WASHINGTON, July 13 (Reuters) - A U.S. judge on Monday voided President Donald Trump's settlement with the IRS that gave him and his companies sweeping tax protections and initially set up a nearly $1.8 billion government fund to pay victims of so-called government weaponization that was later abandoned.
Miami-based U.S. District Judge Kathleen Williams found that Trump and the IRS, which he oversees as president, were not truly adverse to each other as is required in civil lawsuits under the U.S. Constitution.
Williams referred a Trump lawyer in the case, Alejandro Brito, and senior Justice Department officials who signed off on the settlement to state bar authorities to determine if their actions violated legal ethics rules.
"This action was never about a party seeking judicial resolution of a legal issue or a factual dispute," Williams wrote. The judge said it was instead an attempt to "provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the president and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law."
Williams' order bars any of the parties in the case, including Trump, his adult sons and his namesake company, from referring to the settlement or citing any of its terms in future legal proceedings, a move that could nullify the portion of the agreement barring the IRS from pursuing any audits into past tax claims involving Trump or his businesses.
Acting Attorney General Todd Blanche already told Congress that the plan for a nearly $1.8 billion fund to compensate victims of government "weaponization" and "lawfare," terms that Trump has long used to describe legal cases against him and his allies, would not move forward. A federal judge in Virginia last month blocked the Trump administration from setting up the fund.
Trump sued the IRS in January, accusing the agency of not doing enough to prevent the leak of his tax records during his first term in office and initially seeking $10 billion. The settlement brokered in May between Trump's personal lawyers and senior officials at the Justice Department, led Trump to drop the suit in exchange for sweeping tax protections and the creation of the weaponization fund.
The deal came under withering scrutiny from critics, including some Republican lawmakers, who accused the Trump administration of self-dealing and funneling taxpayer money to political allies.
A spokesperson for Trump's legal team did not directly address the court's ruling, but repeated claims that Trump's tax records were improperly leaked and said the president "continues to hold those who wrong America and Americans accountable.”
A Justice Department spokesperson did not immediately respond to a request for comment.
(Reporting by Andrew Goudsward and Dan Rosenzweig-Ziff; writing by Susan Heavey; Editing by Chizu Nomiyama and Aurora Ellis)
