Appeals Court Leaves Trump Sanctions in Place Over ‘Collusive’ $10 Billion IRS Lawsuit

A federal appeals court has refused to block sanctions against President Donald Trump and his lawyers over a judge’s finding that his $10 billion lawsuit against the Internal Revenue Service was improperly used to secure benefits through a settlement with his own administration.

A three-judge panel of the 11th U.S. Circuit Court of Appeals on Tuesday, September 29, 2026, denied a request to stay parts of U.S. District Judge Kathleen Williams’ July sanctions order while Trump’s lawyers and the Justice Department pursue an appeal. No judge dissented.

Williams’ restrictions will remain in effect during the appeal. The panel was deciding whether to suspend those measures in the meantime, rather than whether her underlying findings should ultimately be upheld.

Trump, Donald Trump Jr., Eric Trump and the Trump Organization sued the IRS and Treasury Department in January over the disclosure of their tax information by former IRS contractor Charles Littlejohn. They sought $10 billion in damages, accusing the government of failing to prevent the leak.

Trump and the other plaintiffs later agreed to dismiss the case under an agreement with the Justice Department. They would receive a formal apology but no monetary damages. The arrangement also called for a $1.776 billion “Anti-Weaponization Fund” for other people claiming they had been targeted by the federal government.

A Justice Department order associated with the agreement purported to prevent federal agencies from pursuing certain claims, examinations and other actions involving Trump, his family and affiliated entities. The department later abandoned the fund after bipartisan opposition, and the order establishing it was rescinded.

Williams found in July that the lawsuit had been brought for an “improper purpose” and that the parties were never genuinely adverse. Because Trump controlled the executive branch agencies he had sued, she concluded that his lawyers and government attorneys were working toward the same result while presenting the dispute to a federal court as an adversarial case.

Her order barred Trump, his sons, the Trump Organization and the government from relying on or citing the agreement in judicial, administrative, regulatory or other official proceedings. She also referred Trump attorney Alejandro Brito to Florida disciplinary authorities for possible review.

Trump’s lawyers and the Justice Department appealed and asked the 11th Circuit to suspend those measures during the case, arguing in part that Williams’ restrictions violated the First Amendment by limiting what the parties could say about the agreement.

The appellate panel found the restriction sufficiently narrow to survive that challenge at this stage. It also concluded that Brito’s referral to disciplinary authorities was not a final order subject to immediate appeal.

The judges also pointed to the absence of evidence rebutting Williams’ findings about how the lawsuit and agreement were handled.

Trump’s legal team has maintained that the lawsuit was a legitimate effort to hold the government accountable for the disclosure of his tax information.

The 11th Circuit will continue considering the underlying challenge to Williams’ sanctions while her restrictions remain in effect.