Judge voids Donald Trump’s ‘improper’ $1.8b IRS settlement that gave him immunity from tax audits
A US judge has invalidated a legal agreement between President Donald Trump and federal agencies that gave him immunity from tax audits and allowed his administration to set up a $1.8bn (£1.3bn) “anti-proliferation” fund that has since been abandoned.
The fund, which aims to compensate individuals who claim they were unfairly targeted by the government, was launched in May in exchange for Trump dropping a $10 billion personal lawsuit against the Internal Revenue Service (IRS).
But on Monday, U.S. District Judge Kathleen Williams said the lawsuit was filed for an improper purpose.
He also referred a Trump lawyer to state officials to determine whether ethics rules had been violated and whether disciplinary action was warranted.
In the decision, Williams stated that the Trump lawsuit filed by him, his two sons, and the Trump Organization in 2026 was far from a dispute between two opposing parties. Instead, he said, this was more likely an action by lawyers with ties to Trump and those who claimed to be targets of the government.
Williams wrote that the case “was never about a party seeking judicial resolution of a legal issue or factual dispute between Trump and the IRS, which he controls as president.”
He also described the agreement as a bid to “provide some legitimacy to an agreement that would grant immunity to individuals and entities affiliated with the President and allocate billions of dollars from American taxpayers to address grievances not defined in the law.”
The ruling also prevents people involved in the case, including Trump and his sons, from citing the settlement or stating its terms in future legal proceedings. That could mean the IRS could move forward with audits of Trump’s tax claims in the future.
In the first lawsuit, Trump alleged that nothing was done to prevent the leak of private tax information by a former IRS contractor, Charles Littlejohn.
The information, leaked just before the 2020 presidential election that Trump lost, was the basis of a New York Times investigation that found Trump paid just $750 in federal income taxes in 2016, the year he won the presidency, and no taxes at all in 10 of the previous 15 years.
“President Trump did not pursue his allegations until he once again occupied the White House and appointed his former attorney and the former attorney for the individuals who were potential beneficiaries of the ‘Gun Fund’ to key positions in the Justice Department,” Williams said, referring to the Justice Department. he wrote.
“These officials then negotiated an ‘agreement’ with their current lawyers, including the former White House Counsel, on behalf of the United States. It is risky to suggest that there was any ill-will between the parties,” he added.
One of Trump’s lawyers, Alejandro Brito, has also been referred to the Florida bar for potential disciplinary action, while a second lawyer, Daniel Epstein, will no longer be able to participate in cases in the Southern District of Florida for at least a year.
A spokesperson for Trump’s legal team told the BBC that the IRS “wrongly allowed a dishonest, politically motivated employee to leak private and confidential information to the media.”
“President Trump continues to hold accountable those who have wronged America and Americans,” the spokesperson added.
Calling the deal a “cute deal” for Trump that gives him “unauthorized and unprecedented” exemptions from tax audit rules, Tax Law Center Policy Director Brandon DeBot said the agreement runs afoul of “the tax system’s protection against political interference.”
“The court’s decision is important, but it does not eliminate the need for congressional action to invalidate the entire agreement and prevent similar attempts by the president to direct his own interests in the future,” he told the BBC. he added.
The center, located at New York University, provides legal analysis of tax and public policy.
Plans for a proposed “anti-proliferation” fund were scrapped in early June, just a week after another judge temporarily blocked justice department officials from implementing the fund.
The order came after two men filed a lawsuit in Virginia claiming the fund was discriminatory. The plaintiffs said they were targeted by the Trump administration for political revenge but believed they would not be allowed to seek damages.
The widely criticized plan has raised alarm among Democrats and some Republicans, who argue that payments could be made to people prosecuted for the U.S. Capitol riot on Jan. 6, 2021, including those convicted of attacking police officers.
