Federal Judge tosses Trump’s $10 Billion IRS lawsuit, sanctions his lawyers

President Trump’s $10 billion lawsuit against the IRS was dismissed by a federal judge on Monday. 

The judge ruled the case was not filed in good faith, as it served an “improper purpose.” The judge also referred one of Trump’s lawyers for disciplinary action.

U.S. District Judge Kathleen Williams, an Obama appointee sitting in the Southern District of Florida, laid out her reasoning in a 56-page order. She wrote that the suit “was not brought to vindicate rights” but to “manipulate the judicial process.” 

The core problem, she found, was that there were never two opposing sides: Trump, as president, controls the Justice Department, Treasury, and the IRS, the agencies he was suing.

Why did Trump sue the IRS?

President Trump and his two oldest sons sued the IRS in a Miami federal court in January of this year. They sued for $10 billion, claiming Trump’s tax records were leaked by a former IRS contractor. 

Charles Littlejohn, the man responsible for the leak, passed the tax returns to media outlets. He pleaded guilty and was sentenced to jail for five years in 2023.

In May, Trump and his sons withdrew the case, just two days before they were to defend the merits of their case in court. A settlement was reached. And a $1.776 billion “anti-weaponization fund” was created to pay individuals targeted by the federal government, while Trump and his sons were granted audit immunity.

Who was sanctioned?

Two attorneys were sanctioned. Alejandro Brito and Daniel Epstein. Judge Williams referred Brito to the Florida Bar for possible discipline, while Epstein was barred from instituting new cases in the Southern District of Florida for one year.

Judge Williams did not spare the lawyers from the Justice Department. She ordered copies of her ruling to be sent to the New York and Washington, D.C. bars. Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward are members of both bars.

Williams made reference to Todd Blanche’s May 19 congressional testimony, saying it was “at best, misleading and, at worst, disingenuous.” According to Todd Blanche, reviewing the deal was not possible because the case was dismissed. Williams disagreed, stating that any of the parties could have sought relief in her court at any time.

While the order doesn’t nuke the immunity deal or the 1776 fund, because they were negotiated without court approval, it prohibits anyone connected to the Trump organization from citing the “settlement agreement” as evidence of a settlement in any court, regulatory, or arbitration proceeding.

What prompted the ruling?

35 former judges requested Judge Williams reopen the case due to what they believe was a “product of collusion.” The settlement was reached while the Judge deliberated as to whether she had jurisdiction over the case or not.

When pressed for a response, a spokesperson for Trump’s legal team begged to differ, saying the IRS “wrongly allowed a rogue, politically-motivated employee” to leak the Trump family’s tax returns. The Treasury Department and DOJ did not respond to requests for a comment.

The timing couldn’t be more crucial. Acting Attorney General has his confirmation hearing on Wednesday. If confirmed, he’ll become Attorney General permanently, and Republican Senators have already begun asking questions about the audit immunity granted to the Trump family. The settlement has already attracted lawsuits challenging its validity.