A federal judge has struck down a legal agreement that would have protected President Donald Trump from IRS tax audits while approving a proposed $1.8 billion “anti-weaponisation” fund. The ruling voids the settlement and allows the IRS to resume tax audits into Trump’s filings.
According to the BBC, the agreement was announced in May after Trump agreed to drop his personal $10 billion lawsuit against the Internal Revenue Service. In return, the settlement would have ended IRS audits into his taxes and created a fund to compensate people who claimed they had been unfairly targeted by the federal government. Although the fund was later abandoned, the legal dispute over the agreement remained before the court.
US District Judge Kathleen Williams ruled that the lawsuit had been filed for an improper purpose, invalidating the settlement and raising questions about how it was negotiated. This isn’t the first time the settlement drew scrutiny. Earlier reports revealed the DOJ was weighing a deal to end all IRS audits of Trump and his family.
It almost looked like everyone was on the same side
In Monday’s ruling, the judge said the case did not appear to be a genuine dispute between opposing parties. The court found that lawyers connected to Trump and attorneys linked to people who could have benefited from the proposed fund appeared to be working toward the same outcome.
The ruling said the lawsuit only moved forward after Trump returned to the White House. By then, he had appointed his former lawyer and another attorney linked to potential beneficiaries of the fund to senior positions at the Department of Justice. Those officials later negotiated the settlement with Trump’s legal team, including his former White House Counsel.
Calling the arrangement highly unusual, the judge wrote that it was “risible to suggest that there was ever adverseness between the Parties.” She also ruled that neither Trump nor his sons can rely on the settlement or cite it in future legal proceedings. The audit exemption had already stirred controversy weeks earlier. A quietly released addendum showed the IRS would be permanently barred from auditing Trump again.
The ruling also affects members of the legal team. Attorney Alejandro Brito was referred to the Florida Bar for possible ethics violations, while Daniel Epstein was barred from practicing before the Southern District of Florida for at least one year.
The lawsuit stemmed from the leak of Trump’s confidential tax records by former IRS contractor Charles Littlejohn. Those records were later used in a New York Times investigation published before the 2020 election, which reported that Trump paid $750 in federal income taxes in 2016 and no federal income tax in 10 of the previous 15 years.
A spokesperson for Trump’s legal team said the IRS failed to prevent a politically motivated employee from leaking confidential taxpayer information and that Trump remains committed to holding those responsible accountable.
Tax experts criticized the proposed settlement. Brandon DeBot, policy director at New York University’s Tax Law Center, called it a “sweetheart deal” that would have created unauthorized exemptions from normal IRS audit procedures. He said the ruling is significant but added that Congress may still need to act to prevent similar agreements in the future.
The proposed anti-weaponization fund had already been halted in early June after another federal judge temporarily blocked it in a separate lawsuit. Critics, including some Republicans, argued the fund could have resulted in payments to people prosecuted over the January 6, 2021, Capitol riot, including those convicted of assaulting police officers.
Published: Jul 14, 2026 03:00 pm