Judge says Trump IRS lawsuit was filed for 'improper purpose,' refers
lawyer for possible discipline
[July 14, 2026]
By ERIC TUCKER and ALANNA DURKIN RICHER
WASHINGTON (AP) — President Donald Trump's lawsuit against the Internal
Revenue Service over his leaked tax returns was filed for an “improper
purpose,” a judge said Monday as she referred one of his lawyers for
potential disciplinary action and characterized the $10 billion
complaint as an exercise in self-dealing.
U.S. District Judge Kathleen Williams accused Trump and his lawyers in a
scathing ruling of having manipulated the court system when he sued a
federal agency under his control, bypassing a requirement that parties
in a lawsuit must have adverse interests. The lawsuit ended in a
settlement that granted the president immunity from tax audits and
established a $1.776 billion fund to compensate Trump allies who believe
they have been unjustly persecuted.
The judge stopped short of explicitly voiding the deal shielding Trump
from tax scrutiny but said the government cannot claim in official
proceedings that the agreement was the result of a legitimate legal
process.
“Whether Executive Branch actors can privately agree to give themselves
and their former clients blanket immunities and billions of dollars in
tax monies for legally undefined grievances was never an issue advanced
to this Court,” said Williams, an appointee of President Barack Obama.
“The question is whether the Parties could do so by claiming to be
adverse and engaging the legitimacy of a court proceeding. The answer is
a resounding ‘no.’”
The ruling comes just ahead of a key confirmation hearing
Though the practical impacts of the ruling may be limited since the
lawsuit was voluntarily dismissed months ago and the administration has
already abandoned the $1.776 billion “Anti-Weaponization Fund” that came
out of it, the order nonetheless amounts to a scathing rebuke and tees
up a politically uncomfortable line of questioning for Acting Attorney
General Todd Blanche as he faces the Senate Judiciary Committee for his
confirmation hearing on Wednesday.
“The nature of the suit itself and the conduct of the Parties and
counsel from its filing make plain that this was an attempt to use the
Court to provide some legitimacy to an agreement to confer immunity to
people and entities affiliated with the President and to earmark
billions of dollars from American taxpayers to redress grievances not
defined in the law," Williams wrote in her ruling.
She added: "Ensuring that our courts are used only for the express
purpose created by the Constitution is the obligation of every judge and
an obligation that this Court must discharge in light of the matter
before it.”
The $10 billion suit against the IRS and Treasury Department in January
accused the agencies of a failure to prevent a leak of the president’s
tax information to news outlets between 2018 and 2020.
In May, however, the administration announced that it was settling the
case and creating a fund to compensate people who believe they've been
mistreated by the criminal justice system. The fund was quickly shelved
amid bipartisan backlash, though the Trump administration has said it
intends to proceed with a separate element of the deal affording Trump
and family members protection from tax audits.
From the start, the judge had appeared skeptical of the complaint and
assigned a group of attorneys to determine whether there was a conflict
in the case since, as sitting president, Trump was suing “entities whose
decisions are subject to his direction.”
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President Donald Trump speaks on West Executive Drive at the White
House during a showcase for the upcoming Freedom 250 Grand Prix auto
race, Monday, July 13, 2026, in Washington. (AP Photo/Alex Brandon)
Even after the settlement was revealed, she directed Trump attorneys
to lay out their positions on whether the parties in the case were
truly adverse to each other, whether the dismissal of the lawsuit
was premised on deception and whether the case should be reopened.
She made clear in her ruling that she was not satisfied by the
lawyers' answers.
“After a review of the record, and the Parties’ statements, the
Court declines to adopt or accept the credulous exercise of
divorcing President Trump’s current job title from an understanding
of what happened here,” she wrote.
The ruling also raises the possibility of disciplinary actions
The judge referred Trump attorney Alejandro Brito, who filed the
case, for possible disciplinary action before the state bar in
Florida and said another lawyer, Daniel Epstein, will not be granted
permission to file within the Southern District of Florida for up to
a year.
A spokesman for the Trump legal team responded to a request seeking
comment from Brito with a statement that blamed the IRS for allowing
the president's tax returns to be leaked.
The judge also ordered that her ruling be sent to the state bars in
New York and the District of Columbia, where ethics complaints have
been filed against Blanche and Associate Attorney General Stanley
Woodward.
Williams pointed to Blanche’s congressional testimony in early June
in which he revealed that the fund was no longer moving forward.
Though nothing had been filed in court, Blanche appeared confident
in his testimony that he “could speak for, and bind, both sides of
this matter,” Williams said.
“Acting Attorney General Blanche’s apparent capacity to speak for
both Plaintiffs and Defendants, sign a ‘settlement’ document on
behalf of all Parties to this action, and then repudiate part of
that agreement, demonstrates that there was only one party whose
interests were being represented throughout this case,” the judge
wrote.
The judge also raised ethical concerns about Blanche and Woodward’s
involvement in the settlement given Blanche’s past representation of
Trump as well as Woodward’s previous defense of Jan. 6 defendants
and a co-defendant in Trump’s classified documents case.
“Instead of either recusing because of their previous
representations or vigorously defending this lawsuit as required to
do so by DOJ policies and procedures, these lawyers agreed to a
‘settlement’ involving a staggering amount of money potentially
benefitting former clients,” she said.
Blanche denied in a CNN interview last spring that he had developed
the settlement terms, saying, “The president has outside counsel,
and their counsel, the Department of Justice, not me."
___
Associated Press writers Fatima Hussein and Michelle L. Price
contributed to this report.
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