US judge voids Trump tax settlement with IRS over improper purpose
A US federal judge on Monday voided a controversial settlement between President Donald Trump and the Internal Revenue Service, ruling that the lawsuit was filed for an improper purpose and that there was no genuine legal dispute between the parties.
The settlement, reached in May, would have granted Trump, his family, and his businesses broad protections from tax audits and established a $1.8 billion taxpayer-funded program to compensate people who alleged they had been targeted by politically motivated government investigations. The measure was derided as a "slush fund for criminals." Judge Kathleen Williams of Miami ruled the agreement invalid because Trump, as president, effectively controls the IRS and the Treasury Department.
Williams accused the government of abandoning its duty to defend the public interest, stating that Justice Department officials had pursued objectives exceeding their legal authority. She referred one of Trump’s private attorneys and senior Justice Department officials who signed the settlement to their respective bar associations for review of potential ethical violations.
The original lawsuit, filed by Trump, his two eldest sons, and the Trump Organization, sought $10 billion from the IRS over the disclosure of confidential tax records to news organizations. The settlement ended the lawsuit in May but faced criticism for granting immunity from tax audits and creating the fund.
Williams stated the settlement had no viable basis in law or fact, calling it an attempt to gain judicial legitimacy for a deal without legal foundation. “And because this fact was so obvious and so insurmountable, the court finds that this matter was brought for an improper purpose -- to gain the imprimatur of judicial legitimacy for a 'settlement' that had no viable basis in law or fact,” she wrote.
The judge blocked protections from future tax audits for Trump and his family and prevented them from citing the settlement in future legal proceedings. A spokesperson for Trump’s legal team repeated allegations that Trump’s tax records were improperly leaked but did not address the ruling directly. The Justice Department did not immediately respond to requests for comment.
Williams also limited another Trump lawyer’s ability to appear in her South Florida court for one year. The Wall Street Journal described the ruling as “devastating,” and the New York Times reported that Williams had called the settlement a backroom deal.
The decision affects Trump’s two eldest sons and the Trump Organization, who were parties to the original lawsuit. The settlement would have protected them from tax audits as well.
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