Trump IRS suit settlement questioned by judge as case closed

The judge who oversaw President Donald Trump's $10 billion lawsuit against the Internal Revenue Service questioned whether the government was being transparent about a settlement that could result in massive payouts to Trump allies.

U.S. District Judge Kathleen Williams on Monday issued an order formally closing the case, hours after the Justice Department announced a $1.8 billion settlement and Trump advised the court he was dropping the suit.

Williams expressed frustration with how the settlement was handled, saying that the U.S. has an "obligation" to uphold the "public's strong interest in knowing about the conduct of its government and expenditure of its resources" and the "fair administration of justice."

Acting Attorney General Todd Blanche issued a statement Monday saying the U.S. was settling the suit by creating a $1.8 billion fund to pay claims to people who claim they were victims of alleged government weaponization.

Even so, in her order, the judge said that neither the IRS nor the Justice Department "filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed."

The judge had previously ordered Trump and the government to file briefs by May 20 explaining how the case could proceed with Trump effectively in control of both sides of the litigation. Williams on Monday canceled the deadline and said she no longer has any authority over the case.

Williams added that Trump's notice of dismissal didn't reference the deal, meaning that in the court's view, "there is no settlement of record." Williams said Trump's dismissal did not require her approval because the Justice Department had not yet responded to the suit.

Trump's lawyers pushed back on the judge's reservations.

"President Trump is entering into this settlement squarely for the benefit of the American people, and he will continue his fight to hold those who wrong America and Americans accountable," a spokesman for Trump's legal team said in a statement.

The Justice Department didn't immediately respond to a request for comment.

Trump sued the IRS and the US Treasury in January. The unprecedented suit by a sitting president against executive branch agencies led to condemnation by Democrats and outside groups who said the case represented a grave conflict of interest that could harm taxpayers.

The concerns were amplified after the Justice Department announced the settlement on Monday. Critics condemned the arrangement as an inappropriate slush fund to reward Trump's political allies, potentially including about 1,500 individuals who were prosecuted for storming the U.S. Capitol on Jan. 6, 2021, to try to prevent former President Joe Biden's election from being certified.

Just as Trump dropped the case, 93 members of the House asked the judge for permission to file a brief in the matter, saying the suit "could siphon billions of taxpayer dollars into the pockets of the President, his family, and his allies."

The group said the DOJ "has colluded with President Trump and his allies and, in so doing, abdicated these responsibilities."

The lawsuit related to former IRS contractor Charles Littlejohn, who pleaded guilty in 2023 to stealing Trump's tax data and leaking it to the New York Times. He also stole tax records for thousands of other wealthy Americans, including Ken Griffin, Elon Musk and Jeff Bezos, which he leaked to ProPublica.