US judge voids Donald Trump's $1.8bn settlement with IRS that gave him immunity from tax audits
The judge said the suit was brought for 'improper purposes' and referred a Trump attorney for possible disciplinary action.
A US judge has annulled a legal agreement between President Donald Trump and federal agencies that had provided him immunity from tax audits and facilitated the establishment of a now-defunct $1.8 billion (£1.3 billion) "anti-weaponisation" fund. This fund was designed to compensate individuals who claimed they were unfairly targeted by the government and was introduced in May as part of a deal for Trump to withdraw his personal $10 billion lawsuit against the Internal Revenue Service (IRS).
On Monday, US District Judge Kathleen Williams ruled that the lawsuit was filed for an improper purpose. She also referred one of Trump's attorneys to state authorities to assess whether any ethical violations occurred that warranted disciplinary measures.
In her ruling, Williams characterized Trump's lawsuit—filed in 2026 by Trump, two of his sons, and the Trump Organization—not as a legitimate dispute between two opposing parties, but rather as an action orchestrated by Trump-affiliated lawyers and those claiming to be government targets. She stated that the lawsuit "was never about a party seeking judicial resolution of a legal issue or a factual dispute" with the IRS, which Trump oversees as president.
Williams further described the settlement as 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 to redress grievances not defined in the law." The ruling also bars those involved in the case, including Trump and his sons, from referencing the settlement or its terms in any future legal matters, potentially allowing the IRS to proceed with audits of Trump's tax claims.
In the original lawsuit, Trump alleged that nothing was done to stop the leak of his private tax information by a former IRS contractor, Charles Littlejohn. This leaked information, which surfaced just before the 2020 presidential election that Trump lost, was the basis for a New York Times investigation revealing that he paid only $750 in federal income taxes in the year he won the presidency in 2016 and no taxes at all in 10 of the previous 15 years.
"President Trump did not pursue his claims until he once again occupied the White House and had appointed his former lawyer, and the former lawyer of persons who are putative beneficiaries of the 'Anti-Weaponization Fund' to prominent positions in the DOJ," Williams noted, referring to the Department of Justice. "These officials then negotiated on behalf of the United States, with his current lawyers, including his former White House Counsel to reach a 'settlement.' It is risible to suggest that there was ever adverseness between the Parties," she added.
One of Trump's lawyers, Alejandro Brito, has also been referred to the Florida bar for possible disciplinary action, while another attorney, Daniel Epstein, will be barred from joining cases in the Southern District of Florida for at least a year.
In a statement to the BBC, a spokesperson for Trump's legal team claimed 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 spokesperson added.
Tax Law Center Policy Director Brandon DeBot criticized the agreement as a "sweetheart deal" for Trump that provided him with "unauthorized and unprecedented" exemptions from tax audit regulations, undermining "the tax system's protections against political interference." He emphasized that while the court's decision is significant, it does not eliminate the need for congressional action to invalidate the entire agreement and prevent similar presidential self-dealing in the future.
The center, based at New York University, offers legal analysis on tax and public policy. Plans for the proposed "anti-weaponisation" fund were scrapped in early June, just a week after another judge temporarily halted justice department officials from implementing it. This order followed a lawsuit filed in Virginia by two men who claimed the fund was discriminatory, alleging they had been politically targeted by the Trump administration and feared they would not be permitted to file claims for compensation.
The controversial plan raised concerns among Democrats and some Republicans, who argued it could lead to payments for individuals prosecuted in connection with the January 6, 2021, Capitol riot, including those convicted of assaulting police officers.