Judge Finds Trump IRS Lawsuit Lacked Real Dispute and Sanctions Lawyers

A federal judge ruled Monday that President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service was filed for an improper purpose, finding that the president and the agencies he sued lacked the opposing interests required for a federal court case.

U.S. District Judge Kathleen Williams imposed nonmonetary sanctions, referred Trump attorney Alejandro Brito to the Florida Bar for possible discipline and barred lawyer Daniel Epstein from seeking permission to appear in the Southern District of Florida for one year.

Her order also prevents Trump, his family, the Trump Organization, the IRS and the Treasury Department from presenting their agreement as a settlement reached through the case in any official proceeding.

The case was voluntarily dismissed in May after the administration announced an agreement that included a formal apology and a proposed $1.776 billion Anti-Weaponization Fund. The money was intended for people who claimed they had been harmed by government investigations or prosecutions.

A separate release signed by Acting Attorney General Todd Blanche broadly protected Trump, relatives, affiliated companies and others from claims involving tax matters.

The administration later abandoned the fund after opposition from members of both parties. Williams wrote that Blanche’s announcement addressed only the fund, leaving the audit and immunity provisions in place.

Trump, Donald Trump Jr., Eric Trump and the Trump Organization sued the IRS and Treasury Department in January over the unauthorized disclosure of tax information to news organizations. The complaint sought at least $10 billion and alleged that the agencies failed to protect confidential records obtained by Charles Littlejohn, a former government contractor who pleaded guilty to illegally disclosing tax information and was sentenced to five years in prison.

Federal tax law allows taxpayers to seek damages when a federal officer or employee knowingly or negligently inspects or discloses protected return information without authorization. Section 7431 of the Internal Revenue Code generally permits recovery of at least $1,000 for each unlawful act or proven financial losses, with punitive damages available for willful conduct or gross negligence. Claims normally must be filed within two years after discovery of the disclosure.

Williams stated that Trump had a legal right to pursue a claim over the leaked records. Her review found significant problems involving the timing of the complaint, the parties named, and the lack of support for the amount demanded.

Article III of the Constitution limits federal courts to actual cases and controversies. The people or institutions on opposite sides must have a genuine legal disagreement. The requirement prevents courts from being used to approve an outcome the participants have already chosen.

In her ruling, Williams found that requirement was missing because Trump headed the executive branch while suing agencies subject to his direction. No Justice Department lawyer entered an appearance or defended the agencies during the 109 days the lawsuit remained open, even though government attorneys had raised strong defenses in other cases involving the same tax leak.

The judge also pointed to Blanche’s ability to sign the agreement for the government and speak for both sides. She wrote that his conduct showed only one set of interests was represented throughout the matter.

Williams concluded that the lawsuit was used to give judicial credibility to benefits reached without a genuine legal dispute. She stressed that a president pursuing a personal civil claim remains subject to the same rules as every other person before a federal court.

Rule 11 of the Federal Rules of Civil Procedure requires lawyers to certify that court filings have a reasonable basis in law and fact and are not submitted for an improper purpose. Judges may impose sanctions to deter misuse of the legal system, including after the underlying claims have been withdrawn, because the rule applies to the filing and later defense of court documents.

Brito’s referral was tied to his role in signing and filing the complaint. Williams also noted that Epstein signed the agreement for Trump and the others bringing the lawsuit without first seeking permission to appear in the district.

Any application Epstein files to practice temporarily in the Southern District of Florida will be denied for one year unless the court directs otherwise.

Copies of the ruling will also be sent to bar authorities in New York and Washington, D.C., where ethics proceedings involving Blanche and Associate Attorney General Stanley Woodward are underway. Williams raised concerns because both had previously represented people who could benefit from parts of the agreement.

The lawsuit remains dismissed. Williams left the separate agreement’s validity and enforceability unresolved while barring the parties from treating it as a settlement produced through the federal case.