A US judge has invalidated a legal agreement between President Donald Trump and federal agencies that granted him immunity from tax audits and allowed his administration to create a recently abandoned $1.8bn (£1.3bn) “anti-gun” fund.
The fund, intended to pay compensation to people who claim they were unfairly targeted by the government, was launched in May in exchange for Trump dropping his personal $10 billion lawsuit against the Internal Revenue Service (IRS).
But on Monday, U.S. District Judge Kathleen Williams said the lawsuit was filed for an improper purpose.
She also referred Trump’s lawyer to government authorities to determine whether ethics rules were violated and whether disciplinary action was necessary.
In the ruling, Williams called Trump’s lawsuit, which he, his two sons and the Trump Organization filed in 2026, far from a dispute between two warring parties. Instead, she described it as more of an action taken by lawyers associated with Trump and those who claimed to be targeted by the government.
Williams wrote that the lawsuit “was never about a party seeking a judicial resolution of a legal issue or factual dispute” between Trump and the IRS, which he controls as president.
She also described the agreement as an attempt to “bring some legitimacy to an agreement to grant immunity to people and entities associated with the president and to allocate billions of dollars from American taxpayers to address grievances not defined in the law.”
The ruling also prevents those involved in the case, including Trump and his sons, from citing the settlement or citing its terms in future legal proceedings. This, in turn, could mean that the IRS could continue to conduct future audits of Trump’s tax claims.
In the original lawsuit, Trump argued that nothing was done to prevent former IRS contractor Charles Littlejohn from leaking his private tax information.
Just before the 2020 presidential election, which Trump lost, leaked information formed the basis of a New York Times investigation that found he paid just $750 in federal income taxes the year he became president in 2016 and paid no taxes at all in 10 of the previous 15 years.
“President Trump did not pursue his claims until he was back in the White House and appointed his former lawyer, as well as former counsel for individuals who are the intended beneficiaries of the Anti-Gun Fund, to prominent positions at the Department of Justice,” Williams wrote, referring to the Justice Department.
“These officials then negotiated on behalf of the United States with his current lawyers, including his former White House counsel, to reach a ‘settlement.’ It is ridiculous to suggest that there was ever any hostility between the parties,” she added.
One of Trump’s lawyers, Alejandro Brito, has also been referred to the Florida Bar for possible disciplinary action, and a second lawyer, Daniel Epstein, will now be barred from cases in the Southern District of Florida for at least a year.
In a statement to the BBC, a spokesman for Trump’s legal team said the IRS “wrongfully allowed a rogue, politically motivated employee to leak private and confidential information” to the media.
“President Trump continues to hold accountable those who harm America and Americans,” the spokesperson added.
Calling the agreement a “pet deal” for Trump that gave him “unauthorized and unprecedented” exceptions to tax audit rules, Tax Law Center policy director Brandon DeBot said it ran counter to “protecting the tax system from political interference.”
“The court’s decision is important, but it does not eliminate the need for Congress to act to undo the entire deal and prevent any similar attempts at presidential arbitrariness in the future,” he added in a statement to the BBC.
The center, based at New York University, conducts legal analysis of tax and public policy.
Plans for an anti-gun fund were abandoned in early June, just a week after another judge temporarily blocked Justice Department officials from pursuing it.
That order was overturned after two men who claimed the fund was discriminatory filed a lawsuit in Virginia. The plaintiffs said the Trump administration was the target of political retaliation but believed they would not be allowed to sue for compensation.
The widely criticized plan has raised alarms among Democrats — and some Republicans — who have argued that it could lead to payments being made to people who were prosecuted for the Jan. 6, 2021, Capitol riot, including those convicted of attacking police officers.