A US District Court judge has voided a settlement between Donald Trump and the Internal Revenue Service (IRS) that would have granted him immunity from tax audits and established a $1.8 billion fund. The judge ruled that the lawsuit, filed by Trump and the Trump Organization in 2026, was initiated for improper purposes.
US District Judge Kathleen Williams stated that the settlement was not a genuine dispute between opposing parties, but rather an action orchestrated by lawyers with ties to Trump and individuals who claimed to have been targeted by the government. She wrote that the lawsuit "was never about a party seeking judicial resolution of a legal issue or a factual dispute" between Trump and the IRS, an agency he oversees as president.
The agreement, which was intended to create an "anti-weaponisation" fund to compensate individuals alleging government targeting, was unveiled in May. In exchange for this fund, Trump was to drop his personal $10 billion lawsuit against the IRS. However, the judge described the settlement as an attempt to legitimize an agreement that conferred immunity on individuals and entities affiliated with the president and earmarked billions of taxpayer dollars for grievances not defined by law.
The ruling also prohibits those involved in the case, including Trump and his sons, from referencing the settlement or its terms in future legal proceedings. This decision could allow the IRS to proceed with future audits into Trump's tax claims.
Trump's initial lawsuit claimed that measures were insufficient to prevent the leak of his private tax information by a former IRS contractor. This leaked information became the basis for a New York Times investigation published just before the 2020 presidential election, which revealed that Trump paid only $750 in federal income taxes in 2016 and no taxes in 10 of the preceding 15 years.
Williams noted that Trump pursued his claims only after reoccupying the White House and appointing his former lawyer, along with the former lawyer of putative beneficiaries of the "Anti-Weaponization Fund," to prominent positions in the Department of Justice. She described the negotiation process leading to the settlement as lacking genuine adverseness between the parties.
One of Trump's attorneys, Alejandro Brito, was referred to the Florida bar for potential disciplinary action. Another lawyer, Daniel Epstein, has been barred from cases in the Southern District of Florida for at least one year.
A spokesperson for Trump's legal team stated that the IRS "wrongly allowed a rogue, politically-motivated employee to leak private and confidential information" to the media. The spokesperson added that Trump "continues to hold those who wrong America and Americans accountable."
Brandon DeBot, Policy Director at the Tax Law Center at New York University, criticized the agreement as a "sweetheart deal" that granted Trump "unauthorized and unprecedented" exemptions from tax audit rules, thereby undermining the tax system's safeguards against political interference. DeBot emphasized the need for congressional action to nullify the entire deal and prevent similar instances of presidential self-dealing.
Plans for the proposed "anti-weaponisation" fund were abandoned in early June, a week after another judge temporarily halted its implementation. That order followed a lawsuit filed in Virginia by two men who alleged the fund was discriminatory and that they would be barred from filing compensation claims despite allegedly being targeted for political retribution by the Trump administration.
The settlement plan drew criticism from Democrats and some Republicans, who expressed concern it could lead to payments for individuals prosecuted in connection with the January 6, 2021, US Capitol riot, including those convicted of assaulting law enforcement officers.