Corruption

A Federal Judge Slams Trump's IRS Lawsuit As a Pretext for Delivering a Phony 'Settlement'

U.S. District Judge Kathleen Williams concludes that the case never presented a true "case or controversy" because both sides were controlled by the president.

Jacob Sullum | 7.13.2026 8:10 PM

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(Jim LoScalzo/Pool via CNP/Zuma Press/Newscom)

In a scathing decision issued on Monday, a federal judge in Florida ruled that President Donald Trump's January 29 lawsuit against the IRS was nothing more than a pretext for a "settlement agreement" granting him, his family, and his supporters huge favors at the expense of U.S. taxpayers. The plaintiffs and the defendants "worked in tandem and were never actually adverse," writes U.S. District Judge Kathleen Williams, who ordered sanctions against Trump's lawyers. "Because this fact was so obvious and so insurmountable, 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."

That "settlement," which Acting Attorney General Todd Blanche announced on May 18, included $1.8 billion in taxpayer money for an "Anti-Weaponization Fund" designed to benefit Trump's friends and followers. As Blanche revealed the next day, the agreement also included protection from liability for tax violations and any other federal offenses that Trump or his relatives may have committed prior to May 19—a provision that could save the president more than $100 million in back taxes, interest, and penalties.

The Anti-Weaponization Fund provoked a fierce bipartisan backlash that persuaded Blanche to abandon the scheme two weeks after announcing it. But Blanche said the sweeping immunity deal remained in place. Although Williams' order does not affect either boon, it highlights the brazenly corrupt nature of the arrangement, which was based on a phony lawsuit that pitted Trump against agencies he oversees, represented by Justice Department lawyers who also answer to him.

Trump's lawsuit, which was joined by two of his sons and the Trump Organization, preposterously alleged that an IRS contractor's illegal disclosure of their tax returns had caused "at least" $10 billion in damages. In addition to offering an improbable estimate of the injury he had suffered, Trump filed the lawsuit more than two years after learning about the leak, exceeding the time limit set by the statute he invoked.

That law covers unauthorized disclosures by "any officer or employee of the United States." So even if Trump had filed his lawsuit on time, he would have faced the challenge of arguing that a contractor employed by a consulting business fit into that category—a point that the Justice Department has disputed in other cases involving similar claims.

Despite those legal weaknesses, the Justice Department never bothered to contest Trump's claims, in sharp contrast with the way it usually treats such lawsuits. That failure highlighted the blatant conflicts of interest created by a case in which both sides were represented by lawyers who worked for Trump. Further compromising the Justice Department's ability to defend the IRS, an executive order that Trump issued in February 2025 bars the government's lawyers from taking legal positions at odds with the president's.

The situation was so bizarre that Williams, who oversaw the case in the Southern District of Florida, questioned whether it involved a genuine controversy between adverse parties, as required for the lawsuit to proceed. Trump dropped his case........

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