Judge nullifies Trump-IRS settlement that granted audit immunity and created $1.8 billion fund

A U.S. district judge has invalidated a settlement between President Donald Trump and federal agencies that had shielded him from tax-audit scrutiny and created a $1.8 billion fund intended to compensate individuals who claimed they were targeted by the government. The agreement, announced in May, was linked to Trump’s decision to drop a personal $10 billion lawsuit against the Internal Revenue Service.

Judge Tanya S. Williams ruled that the lawsuit, filed in 2026 by Trump, his sons and the Trump Organization, was not a genuine legal dispute but a maneuver to secure immunity for the president and his affiliates while earmarking taxpayer money for undefined grievances. She wrote that the case “was never about a party seeking judicial resolution of a legal issue or a factual dispute.”

The ruling bars Trump, his sons and related parties from citing the settlement in future litigation, potentially allowing the IRS to resume audits of Trump’s tax filings. The original suit alleged that a former IRS contractor leaked Trump’s private tax information, which had been reported by the New York Times and showed minimal tax payments during his presidency.

Two of Trump’s attorneys faced disciplinary measures: Alejandro Brito was referred to the Florida Bar for possible action, and Daniel Epstein was barred from joining cases in the Southern District of Florida for at least one year.

"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," said Brandon DeBot, policy director at the Tax Law Center.

The order followed a lawsuit filed in Virginia by two men who claimed the fund discriminated against them and that they were targeted for political retribution by the Trump administration.