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A federal judge ruled that President Trump’s $10 billion lawsuit against the IRS and the settlement that resulted from it were unlawful.
Some shit you should know before you dig in: Back in January, Trump, his sons, and the Trump Organization sued the IRS, seeking $10 billion and pinning blame on the agency after his tax returns leaked during his first term. The leaker was IRS contractor Charles Littlejohn, who gave Trump’s tax returns to the New York Times, revealing that he paid just $750 in federal income taxes in 2016. Rather than defend the agency, Trump’s own DOJ reached a “settlement” in May with two provisions: a $1.776 billion “Anti-Weaponization Fund,” a number nodding to 1776, to compensate purported victims of government “lawfare,” and an order signed by Acting Attorney General Todd Blanche, Trump’s former personal defense lawyer, granting Trump, his family, and their businesses immunity from IRS audits and investigations for all previously filed returns. The fund sparked bipartisan outrage over the prospect of payouts to January 6 rioters and was abandoned in June after another judge blocked it, but the audit immunity stayed in place. Ultimately, a group of 35 former federal judges filed a brief urging Judge Kathleen Williams to reopen the case, which had been settled before she could rule on whether Trump and the agency he controls were ever actually on opposing sides.
What’s going on now: Williams ruled Monday that the whole arrangement failed the most basic requirement of a lawsuit: two actually opposing parties. “There was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” Williams wrote. “The Lead Plaintiff and the Government are one, a fully realized unitary interest.”
She wrote that the suit “was never about a party seeking judicial resolution of a legal issue or a factual dispute” but rather “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.”
She noted Trump filed claims he “knew, or should have known, were time-barred,” that the DOJ never raised obvious defenses, and, in a footnote, that “even the Fund amount — $1.776 billion — speaks of a ‘branding’ effort rather than a deliberate and thoughtful calculation of damages.” She also found the audit-immunity provision “directly contravenes” federal law barring the executive branch from influencing taxpayer audits, and said the tax relief potentially violates the Constitution’s bar on increasing a president’s compensation while in office.
In her ruling, Williams barred Trump and the other parties from citing the “settlement” in any official proceeding, referred Trump’s lead attorney Alejandro Brito to the Florida Bar for potential discipline, banned another Trump lawyer, Daniel Epstein, from practicing in the Southern District of Florida for a year, and forwarded her order to ongoing bar investigations of Blanche in New York and Associate Attorney General Stanley Woodward in DC. She also opened the door to monetary sanctions, with Trump potentially reimbursing the legal costs of the 35 former federal judges whose brief prompted her to reopen the case.
The timing is brutal for Blanche, whose Senate confirmation hearing for attorney general is this week; Williams wrote she was “extremely troubled” by his May Senate testimony that there was “no mechanism” for court review of the settlement, calling that answer “at best, misleading and, at worst, disingenuous.”
The DOJ came out swinging, calling Williams “partisan” and insisting “there was no collusion in this case,” while a Trump legal team spokesman said the IRS “wrongly allowed a rogue, politically-motivated employee to leak private and confidential information” and that Trump “continues to hold those who wrong America and Americans accountable.”
