Judge Voids Trump's $10 Billion IRS Deal, Orders Sanctions and Refers His Lawyers for Discipline

A federal judge on Monday nullified President Donald Trump's controversial settlement with the Internal Revenue Service, ruling that Trump acted in bad faith and had sought to "manipulate the judicial process" by using a lawsuit against the government as cover for an agreement he was unwilling to defend in open court. In a scathing 56-page order, U.S. District Judge Kathleen Williams also ordered sanctions and referred one of the president's attorneys for possible discipline.

Williams found that the parties in the case were never actually in opposition to one another, and that the litigation and the resulting settlement were therefore not lawful. Trump, she wrote, "improperly" used the lawsuit "as a means of conferring legitimacy upon a course of action that they were unwilling to subject to judicial review." She described the arrangement as an attempt "to use the Court to provide some legitimacy to an agreement to confer immunity."

The voided deal was extraordinary in scope. It had included a $1.776 billion "anti-weaponization fund" earmarked for the president's allies, along with a sweeping immunity agreement that shielded Trump, his sons and other "related parties" from certain prosecutions or civil actions by the federal government. The pact grew out of a $10 billion lawsuit Trump brought against the IRS, and it also carried a promise that the president and his businesses would not be audited.

Williams ordered sanctions against the attorneys involved and referred Trump's lawyer, Alejandro Brito, to the Florida Bar for potential disciplinary action. She further directed that a copy of her order be added to disciplinary proceedings already underway against Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward, deepening the legal jeopardy facing senior Justice Department officials.

The ruling represents one of the most direct judicial rebukes of the administration's handling of Trump's personal legal affairs, and it strips away a settlement the president had touted as a resolution of his long-running feud with the tax agency. Congress had already blocked the fund's implementation earlier this year, but the no-audit promise for Trump and his companies had remained in place until Monday's decision. Lawyers for the president are expected to appeal, and the fight over the sanctions and bar referrals is likely to stretch on for months. Central to the judge's reasoning was that the IRS was never a genuine adversary in the case, meaning there was no real dispute for a court to resolve — a defect she said made both the litigation and the settlement legally void from the start. The decision lands amid a series of courtroom setbacks for the administration's most aggressive legal maneuvers, and legal ethics experts said the referral of a sitting president's attorney to a state bar over conduct in his personal case was a rare and serious step.