Most legal storms that surrounded Donald Trump over the past decade had an escape hatch built in. Criminal indictments disappeared when he returned to the presidency. Federal prosecutors cited longstanding DOJ policy against charging a sitting president and closed their files. The Georgia case ran into prosecutorial misconduct questions and stalled out. Even the New York hush money conviction, the one that produced a verdict, ended with a sentence of unconditional discharge. Catastrophic headlines, enormous legal activity, and then nothing that landed.
The IRS case looked, at first glance, like more of the same. A complaint filed in federal court, some procedural sparring, and then the parties quietly settling before anything inconvenient could happen. On July 13, 2026, U.S. District Judge Kathleen Williams issued a 56-page ruling in Miami. A federal judge found that President Trump had filed a $10 billion lawsuit against the IRS “for an improper purpose,” to gain the appearance of judicial legitimacy for a settlement that had, in her words, “no viable basis in law or fact.”
The ruling itself, sharp as it was, is not the part that should keep Trump’s team up at night.
What the Lawsuit Was About
Trump had sued the IRS for $10 billion over the leak of his tax information by a government contractor. The leak was traced to Charles Littlejohn, a former IRS subcontractor who pleaded guilty in October 2023 and was sentenced to five years in prison in January 2024. Private financial data belonging to the president, his sons, and the Trump Organization had been disclosed without authorization, and a federal contractor went to prison for it.
Trump, who filed the lawsuit in January 2026, struck an agreement with the IRS in late May to create an “anti-weaponization” fund to provide payments to those who claimed to have been wronged by the government. According to the DOJ’s announcement, the fund would receive $1.776 billion drawn from the federal Judgment Fund, a permanent Treasury appropriation used to pay government settlements. Judge Williams pointed out that the figure evoked the year 1776, the year the Declaration of Independence was adopted, suggesting it was a “branding effort rather than a deliberate and thoughtful calculation of damages.”
The settlement also included conditions that would permanently insulate the president, his family members, and businesses from IRS audits. The president sued a federal agency that he controlled, that agency agreed to pay billions to people connected to the president, and the deal came with a guarantee that the IRS would never look at the president’s own tax returns again. Williams was not fooled. The case, she wrote, “was brought for an improper purpose to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”
The Settlement That Was Never What It Claimed to Be
Courts require that the parties in a lawsuit be genuinely opposed to each other. A plaintiff and defendant who are secretly on the same side, staging a legal dispute to extract an outcome they’ve already agreed on, are committing what lawyers call a fraud on the court. That is precisely what Judge Williams found.
She pointed to Trump’s power over the IRS and DOJ when he filed the suit as president and then reached a settlement with the parties out of court. “The Court determines that Plaintiffs improperly employed this lawsuit to justify a particular award in this matter,” she wrote, including “access to taxpayer funds and exemption from audits and other investigations, which was accomplished by leveraging control over Defendants.”
Williams had asked the parties to explain how they were adversaries, a basic requirement for any lawsuit. Rather than answer that question, the parties withdrew and announced their settlement the same day, effectively sidestepping the judge entirely. The settlement was not submitted to Williams or any other court for review.
Williams suggested that if Trump had brought the lawsuit “in a timely fashion while he was a private citizen,” the case might have been resolved within months. “But that is not what happened,” she wrote. “Instead, President Trump did not pursue his claims until he once again occupied the White House and had appointed his former lawyer, and the former lawyer of persons who are putative beneficiaries of the ‘Anti-Weaponization Fund’ to prominent positions in the DOJ.”
Acting Attorney General Todd Blanche signed a memo to “forever bar and preclude” the government from taking any action related to Trump’s past tax returns, a protection that also extended to his businesses and family members. Williams found that this directly violated federal law. She wrote that “acquiescing to any such demand is wholly incompatible with the duties of DOJ attorneys” and said the immunity memo “directly contravenes” a federal statute barring executive officials from influencing tax audits. Her order strips Trump of the audit protection he had operated under for two months.
