Federal Judge Reopens Trump's $10B IRS Case

Judge Kathleen M. Williams wasn't supposed to have this case anymore. Trump and the DOJ voluntarily dismissed the $10 billion IRS lawsuit last week — sidestepping her courtroom and landing a deal that created a $1.776 billion anti-weaponization fund plus a permanent audit shield for Trump and his family.

On Friday, she took it back.

Williams, a Barack Obama appointee sitting in Miami, agreed to reopen the case after a bipartisan group of 35 former federal judges filed court papers demanding she investigate. According to reporting from The Hill and WAVY News, the former judges argued the dismissal was designed specifically to avoid judicial scrutiny and called the arrangement "collusive from the start."

Williams didn't mince words in her order. According to WAVY News, she wrote that the former judges "advance grievous allegations that Plaintiffs voluntarily dismissed this litigation solely to avoid judicial scrutiny of a lawsuit that 'was collusive from the start' and was only filed to provide the imprimatur of legality for an unlawful settlement."

She also flagged a specific concern: the DOJ "did not even try to defend against Plaintiffs' claims despite their active opposition to nearly identical claims in other litigation." In plain terms, the government appeared to fight Trump in court while handing him everything he wanted.

The judge is directing both Trump's team and the DOJ to file briefs addressing two core questions: whether the parties were truly adverse, as basic legal requirements demand, and whether the court was the victim of fraud. The deadline is June 12.

The Tax Return Provision

Acting Attorney General Todd Blanche signed a separate three-paragraph addendum to the settlement agreement. According to WAVY News and WION News, that addendum "forever bars and precludes" the IRS from reviewing Trump's prior tax returns.

Previous reports have found Trump could owe as much as $100 million following audits of prior returns. The addendum effectively kills those audits permanently — and it was attached to a lawsuit where Trump was, as Williams herself noted before dismissal, effectively on both sides of the action as president and plaintiff simultaneously.

Virginia Judge Moves to Block the Fund

The Miami courtroom isn't the only problem for this deal.

On Friday, according to Yahoo News, a federal judge in Virginia ruled to temporarily halt the creation of the anti-weaponization fund. That's the $1.776 billion pot of money the Trump administration indicated could be used to pay out people convicted of participating in the January 6, 2021 Capitol attack, among others.

Coverage and Congressional Response

Left-leaning outlets, including HuffPost, are treating this primarily as a Trump corruption story and playing up the January 6 angle. Right-leaning coverage, including The Epoch Times, is framing this as judicial scrutiny without fully addressing the core issue: congressional Republicans themselves have sponsored legislation to ban this fund, per WAVY News. GOP members of Congress are saying the executive branch spent money it had no authority to spend.

The deeper legal problem isn't partisan. Williams had already flagged before the dismissal that the lawsuit lacked a valid legal dispute because Trump controlled both sides. The DOJ's decision to then settle without even defending the government's position — while simultaneously fighting identical claims in other courts — raises questions about the arrangement's legitimacy.

What Comes Next

At stake is whether a president can use the federal court system as a prop: file a lawsuit against his own government, settle it with himself, extract a permanent tax audit shield and $1.776 billion in spending, and walk away before a judge can review any of it.

Williams has given both sides until June 12 to respond to the fraud allegations. According to WION News, the White House has not responded to requests for comment.