Even if Trump kills his $1.8 billion slush fund, his IRS lawsuit headache isn’t over

Jun. 1, 2026, 9:00 PM EDT

ByNick Akerman

President Donald Trump is in a legal bind of his own making.

Reports emerged Monday that Trump, under pressure from Republican lawmakersis preparing to drop the $1.776 billion “anti-weaponization” fund that sparked public outragepolitical chaos and, crucially, legal questions. The Justice Department announced it would temporarily pause implementation to comply with a court order.

There’s no indication that Trump would also drop the IRS immunity that was part of his controversial lawsuit settlement. Therefore, a federal judge is likely to proceed in her inquiry that poses a significant legal threat to Trump.

Judge Kathleen M. Williams signaled Friday that she is deciding whether to reopen Trump’s $10 billion lawsuit against the IRS in order to investigate the propriety of the lawsuit and the subsequent settlement.

Trump, of course, had recently withdrawn the lawsuit he filed in January against government agencies under his control. The Department of Justice later announced a settlement that created a slush fund for allies and precludes future IRS investigation of him, other Trump family members and Trump businesses.

The settlement in the wake of Trump’s dubious lawsuit reeked of self-dealing — and now the judge’s order may leave Trump with little room to maneuver. The president may be preparing to drop the settlement fund that has sparked political backlashbut if he attempts to hold on to the IRS immunity, he would still have to answer to Williams.

A lawsuit is valid only when there is “a case or controversy” between adverse parties. Since Trump controls the executive branch, there was an obvious lack of adversity between a sitting president and entities whose decisions were subject to his direction. From the outset, Williams, who presides over the case in the Southern District of Florida, expressed skepticism of the lawsuit’s legitimacy. She asked the parties to submit briefs addressing whether the lawsuit was, in fact, a legitimate adverse proceeding.

Two days before the briefs were due last month, Trump moved to dismiss the case. Williams granted the motion but was not informed about the settlement the Justice Department later announced.

Last week, 35 former federal judges filed a motion asking Williams to reopen the case. They argued that “the purported ‘settlement’ that the parties never placed before this Court raises profound questions about the parties’ candor toward the Court and manipulation of the judicial system, which threatens to undermine confidence in the administration of justice.” The settlement is “a fraud on the Court,” they wrote.

Other lawsuits have been filed over the settlement, but Williams’ court is by far the best forum for addressing this settlement. One suit was brought in Washington, D.C., by former Capitol Police officers who defended the Capitol on Jan. 6, 2021. The other was filed in Virginia by public and nonprofit entities. A federal judge’s temporary order in the Virginia lawsuit is what the Justice Department responded to Monday. Those two suits challenge the creation of the fund, but neither addresses the issue of future IRS immunity. The two lawsuits are also likely to be dismissed for lack of standing over the plaintiffs’ failure to show a concrete injury traceable to the settlement.

Judge Williams, by contrast, is positioned to unravel the entire agreement. Federal courts possess inherent contempt powers and may investigate and remedy improper conduct by attorneys and litigants. That authority can include appointing a private attorney to assist in investigating and prosecuting criminal contempt — when, as here, there is reason to believe the Justice Department has a conflict.

Two days after the 35 former judges filed their motion, Judge Williams issued an order in response. The court, she wrote, “is empowered to investigate serious misconduct as a collateral issue” and to determine whether the suit was filed for an “improper purpose.”

Among the key points in her order:

• the grant of IRS immunity did not relate “to the immediate subject matter of the claim,” which was the leak of Trump’s tax information;
• the IRS and the U.S. Treasury “did not ‘even try[] to defend against” Trump’s claims, despite actively opposing “nearly identical claims in other litigation”;
• and, as the former judges had argued, Trump’s claims were “clearly untimely” and barred by the expired statute of limitations.

Williams ordered Trump, the IRS and the U.S. Treasury to respond by June 12 on: “(1) the charges of collusion and whether the Parties are
truly adverse; (2) the assertion that the dismissal in this case was premised on deception by the Parties; and (3) the question of whether the case should be reopened because the Court was the ‘victim of a fraud.’”

So here is Trump’s quandary: He must answer Williams’ questions with facts. He cannot simply submit a memorandum filled with platitudes denying collusion or dismissing the matter as a witch hunt. The court will likely expect sworn affidavits setting out facts to support any defense that there was no collusion and no deception.

An affidavit from a third party such as acting Attorney General Todd Blanche — Trump’s former criminal defense lawyer, who in his new role signed the immunity agreement and has defended the overall settlement — would likely be insufficient on its own.

The judge will almost certainly expect Trump, the named plaintiff, to submit an affidavit himself responding to all three of Williams’ inquiries.

Whatever is filed in response to the court’s order could raise additional issues, which could lead to an evidentiary hearing with witnesses. Matters not fully addressed in the affidavits or that otherwise remain ambiguous would need to be explored, with Williams empowered to assess credibility firsthand.

Such a hearing would pose significant legal risks for Trump. He would be expected to explain remarks such as when, asked about being on both sides of a lawsuit, he told reporters, “I’m supposed to work out a settlement with myself.”

His testimony could also expose him to criminal liability beyond fraud on the court, such as a broader fraudulent scheme to defraud the government of massive taxpayer funds in violation of Title 18 U.S.C. § 371. Conspiring to deceive the government is a federal felony punishable by up to five years in prison.

At any hearing, Trump would be free to invoke his Fifth Amendment privilege against self-incrimination. But that choice can be used against him and could provide the judge with more than ample basis to nullify the settlement. Because Trump brought the lawsuit in his personal capacity, he would not be entitled to presidential immunity for “official acts” under the Supreme Court’s 2024 decision in Trump v. United States. His testimony at such a hearing could also be used against him in a later criminal prosecution.

Because we have an independent judiciary and judges committed to the rule of law, Trump could remain accountable for fraud or other misdeeds he may have committed in pursuing his lawsuit against the IRS or the settlement. Jettisoning the controversial fund doesn’t automatically end Judge Williams’ inquiry.