A US federal judge has voided a settlement between President Donald Trump and the Internal Revenue Service, ruling that the lawsuit which produced it was filed in bad faith and for an improper purpose. The decision by District Judge Kathleen Williams in Miami nullifies an agreement that would have shielded Trump, his family and his businesses from tax audits and authorised a $1.8 billion fund for alleged victims of government “weaponisation”.

The judge found that the parties were never truly adverse, as Trump, in his capacity as president, controls both the IRS and the Department of Justice. She concluded that the litigation was “an attempt to use the Court to provide some legitimacy to an agreement to confer immunity” and to earmark billions of taxpayer dollars for grievances not defined in law. Trump’s legal team maintained that the IRS failed to prevent a politically motivated leak of his tax records and that the president “continues to hold those who wrong America and Americans accountable”. The Justice Department did not immediately respond to requests for comment.

The ruling bars Trump, his sons and the Trump Organization from citing the settlement in any official proceedings, effectively reviving the possibility of IRS audits into past tax filings. The $1.8 billion “Anti-Weaponization Fund” had already been abandoned by the administration in May after bipartisan criticism, with Democratic lawmakers and some Republicans denouncing it as a slush fund. The case originated from a 2019 leak of Trump’s tax returns by an IRS contractor, who was later convicted. Trump sued for $10 billion in January 2026, but the settlement was reached in May after his personal lawyers and the Justice Department, then led by his former attorney Todd Blanche, negotiated the terms. The judge noted that the government conspicuously failed to defend the lawsuit, and she referred Trump’s attorney Alejandro Brito to the Florida Bar for possible disciplinary action, while also forwarding her order to ongoing ethics investigations of Blanche and another senior official.

The judgment arrives two days before Blanche’s Senate confirmation hearing for the post of permanent attorney general, where the settlement is expected to be a central focus. European diplomatic observers note that the ruling reinforces institutional checks on executive self-dealing, while Latin American media highlight the judge’s finding that Trump “manipulated the judicial process”. The court has ordered monetary sanctions against the plaintiffs to cover the legal fees of former federal judges who intervened. Trump may appeal, but for now the settlement is legally inoperative, and the disciplinary referrals will proceed before state bar authorities.