A federal judge said Monday that President Donald Trump’s lawsuit against the IRS — which resulted in a now-scuttled proposal for a $1.8 billion payout fund for alleged victims of politicized justice — was filed for an “improper purpose” and referred the attorneys involved for potential disciplinary proceedings.
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In a blistering 56-page ruling, U.S. District Judge Kathleen M. Williams accused the Justice Department’s top leaders and Trump’s personal attorneys of abusing the court process by fabricating a dispute and then using the courts to legitimize their desired resolution.
The administration has said it has abandoned plans for the fund, money for which would have been drawn from public coffers. It was not immediately clear whether the judge’s ruling would affect a second piece of agreement, which officials have said absolved Trump, his family and any of their associated entities from past tax claims, a potentially lucrative benefit for a president who has often complained about IRS audits targeting him.
Williams noted that Trump, as president, controlled attorneys on both sides of the case — those at the Justice Department and those representing him in his personal capacity. And when the judge began to ask questions about that relationship earlier this year, the lawyers worked quickly to reach a deal and withdrew the case.
Williams, in her ruling Monday, noted that no sitting president had ever sued the government he leads seeking monetary benefits for himself.
“The nature of the suit itself and the conduct of the Parties and counsel from its filing make plain that this was an attempt to use the Court 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,” wrote Williams, an appointee of President Barack Obama whose court is based in Florida.
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She referred two of Trump’s attorneys for potential disciplinary proceedings in that state and ordered that her ruling be sent to attorney oversight bodies in New York and Washington that are already investigating disciplinary claims against acting attorney general Todd Blanche and Stanley Woodward, the Justice Department’s No. 3 official. Both were key players in the deal.
The deal drew bipartisan backlash shortly after its announcement in the spring, and Blanche eventually told lawmakers that plans for the payout fund were no longer moving forward. But he has refused to put that pledge into writing — even at the prompting of another judge reviewing the legality of the proposed fund in separate litigation in Virginia.
Blanche has also said the Justice Department has no plans to withdraw the aspect of the deal shielding Trump and his family from past tax audits.
Trump, his two eldest sons and his family business filed their suit against the IRS in January, seeking as much as $10 billion in damages for the theft of their tax filings by a former agency consultant, who then leaked them to news organizations.
The former contractor, Charles Littlejohn, also leaked confidential tax records of other wealthy Americans. He pleaded guilty and was sentenced in 2024 to five years in prison in a case a judge called “the biggest heist in IRS history.”
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This is a developing story and will be updated.
