Judge Williams THREATENS SANCTIONS for Trump's BOGUS IRS Deal - Talking Feds

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Harry Litman fills you in on massive news: Judge Williams has reopened Trump's collusive IRS case, opening the door to possible sanctions. - 05/29/2026.

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1. Judge Reopens Trump's I.R.S. Suit and Questions His 'Weaponization' Fund (New York Times Gift Article)

The ruling was a blow to both President Trump, who had voluntarily dismissed the suit last week, and to the Justice Department, which used the suit to establish a fund likely intended for Trump allies.

Link to tweet

https://www.nytimes.com/2026/05/29/us/politics/trump-irs-lawsuit-ruling.html?unlocked_article_code=1.mFA.muWo.MFi8gLTfd6Q-&smid=nytcore-ios-share

A federal judge in Miami reopened President Trump’s $10 billion case against the I.R.S. in a striking turnabout, saying that she wanted to investigate “grievous allegations” that the hasty deal to resolve it was “premised on deception.”

The ruling by the judge, Kathleen M. Williams, on Friday to revive the case shortly after closing it was a significant blow both to Mr. Trump, who had voluntarily dismissed the suit last week, and to the Justice Department. After the president withdrew the suit, senior department officials released a pair of extraordinary agreements that settled the case by establishing a $1.8 billion fund to compensate people who claimed they were victims of government “weaponization” by Democrats.

The deal also conferred lucrative tax benefits on Mr. Trump, his family and his businesses.

Judge Williams’s decision came in response to court papers filed on Wednesday by a bipartisan group of 35 former federal judges who urged her to bring the case back to life and dig into the details of the agreement to settle it.....

In her brief but stern order on Friday, Judge Williams said that she wanted to investigate the circumstances surrounding Mr. Trump’s efforts to settle the lawsuit in a way that benefited him and his allies. If she succeeds in moving forward with her inquiry, it could ultimately result in questions being asked of the Justice Department leaders who signed the agreements to settle the suit — chief among them, Todd Blanche, the acting attorney general, and Stanley Woodward Jr., the No. 3 official in the department.

In her order, Judge Williams asserted that she was “empowered to investigate serious misconduct” in any case before her, and ordered Mr. Trump’s lawyers to tell her by June 12 whether the lawsuit should be formally reopened because “the court was the victim of a fraud.”.....

Mr. Trump’s suit, as I.R.S. officials laid out in their memo and other lawyers have noted, had clear legal flaws. Potential defenses against it include that it was filed after the statute of limitations, and that it incorrectly faulted the I.R.S. for the actions of Mr. Littlejohn, previously a contractor employed by Booz Allen Hamilton. But the Justice Department never made an attempt to contest Mr. Trump’s suit. No government lawyer entered an appearance in the case.

That has fueled criticism that the deal the Justice Department struck with Mr. Trump was not a genuine attempt to avoid a loss on the merits to the president in court, but instead a scheme to provide him and his political allies with public benefits.

In a footnote, Judge Williams questioned the provision granting Mr. Trump, his family and their businesses immunity from I.R.S. scrutiny of tax returns they had already filed. She wrote that the audit protection may run afoul of Justice Department rules requiring legal settlements to directly relate to the issues in the suit.

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2. It amazes me there are lawyers who haven't figured out...

...that Trump's grifts hasn't hurt him much, but there's a trail of disbarred attorneys in his wake.

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3. MS NOW- Even if Trump kills his $1.8 billion slush fund, his IRS lawsuit headache isn't over

The controversial settlement included both a fund that has sparked a political backlash and IRS immunity for the president, his relatives and Trump businesses.

Link to tweet

https://www.ms.now/opinion/trump-billion-fund-irs-settlement-legal-jeopardy

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....

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.

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.

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.....

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.

Even if trump drops the slush fund part of the case, Judge Williams will need to still hold a hearing on the IRS immunity issue and trump may have to testify by either affidavit or in person. This hearing will be fun to watch