In a landmark legal ruling that has sent shockwaves through U.S. political circles, a federal district judge has struck down a controversial agreement between sitting President Donald Trump and federal agencies that would have granted him broad immunity from Internal Revenue Service (IRS) tax audits and authorized an abandoned $1.8 billion fund for alleged political targeting victims. The proposed “anti-weaponization” fund, which was introduced back in May as part of a deal to drop Trump’s $10 billion personal lawsuit against the IRS, was rejected by U.S. District Judge Kathleen Williams on the grounds that the underlying lawsuit was filed for an improper purpose. Beyond voiding the entire settlement, Williams also referred one of Trump’s personal attorneys to state regulatory authorities to investigate potential ethics violations and consider disciplinary action.
The 2026 lawsuit at the center of the ruling was brought by Trump, two of his sons, and the Trump Organization against the nation’s tax collection agency. In her scathing 15-page ruling, Judge Williams rejected the framing of the case as a traditional adversarial legal dispute. Instead, she argued that the lawsuit was coordinated between Trump-aligned attorneys and individuals claiming to have been targeted by the federal government, with no genuine intention of resolving a legitimate legal or factual conflict between Trump and the IRS — an agency that Trump currently controls as President. Williams wrote that the entire settlement was a deliberate attempt to legitimize an arrangement that grants legal immunity to Trump and his affiliated associates, while siphoning billions of taxpayer dollars to address grievances that are not even recognized under existing federal law.
As part of the ruling, Williams barred all parties involved in the case, including Trump and his sons, from referencing the terms of the voided settlement in any future legal proceedings. The decision paves the way for the IRS to resume long-stalled audits of Trump’s personal and business tax returns, a development that carries significant legal and political risk for the sitting president.
The origins of the original lawsuit trace back to a high-profile 2020 tax leak, just weeks before that year’s presidential election, which Trump lost. A former IRS contractor named Charles Littlejohn leaked Trump’s confidential tax records to *The New York Times*, which published an investigation revealing that Trump paid just $750 in federal income taxes in 2016, the year he was first elected president, and paid no federal income taxes at all in 10 of the 15 years preceding his first victory. Notably, Trump did not move forward with his legal claims over the leak until he returned to the White House after the 2024 election, when he appointed allies to top roles at the Department of Justice (DOJ), including a former attorney who represented individuals that stood to benefit from the proposed anti-weaponization fund.
“These officials then negotiated on behalf of the United States, with his current lawyers, including his former White House Counsel to reach a ‘settlement.’ It is risible to suggest that there was ever adverseness between the Parties,” Williams wrote in her ruling.
Alongside voiding the settlement, the judge imposed professional sanctions on two of Trump’s legal team members. Lead attorney Alejandro Brito was referred to the Florida Bar for potential disciplinary action over ethics violations, while a second attorney, Daniel Epstein, was banned from representing clients in the U.S. Southern District Court of Florida for a minimum of one year.
In a written statement provided to the BBC, a spokesperson for Trump’s legal team defended the President’s actions, arguing that the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information” to the media. The statement added that “President Trump continues to hold those who wrong America and Americans accountable.”
Legal and tax policy experts have widely condemned the original settlement as an unprecedented example of presidential self-dealing. Brandon DeBot, Policy Director at the New York University-based Tax Law Center, described the deal as a “sweetheart deal” that granted Trump unauthorized and historically unprecedented exemptions from standard IRS audit rules, undermining core safeguards designed to prevent political interference in the U.S. tax system. DeBot noted that while the court’s ruling is a critical step forward, Congress still needs to pass formal legislation to fully invalidate all provisions of the deal and block future attempts at self-serving political action by a sitting president. “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,” DeBot told the BBC.
Plans for the $1.8 billion anti-weaponization fund were already scrapped in early June, just seven days after a separate federal judge issued a temporary order blocking the DOJ from moving forward with its implementation. That preliminary injunction came in response to a separate lawsuit filed in Virginia by two men who alleged the fund’s eligibility rules were discriminatory. The two plaintiffs claimed they had been targeted for political retribution by the Trump administration but would be barred from accessing compensation through the fund.
From its announcement, the fund drew fierce criticism from lawmakers across both major political parties, with Democrats and a faction of Republicans raising alarms that the fund could be used to pay compensation to individuals charged and convicted in connection with the January 6, 2021 U.S. Capitol riot, including those who were found guilty of assaulting police officers during the insurrection.