Trump, et al. v. IRS, et al.

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Source & Overview

• Order from Judge Kathleen M. Williams, U.S. District Court for the Southern District of Florida, in a lawsuit brought by President Donald J. Trump, Donald J. Trump Jr., Eric Trump, and The Trump Organization, LLC against the IRS and the U.S. Treasury Department.
• The order responds to a Motion for Relief from Judgment (Rule 60) filed by 35 non-party movants who alleged the case and its settlement were "a fraud on the Court" and the product of collusion between the parties.
• The Court examines whether it should reopen the case, focusing on (1) whether the parties were genuinely adverse, (2) whether the dismissal was based on deception, and (3) whether the Court was a victim of fraud.

Background & Event Timeline

2023

DOJ contractor Charles Littlejohn sentenced (60 months) for leaking tax records. Private § 7431 lawsuits follow.

January 29, 2026

President Trump files suit seeking at least $10 billion in damages from the IRS and Treasury.

May 18, 2026

Plaintiffs file Notice of Voluntary Dismissal. DOJ immediately announces a $1.776B settlement and formal apology. Treasury General Counsel resigns.

June 2, 2026

Acting AG Todd Blanche tells Congress the fund will not move forward, but leaves audit-immunity provisions intact.

July 13, 2026

Judge Williams enters a 56-page order detailing bad faith, collusion, and imposing sanctions/referrals.

• Because Defendants are federal agencies, they had 60 days to respond; three days before that deadline, Plaintiffs and Defendants filed a joint motion for a 90-day extension to pursue settlement talks.
• The Court, concerned about subject-matter jurisdiction given Trump's control over the defendant agencies, ordered briefing and appointed amici curiae to address the issue by May 21, 2026. Neither party responded to the Court's concerns.
• When asked why the settlement was never submitted to the Court, Blanche testified there was "no judge" and "no mechanism" for review because the case was already dismissed.
• Reports indicated IRS staff had prepared a lengthy internal memo outlining strong defenses to Plaintiffs' claims, yet the government settled anyway without asserting any of them.

Court's Core Legal Finding: No Genuine Case or Controversy

Holding: Non-Adversarial & Collusive

Article III of the Constitution limits federal courts to genuine "cases" or "controversies" between truly adverse parties. Because President Trump effectively controlled both sides of the litigation—exercising direct authority over the defendant agencies and DOJ litigators—there was no actual adverseness, rendering the case non-adversarial, collusive, and jurisdictionally improper.

• The Court holds that President Trump, as head of the Executive Branch, exercises direct constitutional and statutory control over the Treasury Secretary and IRS leadership, including the power to appoint and remove them at will.
• An Executive Order cited by the Court requires all executive-branch employees, including DOJ litigators, to follow the President's and Attorney General's legal interpretations – meaning DOJ attorneys could not take a litigation position adverse to Trump.
• As a result, no government attorney ever appeared, contested the claims, or filed any responsive pleading in sharp contrast to the government's vigorous defense in other, similar tax-disclosure lawsuits (e.g., Griffin v. IRS).
• The Court also questions the parties' reliance on the Keepseagle settlement as precedent, noting that case took roughly a decade of contested litigation, unlike the 109-day span here with no docket activity.
• The Court finds the government's justification for the settlement (that "there is no judge" to review it) misleading, since the Court remained available to review any filing throughout the case.

Conflicts of Interest and Ethical Concerns Raised

Ethical & Constitutional Red Flags

The settlement was signed for Defendants by Associate AG Stanley Woodward and Acting AG Todd Blanche, both of whom previously represented Trump or Trump associates in private practice. Florida Bar ethics rules restrict lawyers from letting a former client's interests improperly benefit from government decisions.

• The settlement agreement was signed for Plaintiffs by Daniel Epstein, a former White House lawyer who was never formally admitted to appear in the case.
• The Release Order's bar on future IRS audits of Trump and his family is highlighted as potentially violating 26 U.S.C. § 7217, which makes it unlawful to request that the IRS start or stop an audit of a specific taxpayer.
• The Court also raises, without deciding, potential Emoluments Clause (Article II) concerns about a sitting president receiving a financial benefit from agencies he controls.

Sanctions and Remedial Actions Ordered

• The Court concludes the lawsuit was filed for an improper purpose under Federal Rule of Civil Procedure 11 – to create the appearance of legitimate litigation as cover for a pre-arranged, collusive settlement.
• It holds that a voluntary dismissal does not strip the Court of authority to impose Rule 11 sanctions or to act under its inherent authority to police abuse of the judicial process.
• Plaintiffs' attorney Alejandro Brito is referred to The Florida Bar for review of possible disciplinary action.
• Attorney Daniel Epstein is barred from any pro hac vice admission in the Southern District of Florida for one year.
• The parties are prohibited from citing or relying on the "settlement agreement" as evidence of an actual settlement in any future judicial, administrative, or regulatory proceeding.
• The Court finds the parties acted in bad faith and holds that monetary sanctions are appropriate under its inherent authority (as opposed to Rule 11, which is limited after a voluntary dismissal) – specifically, fees for court-appointed amici who briefed the jurisdictional issues, though those particular amici declined reimbursement.
• Copies of the order are directed to be sent to the New York and D.C. bar associations, where Blanche and Woodward are respectively members.
• The Court leaves open the separate question of whether the case could later be reopened for "fraud on the court" under Rule 60(d)(3).

<footer class="disclaimer"> Note: This is a condensed, plain-language summary of a 56-page federal court order for informational purposes. It omits extensive case citations and footnotes and paraphrases the Court's reasoning; it is not a substitute for reading the full order and should not be relied upon as legal advice. </footer>