US Judge Voids Trump Deal Shielding Him from IRS Tax Audits

TEMPO.CO, Jakarta – A US federal judge has nullified a controversial legal settlement between President Donald Trump and federal agencies that would have shielded him from future tax audits, ruling that the agreement lacked a legitimate legal basis and was designed to benefit the president rather than resolve a genuine dispute.

As reported by BBC, US District Judge Kathleen Williams on Monday voided the agreement, which had also included plans for a now-abandoned US$1.8 billion "anti-weaponization" fund intended to compensate people claiming they had been unfairly targeted by the federal government. The settlement had been reached after Trump agreed to withdraw a US$10 billion lawsuit against the Internal Revenue Service (IRS).

Williams ruled that the case "was never about a party seeking judicial resolution of a legal issue or a factual dispute," arguing instead that it was an attempt to use the courts to legitimize an arrangement granting immunity from tax audits to Trump, his family, and affiliated entities while allocating billions of dollars in taxpayer funds for claims not recognized under existing law.

The ruling effectively revives the possibility that the IRS could conduct future audits of Trump's tax returns. It also bars Trump, his sons, the Trump Organization, and the federal government from citing or relying on the settlement in future legal proceedings.

The lawsuit was originally filed after former IRS contractor Charles Littlejohn leaked Trump's confidential tax information before the 2020 presidential election. The disclosures later formed the basis of a New York Times investigation that reported Trump paid just US$750 in federal income taxes in 2016 and no federal income tax in 10 of the previous 15 years.

Williams questioned whether the lawsuit had ever represented a genuine legal dispute, noting that Trump filed the case only after returning to the White House, where he ultimately controlled the federal agencies named as defendants.

According to The Guardian, the judge concluded there had never been the required legal adversity between the parties because the Treasury Department and the Department of Justice ultimately acted under the president's authority.

"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," Williams wrote in her 56-page ruling.

She also criticized the government's handling of the case, saying Acting Attorney General Todd Blanche appeared able to speak on behalf of both the plaintiffs and the defendants. Williams said that arrangement demonstrated that only one set of interests had been represented throughout the litigation.

Beyond invalidating the agreement, the judge imposed sanctions on several lawyers involved in the case. Trump attorney Alejandro Brito was referred to the Florida Bar for possible disciplinary action, while another lawyer, Daniel Epstein, was barred from appearing before the U.S. District Court for the Southern District of Florida for at least one year.

Williams also referred Blanche and Associate Attorney General Stanley Woodward to bar authorities in New York and Washington, D.C., citing concerns over their conduct during the proceedings.

The settlement had already faced mounting political opposition after the Justice Department abandoned the proposed US$1.8 billion compensation fund in June. Critics from both major political parties warned the program could be used to compensate individuals convicted over the January 6, 2021, attack on the US Capitol or others claiming political persecution.

Although the fund was scrapped, provisions shielding Trump and related entities from IRS audits remained intact until Monday's ruling.

A spokesperson for Trump's legal team defended the lawsuit, arguing that the IRS had failed to prevent the politically motivated disclosure of Trump's confidential tax records and saying the president remained committed to holding accountable those responsible for the leak.

Legal experts welcomed the ruling but said further action is still needed. Brandon DeBot, policy director at the Tax Law Center at New York University, said the agreement had represented an unprecedented exemption from ordinary tax oversight and undermined protections against political interference in the tax system.

He argued that congressional action remains necessary to permanently prevent similar arrangements involving future presidents.

Read: Trump Ally Lindsey Graham Dies at 71 After Sudden Illness

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