US judge voids Trump's IRS settlement, rules $10 billion lawsuit was filed in bad faith to grant the president and his family tax immunity
A US federal judge in Florida voided the settlement President Donald Trump reached with the Internal Revenue Service, ruling the $10 billion lawsuit that spawned it was a sham designed to confer tax immunity on the president and his family.
The lawsuit and settlement
President Donald Trump, along with his sons Eric and Donald Trump Jr., sued the Internal Revenue Service in January for $10 billion. The suit alleged the agency failed to prevent the leak of Trump's confidential tax records during his first term. The data was leaked between 2018 and 2020 by Charles Littlejohn, an IRS contractor who was later sentenced to five years in prison. In May, Trump's personal lawyers reached a settlement with the Justice Department. That agreement granted Trump, his family members and their businesses sweeping retroactive immunity from IRS tax audits. It also created a $1.8 billion taxpayer-funded "anti-weaponisation" fund to compensate alleged victims of politically motivated government investigations. The fund was abandoned last month after fierce criticism, including from some Republican senators, and a Virginia judge blocked its use.
A case without adversaries
Judge Kathleen Williams of the US District Court in Miami issued a 56-page ruling voiding the settlement and declaring the underlying lawsuit had no basis in law or fact. Williams found that Trump and the IRS were never truly adverse parties because the president controls both the tax agency and the Justice Department. The ruling states the lawsuit 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." The judge quoted her own finding that the parties "worked in tandem and were never actually adverse," a direct violation of the constitutional requirement that a genuine case or controversy must exist for a federal court to hear a civil matter.
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 had initially closed the case after Trump withdrew the complaint. She reopened it after 35 former federal judges filed a motion asserting the court had been "misled" because the plaintiffs deliberately concealed the simultaneous settlement with the Justice Department.
What the judge barred
Williams prohibited Trump, his adult sons and the Trump Organization from citing the settlement in any future judicial or regulatory proceeding. This effectively nullifies the clause barring the IRS from examining past tax filings by the Trump family and their businesses. The judge also directed that a copy of her ruling be sent to the State Bar of New York and the District of Columbia Bar, where acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward are licensed members. She referred one of Trump's private attorneys who helped approve the settlement to the Florida Bar for possible disciplinary action.
Blanche and the Senate hearing
The ruling lands days before Blanche's scheduled confirmation hearing before the Senate Judiciary Committee. Blanche previously served as Trump's personal criminal defense lawyer before becoming acting attorney general. Williams described prior statements Blanche made to senators about the settlement as misleading. He had claimed the agreement could not be reviewed by a court because the case had already been withdrawn, but Williams determined that review was in fact possible. The Financial Times reported that Blanche is expected to face intense questioning about his independence from the White House and his role in the IRS deal.
The most flagrant act of corruption in American history.
Reactions and next steps
The Department of Justice did not immediately respond to requests for comment. A spokesman for Trump's legal team did not directly address the ruling but reiterated the claim that Trump's tax records were unlawfully released. Opposition Democrats, led by Senate Minority Leader Chuck Schumer, had already condemned the settlement as a "slush fund for criminals" and Schumer called it "the most flagrant act of corruption in American history." The German outlet N-tv noted that some Republican lawmakers also accused the administration of self-enrichment and misuse of taxpayer money for political allies. Williams' decision is the latest instance of the courts impugning the motives of the president and his administration.
