A US federal judge has struck down a legal settlement that had granted President Donald Trump immunity from tax audits and enabled his administration to establish a now-abandoned $1.8bn anti-weaponisation fund. The fund had been designed to compensate individuals who claimed they were unfairly targeted by the government, and was unveiled in May in exchange for Trump withdrawing his personal $10bn lawsuit against the Internal Revenue Service.
US District Judge Kathleen Williams ruled on Monday that the lawsuit had been filed for an improper purpose, and referred one of Trump’s attorneys to state authorities to determine whether ethics violations warranted disciplinary action. In her ruling, Williams characterized the case, filed by Trump, two of his sons, and the Trump Organization in 2026, as far removed from a genuine legal dispute between opposing parties, describing it instead as an arrangement orchestrated by lawyers connected to Trump alongside individuals claiming to have been government targets.
Williams 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. She said the settlement appeared designed 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.”
Her ruling also bars everyone involved in the case, including Trump and his sons, from invoking the settlement or its terms in any future legal proceedings, a decision that could clear the way for the IRS to resume audits into Trump’s tax filings. The original lawsuit had accused the agency of failing to prevent former IRS contractor Charles Littlejohn from leaking Trump’s private tax records.
That leaked information, made public shortly before the 2020 election which Trump lost, formed the basis of a New York Times investigation revealing he paid just $750 in federal income tax the year he won the presidency in 2016, and no federal income tax at all in 10 of the preceding 15 years. Williams noted that Trump did not pursue legal action over the leak until returning to the White House and appointing his former lawyer, along with the former lawyer of individuals set to benefit from the anti-weaponisation fund, to senior Justice Department positions.
“These officials then negotiated on behalf of the United States, with his current lawyers, including his former White House Counsel to reach a ‘settlement,'” Williams wrote. “It is risible to suggest that there was ever adverseness between the Parties.” Trump attorney Alejandro Brito was referred to the Florida bar for potential disciplinary review, while a second lawyer, Daniel Epstein, has been barred from taking on cases in the Southern District of Florida for at least a year.
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, adding that “President Trump continues to hold those who wrong America and Americans accountable.”
Brandon DeBot, policy director at the Tax Law Center at New York University, described the original agreement as a “sweetheart deal” that granted Trump “unauthorized and unprecedented” exemptions from standard tax audit procedures, undermining protections meant to shield the tax system from political interference. “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 in a statement.
Plans for the anti-weaponisation fund were abandoned in early June, just a week after a separate judge temporarily blocked Justice Department officials from implementing it. That earlier order followed a lawsuit filed in Virginia by two men who alleged the fund was discriminatory, claiming they had faced political retribution under the Trump administration but would be barred from filing compensation claims themselves. The plan drew sharp criticism from Democrats and some Republicans, who warned it could result in payments to individuals prosecuted over the 6 January 2021 Capitol riot, including those convicted of assaulting police officers.
