In May, the Trump administration settled a lawsuit Trump had filed against the IRS over the theft and leak of his tax returns. The deal gave Trump a formal public apology, blocked future IRS audits of his family and businesses, and created a $1.776 billion fund to compensate people who claimed the government had been "weaponized" against them. On Monday, U.S. District Judge Kathleen Williams voided the settlement, called the lawsuit an abuse of the court system, and referred Trump's lawyers for bar discipline.

1. The IRS Really Did Steal His Tax Returns (Donald Trump, Sen. Ron Johnson)

Trump's camp says the underlying grievance was real — and the settlement was appropriate compensation for a genuine federal crime.

The leak was a genuine federal crime. IRS contractor Charles Littlejohn stole Trump's tax returns and passed them to The New York Times and ProPublica. A federal court convicted Littlejohn and sentenced him to five years in prison. Ken Griffin and other wealthy Americans sued the IRS over the same breach.

Voiding the settlement leaves the original violation unaddressed. Trump's lawyers said the IRS "wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization." Sen. Ron Johnson, a close Trump ally, backed the approach: "I think when the federal government abuses citizens, they owe citizens some compensation."

2. But He Used the Courts to Immunize Himself (Judge Kathleen Williams, Former IRS Officials, 35 Former Federal Judges)

The judge says there was never a real lawsuit — Trump sued agencies he controlled, then settled with himself.

Trump sued agencies he controlled. In her 56-page ruling, Judge Williams found that Trump filed the case for "an improper purpose" — to gain "judicial legitimacy for a 'settlement' that had no viable basis in law or fact." Trump controlled both the IRS and the DOJ he was suing — so there were no genuine adverse parties and no real case.

The audit immunity provision broke the law. A group of former officials — including a former IRS commissioner and a former chief of the DOJ's tax division — called the deal "unprecedented and breathtakingly improper." They argued the clause permanently blocking IRS audits of Trump and his businesses "directly contravenes" a federal law that bars executive-branch interference in taxpayer investigations. Brandon DeBot, policy director at NYU's Tax Law Center, said the deal created "two separate tax codes" — one for Trump and one for everyone else.

The judge sanctioned Trump's lawyers. Judge Williams referred attorney Alejandro Brito to the Florida Bar and barred attorney Daniel Epstein from practicing in the Southern District of Florida for a year. She also sent copies of the ruling to the New York and D.C. bars regarding Acting AG Todd Blanche and DOJ official Stanley Woodward.

3. Republicans Didn't Buy the Fund Either (Senate Majority Leader John Thune, Sen. Susan Collins)

Some Republicans split from Trump on the anti-weaponization fund — the structure of the deal was wrong even if the IRS was wrong first.

The fund collapsed under bipartisan pressure before the judge struck it down. Senate Majority Leader John Thune said he was "not a big fan" of the fund and didn't "see a purpose for that." Sen. Susan Collins pressed Blanche on the terms at hearings. By early June, DOJ had abandoned the fund entirely.

This camp's argument isn't that Trump deserved nothing. Presidential court settlements are the wrong mechanism for compensating victims of government surveillance abuse. Proper relief would require legislation and real appropriations — not a president suing his own agencies and settling with himself. Even Trump's own party rejected the fund's structure — the problem was structural, not just partisan.

Where This Lands

Trump can still appeal the July 13 ruling. His team declined direct comment but said he "continues to hold those who wrong America accountable." The lawyers face bar proceedings in at least two states plus D.C. Judge Williams left open the possibility that Trump could create a private immunity agreement outside of litigation — though whether it would hold up in court is uncertain. For critics, the ruling is a rare case of the judicial system catching a presidential end-run in real time. For Trump's camp, the original IRS violation remains unaddressed and uncompensated.

Sources