Judge Rebukes Trump's IRS Lawsuit, Says It Was Filed for 'Improper Purpose'

A US federal judge ruled on Monday that US President Donald Trump's $10 billion lawsuit against the Internal Revenue Service (IRS) over the leak of his tax returns was filed for an "improper purpose", accusing Trump and his lawyers of misusing the courts to legitimise a settlement that granted him immunity from tax audits and referring one of his attorneys for possible disciplinary action.

In a strongly worded ruling, US District Judge Kathleen Williams said Trump and his legal team had manipulated the court system by suing a federal agency that ultimately fell under his control, bypassing the legal requirement that opposing parties in a lawsuit must have genuinely adverse interests.

The lawsuit, filed against the IRS and the Treasury Department in January, accused the agencies of failing to prevent the leak of Trump's tax information to news organisations between 2018 and 2020.

The case was settled in May, with the administration agreeing to create a $1.776 billion fund to compensate Trump allies who claimed they had been unjustly targeted by the justice system. The settlement also granted Trump and certain family members protection from future tax audits. Although the compensation fund was later abandoned following bipartisan criticism, the administration has said it intends to retain the audit immunity provisions.

Williams stopped short of invalidating the agreement shielding Trump from tax scrutiny but ruled that the government could not portray the settlement as the outcome of a legitimate judicial 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," Williams wrote. "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 ahead of Acting Attorney General Todd Blanche's Senate confirmation hearing on Wednesday and could lead to scrutiny over the Justice Department's handling of the case.

"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.

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 judge noted that she had questioned the lawsuit from the outset, appointing outside attorneys to examine whether a conflict existed because, as president, Trump was suing agencies whose decisions were subject to his direction.

Even after the case was voluntarily dismissed following the settlement, Williams ordered Trump's legal team to explain whether the parties had genuinely adverse interests, whether the court had been misled and whether the case should be reopened.

Rejecting the lawyers' arguments, Williams wrote: "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."

Williams also referred Trump's attorney Alejandro Brito, who filed the lawsuit, to the Florida Bar for possible disciplinary action and ruled that another lawyer, Daniel Epstein, would not be permitted to file cases in the Southern District of Florida for up to a year.