A federal judge has ordered President Donald Trump and his legal team to respond to claims that a quick settlement in his lawsuit against the IRS amounted to fraud on the court.
U.S. District Judge Kathleen M. Williams issued the directive Friday, May 29, describing the accusations as “grievous allegations.”
She gave Trump’s lawyers until June 12 to address whether the case should be reopened and investigated.
The unusual order stems from Trump’s $10 billion lawsuit filed earlier this year against the IRS and Treasury Department.
The president, along with his sons and the Trump Organization, accused the agency of allowing a rogue contractor the leak his tax returns years ago. The suit sought massive damages for the breach.
Trump Faces Legal Challenge Over $1.8B IRS Settlement
Last week, Trump’s side suddenly dropped the case after reaching a deal with the Justice Department.
Instead of a direct payout to the plaintiffs, the agreement created a roughly $1.8 billion “anti-weaponization fund” at the Treasury.
The fund aims to compensate people who claim they were targeted by politically motivated government actions, including some January 6 defendants and Trump allies.
A bipartisan group of 35 retired federal judges quickly stepped in and filed a motion this week, urging Williams to reopen the dismissed case.
They argue the lawsuit may have been collusive from the beginning because the president now controls the executive branch, including the IRS.
There was never a real conflict between the parties as required for a valid federal case, they said.
The ex-judges claim the rapid dismissal helped create the appearance of legitimacy for the large fund without proper court or congressional review.
They called it a potential “fraud on the court,” saying the settlement bypassed normal oversight and used taxpayer money in a questionable way.
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Judge Williams said the court may have been “the victim of a fraud” and that the dismissal could have been “premised on deception.”
She signaled she is prepared to dig into whether Trump’s team and the Justice Department misled the court to push through the deal.
Her order requires Trump’s personal lawyers to explain their side. It also raises broader questions about whether the president and his administration colluded to avoid scrutiny of the underlying claims.
This latest development adds another layer of legal headaches for the Trump administration.
A separate federal judge in Virginia has already temporarily blocked parts of the new fund while challenges play out.
The retired judges who brought the motion include appointees from both Republican and Democratic presidents.
Their involvement gives the challenge extra weight in legal circles, as they do not have a direct stake in the outcome.
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Trump’s team has not yet commented publicly on the judge’s order.
The White House has previously defended the settlement as a proper way to resolve the tax leak dispute and to help others harmed by what it calls weaponized federal agencies.
If Williams finds evidence of serious misconduct, she could unwind the settlement, return the case to trial, or impose other sanctions.
Ahead of the deadline, set for June 12, Trump’s lawyers must file their response, and Williams will decide the next steps. The case has moved fast from filing to dismissal to this new fight over its legitimacy.
The IRS leak that started it all dates back to 2019 and 2020. A former contractor was later convicted and sentenced to prison for unauthorized disclosure of tax information.
The president has long maintained that the leaks were part of efforts to damage him politically.
How this latest court battle ends could affect not only the $1.8 billion fund but also set a precedent for how future presidents handle lawsuits against agencies they control.
