US judge voids Trump's $1.8bn IRS settlement and tax audit immunity, citing self-dealing
A federal judge in Florida ruled that the $1.8bn settlement between President Trump and his own justice department was collusive, voiding the deal and referring two lawyers for possible ethics violations.
The settlement
In May 2026, President Trump's personal lawyers and senior Department of Justice officials reached a deal to end a $10bn lawsuit Trump had filed against the Internal Revenue Service in January. The agreement committed the government to create a $1.8bn (£1.3bn) "Anti-Weaponization Fund" for individuals claiming they were unfairly targeted by law enforcement, and it granted Trump, his sons Eric and Donald Jr., and the Trump Organization sweeping immunity from future tax audits and other federal claims predating the settlement. The lawsuit had demanded damages over the leak of Trump's tax returns during his first term.
Judge Williams' voiding of the deal
US District Judge Kathleen Williams of the Southern District of Florida voided the entire settlement on Monday, saying the lawsuit was "never about a party seeking judicial resolution of a legal issue" and was instead an effort to "provide some legitimacy to an agreement to confer immunity." She wrote that because Trump controls the IRS as president, the parties could not be truly adverse as required by the Constitution. Her 56-page order blocks both sides from ever citing or using the agreement in any future proceeding.
It is risible to suggest that there was ever adverseness between the Parties.
- Trump and his sons sue the IRS for $10bn over the leak of his tax returns.
- Settlement reached: lawsuit withdrawn, $1.8bn anti-weaponization fund and tax audit immunity granted.
- A separate federal judge temporarily blocks use of the anti-weaponization fund.
- DOJ abandons the fund under bipartisan pressure; tax immunity terms remain in place.
- Judge Williams voids the entire settlement, bars future use of the agreement, and refers lawyers for ethics review.
Ethical referrals
Williams referred Trump lawyer Alejandro Brito and the senior DOJ officials who signed off on the deal to state bar disciplinary authorities, writing that the case was "brought for an improper purpose." She also criticised acting Attorney General Todd Blanche for his "apparent capacity to speak for both Plaintiffs and Defendants." Blanche faces a Senate confirmation hearing next week. Williams noted that Trump appointed his former personal lawyer, and the former attorney of other putative fund beneficiaries, to senior DOJ positions, who then negotiated the settlement with Trump's current lawyers.
Political and legal fallout
The settlement had already drawn bipartisan condemnation. In late May, a separate federal judge temporarily blocked the anti-weaponization fund, leading the DOJ to abandon it. The tax audit immunity provisions, however, remained intact until Monday. Thirty-five retired federal judges had asked Williams to reopen the case, arguing the court was "misled" because Trump's team failed to disclose the settlement when withdrawing the lawsuit. Williams reopened it and ultimately declared the entire arrangement void. She added that the immunity clause violated a federal law barring any president or executive official from interfering in IRS audits.
How the leak case began
Trump sued the IRS in January 2026 alongside his sons Eric and Donald Jr. and the Trump Organization, demanding $10bn for the agency's alleged failure to stop former contractor Charles Littlejohn from leaking his tax records during his first term. Those records formed the basis of a New York Times investigation published before the 2020 election that revealed Trump paid only $750 in federal income tax in 2016 and nothing in 10 of the prior 15 years. The suit lay dormant until Trump returned to office and installed his allies at the top of the justice department.
