaponization fund” intended to compensate individuals claiming they were unfairly targeted by the government. The fund was abandoned in early June after another federal judge temporarily blocked its implementation following a lawsuit challenging its legality.
Judge Williams’ 56-page ruling excoriated both Trump’s personal lawyers and attorneys in the Justice Department, concluding they had misused the legal system to provide cover for actions benefiting Trump and his allies. Williams found that Trump did not pursue his claims until after returning to the White House and appointing his former lawyer and the former lawyer of people who were putative beneficiaries of the fund to prominent positions in the DOJ. “This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams wrote, characterizing the lawsuit instead as an attempt to “provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the President.”
The judge determined that there was no genuine adverseness between the parties, a legal requirement for civil lawsuits. She referred Trump attorney Alejandro Brito to the Florida bar for potential disciplinary action and barred another lawyer, Daniel Epstein, from joining cases in the Southern District of Florida for at least one year. A copy of the ruling was also sent to legal disciplinary authorities in New York and Washington, D.C., where Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward hold bar licenses.
Williams’ order prevents Trump, his adult sons, and the Trump Organization from referring to the settlement or citing its terms in any future legal proceedings. This means the IRS may now move forward with future audits into Trump’s tax claims, effectively nullifying the core benefit Trump sought from the agreement. Brandon DeBot, policy director of the Tax Law Center at New York University, called the court’s decision important but noted it did not remove the need for congressional action. “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,” DeBot said in a statement.
The settlement had drawn sharp criticism from Democrats and some Republicans who argued it represented an unprecedented and sweeping exemption from standard tax audit rules. Critics raised particular concerns about the weaponization fund, warning it could result in payments to individuals prosecuted over the January 6, 2021 Capitol riot, including those convicted of assaulting police officers. A federal judge in Virginia had already blocked the fund’s implementation after two men filed a lawsuit claiming it was discriminatory.
Trump’s legal team responded to the ruling by restating claims that the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information” and said the president “continues to hold those who wrong America and Americans accountable.” A Justice Department spokesperson did not immediately respond to requests for comment on the ruling.
Sources
- BBC News — Judge Kathleen Williams’ ruling voiding the settlement, the original lawsuit filing date, the settlement terms, the weaponization fund, and referral of Trump attorney for disciplinary action
- Reuters — Judge Williams’ 56-page ruling finding improper use of the court system, the settlement terms, the lack of adverseness between parties, referrals to bar authorities, and the barring of Trump from citing the settlement in future proceedings
- Tax Law Center — Commentary from Brandon DeBot on the court’s decision and the need for congressional action
- NBC News — Judge’s finding that Trump attempted to manipulate the judicial process
