Judge voids Trump IRS settlement granting tax audit immunity

A federal judge in Florida has thrown out a settlement between President Donald Trump and the federal government that would have granted Trump, his family and related entities immunity from tax audits and helped create a $1.8 billion fund for people claiming they were targeted by the government.

U.S. District Judge Kathleen Williams ruled Monday that Trump’s lawsuit over the leak of his tax returns was filed for an improper purpose and that the agreement reached to resolve it had no legitimate legal basis. The settlement had been announced in May after Trump agreed to drop a $10 billion lawsuit against the Internal Revenue Service over the disclosure of his private tax information.

Williams wrote that the case “was never about a party seeking judicial resolution of a legal issue or a factual dispute” between Trump and the IRS, which he controls as president. She said it was instead an effort “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.”

“The court finds that 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,” Williams wrote, according to The Guardian.

The ruling bars Trump, his sons, the Trump Organization and the government from using, offering, admitting or citing the settlement agreement in future proceedings. The BBC reported that the decision could allow the IRS to move forward with future audits involving Trump’s tax claims.

Trump, two of his sons and the Trump Organization filed the lawsuit in 2026, alleging that the IRS failed to stop former contractor Charles Littlejohn from leaking Trump’s tax information. The leaked material formed the basis of a New York Times investigation published shortly before the 2020 election, which reported that Trump paid $750 in federal income taxes in 2016, the year he won the presidency, and paid no federal income taxes in 10 of the previous 15 years.

Williams said Trump did not pursue the claims until he returned to the White House and had appointed his former lawyer, along with lawyers for people who could benefit from the “Anti-Weaponization Fund,” to senior Justice Department posts. “These officials then negotiated on behalf of the United States, with his current lawyers, including his former White House Counsel to reach a ‘settlement,’” she wrote. “It is risible to suggest that there was ever adverseness between the Parties.”

The proposed fund, meant to compensate people who said they were unfairly targeted by the government, drew bipartisan criticism. Critics warned it could lead to payments to people prosecuted over the Jan. 6, 2021, attack on the U.S. Capitol, including those convicted of assaulting police officers. Plans for the fund were abandoned in early June, a week after another judge temporarily blocked Justice Department officials from implementing it in a lawsuit filed in Virginia by two men who said the fund was discriminatory.

The Guardian reported that acting Attorney General Todd Blanche scrapped the fund amid backlash, while the tax immunity provisions remained in place until Williams’ ruling. Williams also said the government never answered obvious questions about whether the agreement conflicted with the Constitution’s emoluments clause or a law barring the president from ordering or ending an audit of a particular taxpayer.

Williams referred Trump attorney Alejandro Brito to the Florida Bar for possible disciplinary action and barred another Trump lawyer, Daniel Epstein, from appearing on behalf of clients in the Southern District of Florida for a year. The Guardian reported that she also criticized Blanche and Associate Attorney General Stanley Woodward and referred them to bars in New York and the District of Columbia, where disciplinary proceedings against them are ongoing.

A spokesman for Trump’s legal team told the BBC that the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information” to the media. “President Trump continues to hold those who wrong America and Americans accountable,” the spokesman said.

Brandon DeBot, policy director at the Tax Law Center, called the agreement a “sweetheart deal” that gave Trump “unauthorized and unprecedented” exemptions from audit rules. “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,” he said.