Judge says Trump IRS lawsuit bad faith, voids settlement

A federal judge has ruled that a lawsuit filed by President Donald Trump against the Internal Revenue Service was brought in bad faith to manipulate the judicial process, invalidating a resulting settlement and referring attorneys for potential disciplinary action. U.S. District Judge Kathleen Williams issued the 56-page order on Monday, July 13, 2026, in Miami, concluding the case was a sham designed to confer legal legitimacy on a deal granting the president and his associates sweeping benefits.

The lawsuit, filed in January 2026 by Trump, his adult sons, and the Trump Organization, sought $10 billion in damages. It alleged negligence by the IRS in allowing a contractor to leak the president's tax returns years earlier, a crime for which the contractor had already pleaded guilty in 2023. The case was voluntarily withdrawn by Trump in May 2026, coinciding with the announcement of a settlement brokered between his personal lawyers and senior Justice Department officials.

That settlement contained two major components: broad immunity from IRS audits and investigations for Trump, his family, and his businesses, and the creation of a taxpayer-funded "Anti-Weaponization Fund" valued...