A US federal judge has struck down a controversial legal settlement between former President Donald Trump and federal agencies that had granted Trump immunity from tax audits and allowed the Trump administration to establish a now-defunct $1.8 billion "anti-weaponisation" fund. The fund was initially created to compensate individuals who claimed they had been unfairly targeted by the government, and it was introduced in May as part of a deal in which Trump agreed to drop his personal $10 billion lawsuit against the Internal Revenue Service (IRS).
The decision came on Monday from US District Judge Kathleen Williams, who ruled that the lawsuit was filed for an improper purpose. In her ruling, Judge Williams described Trump's legal action - which he filed in 2026 alongside two of his sons and the Trump Organization - not as a genuine dispute between two opposing parties, but rather as a coordinated effort involving lawyers connected to Trump and individuals claiming to have been targeted by the government. Williams wrote that the suit "was never about a party seeking judicial resolution of a legal issue or a factual dispute" between Trump and the IRS, the agency responsible for tax enforcement.
Moreover, the judge characterized the settlement as an attempt 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." The ruling effectively voided the settlement, preventing Trump, his sons, and others involved in the case from citing or relying on the agreement's terms in any future legal proceedings. This outcome potentially clears the path for the IRS to resume auditing Trump's tax records and claims.
Trump's original lawsuit was centered on allegations that the IRS failed to prevent the leak of his private tax information by a former IRS contractor named Charles Littlejohn. The leaked tax documents, which surfaced just prior to the 2020 presidential election that Trump ultimately lost, formed the basis of a New York Times investigation revealing that Trump paid only $750 in federal income taxes in the year he won the presidency (2016), and had paid no federal income taxes in 10 of the previous 15 years. The release of this information ignited significant public controversy and scrutiny over Trump's financial affairs.
Judge Williams also pointed out that Trump did not pursue his claims until he had returned to the White House and had appointed his former lawyer, along with the former lawyer of some potential beneficiaries of the "anti-weaponisation" fund, to key positions within the Department of Justice (DOJ). She noted that these officials then negotiated on behalf of the US government with Trump's current lawyers - including his former White House counsel - to reach the settlement. Williams dismissed as "risible" the suggestion that any true adversarial dispute had existed between the parties.
In addition to annulling the settlement, the judge referred one of Trump's attorneys, Alejandro Brito, to the Florida Bar for potential disciplinary action, citing possible ethics violations. Another attorney, Daniel Epstein, was barred from appearing in cases before the Southern District of Florida for at least one year. These measures underscore the court's serious concerns about the conduct of Trump's legal team in pursuing the case.
Responding to the ruling, a spokesman for Trump's legal team told the BBC that the IRS "wrongly allowed a rogue, politically motivated employee to leak private and confidential information" to the media. The spokesman added that "President Trump continues to hold those who wrong America and Americans accountable," reaffirming Trump's stance against the alleged leak.
Public commentary on the court's decision was largely critical of the initial settlement. Brandon DeBot, Policy Director at the Tax Law Center based at New York University, described the original agreement as a "sweetheart deal" that granted Trump "unauthorized and unprecedented" exemptions from tax audit rules. He argued that the settlement undermined "the tax system's protections against political interference." While welcoming the court's decision, DeBot emphasized that congressional action was still needed to fully nullify the deal and prevent similar attempts at presidential self-dealing in the future.
The "anti-weaponisation" fund itself had been widely criticized and ultimately abandoned shortly after its announcement. Plans for the $1.8 billion fund were dropped in early June, just a week after a separate judge issued a temporary injunction preventing the Department of Justice from implementing it. That injunction followed a lawsuit filed in Virginia by two men who claimed the fund was discriminatory. These plaintiffs alleged they had been targeted for political retribution by the Trump administration but feared they would be excluded from compensation under the fund's terms.
The fund was controversial because it proposed compensating individuals who claimed to be victims of government harassment or unfair targeting, raising concerns among Democrats and some Republicans about the possibility that it might provide payouts to people convicted for their involvement in the January 6, 2021, US Capitol riot. Some critics feared that those who had been prosecuted for crimes such as assaulting police officers during the riot could receive government funds, a notion many found deeply objectionable.
The initiative also drew criticism from prominent political figures. Former Vice President Mike Pence, for example, called the "anti-weaponisation" fund "deeply offensive" and urged that it be dropped, reflecting broader bipartisan unease about the plan's implications.
In summary, the voiding of Trump's settlement with the IRS and the abandonment of the "anti-weaponisation" fund mark a significant legal and political setback for the former president. The court's ruling not only rejects what it deemed an improper legal strategy designed to shield Trump and his affiliates from tax scrutiny but also highlights ethical concerns involving Trump's legal representatives. Meanwhile, the collapse of the fund reflects widespread opposition to what many saw as an unprecedented and potentially unjust use of taxpayer money. Going forward, the IRS appears free to resume its audits of Trump's tax filings, and the controversy surrounding these matters continues to underscore ongoing tensions over presidential accountability and the rule of law in the United States.