The Bar Referrals Are What Matter
The ruling’s headline findings, that the lawsuit was improper, that the parties colluded, that Trump acted in bad faith, can all be appealed. A higher court could reach a different conclusion about any of them, or decline to reach a conclusion at all.
Williams referred Trump’s lawyer in the suit, Alejandro Brito, to the Florida Bar for consideration of whether Brito should be disciplined in light of her findings. She also ordered a copy of the order to be sent to the New York State Bar Association, of which acting Attorney General Todd Blanche is a member, and to the District of Columbia Bar, of which Associate Attorney General Stanley Woodward is a member.
State bar associations operate on an independent track from federal courts. A judge can refer an attorney to a bar authority, but from that point on, the bar runs its own investigation under its own rules, on its own timeline. An appellate court reversing Williams’s ruling on the merits of the IRS case does not close the bar inquiries. The bars are not bound by whatever a circuit court decides about presidential power or settlement validity. They are asking a different question: did these lawyers violate their professional obligations as attorneys?
Williams also raised ethical concerns about Blanche and Woodward’s involvement in the settlement, given Blanche’s past representation of Trump and Woodward’s previous defense of January 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.
That is a direct conflict of interest allegation against the acting Attorney General of the United States. Blanche served as Trump’s personal criminal defense attorney before becoming the country’s top law enforcement officer. Woodward defended January 6 defendants. Then both men negotiated a deal that sent money toward a fund designed to compensate people like their former clients. Williams also called out Blanche directly for providing, in her view, “misleading” testimony before Congress. “The Court is extremely troubled by the testimony given by Acting Attorney General Blanche on May 19, 2026,” she wrote.
The Senate Hearing and the Bipartisan Pressure
Williams’s ruling came just days before Blanche was set to appear before the Senate Judiciary Committee for his confirmation hearing to make his role as attorney general permanent.
Republican senators had already said they would push for further details from Blanche on the portion of the settlement that related to Trump and his family being shielded from IRS investigations of their past tax returns. A federal judge calling his congressional testimony “misleading” days before that hearing is not a small thing. It hands senators from both parties a specific judicial finding to put to him directly, with cameras running.
The broader legal picture around the Trump administration is already stretched to an unusual degree. Lawfare’s litigation tracker reports 332 active cases challenging Trump administration actions. One or more states have teamed up to sue the federal government nearly 100 times since January 2025. That pace, if it continues, is likely to smash the record set during Trump’s first term.
Against that volume of litigation, any single case can look like noise. What separates the IRS ruling is the specific process it triggered. Courts can be appealed. Bar associations cannot.
Why This One Has Teeth
The lawsuit was withdrawn months ago, and the $1.776 billion Anti-Weaponization Fund had already been abandoned after bipartisan congressional blowback and a separate court block. Williams stopped short of voiding the private settlement agreement itself, noting that question was not before the court. What she did do was bar all parties from citing that agreement in any future legal or official proceeding, which strips the deal of its primary utility. The audit immunity Trump’s team sought to lock in is gone.
The bar referrals sit firmly in consequential territory. The New York State Bar, the D.C. Bar, and the Florida Bar are not going to be swayed by what happens at a Senate confirmation hearing, or by a presidential press conference, or by an appellate ruling that reframes the legal questions. They will complete their own investigations into whether Blanche, Woodward, and Brito met their professional obligations as lawyers. That process does not care who their client was.
For Blanche specifically, the weight of all this is real and measurable. He was Trump’s personal criminal defense attorney. He became acting Attorney General. He then negotiated a deal that a federal judge found had no legal basis, and she referred him for professional discipline and accused him of misleading Congress, all while he was seeking Senate confirmation to make his role permanent. No pardon can address bar discipline. It does not dissolve when the political wind shifts. It follows an attorney regardless of who they work for.
Whatever an appellate court decides about the merits, three different bar associations now hold a paper trail. That trail stays open.
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AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.