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In a significant development, a federal judge in Florida has decided to revive President Trump’s lawsuit against the Internal Revenue Service (IRS), which seeks damages amounting to $10 billion. This decision comes after intervenors raised concerns that a settlement involving the creation of an “anti-weaponization” fund might have compromised the integrity of the case.
Previously, an agreement was reached between the Department of Justice (DOJ) and Trump to voluntarily withdraw the lawsuit. In exchange, a substantial fund of $1.776 billion was to be established, allowing individuals who believe they have been wronged by the government to apply for compensation. This arrangement allowed both parties to bypass U.S. District Judge Kathleen Williams, who was originally overseeing the case.
However, on Friday, Judge Williams decided to reconsider the case. She took this step in response to concerns from non-party intervenors, who argued that despite there being no official settlement on record, public statements and documents implied that the case’s dismissal was based on a supposed settlement between the involved parties.
Judge Williams’ decision to reopen the case underscores the ongoing legal complexities and the broader implications of the settlement’s terms. The case will now return to the court for further examination, potentially impacting the future of similar fund-based settlements.
“The non-party movants explain that although there is no settlement of record in this matter, public documents and announcements indicate that the dismissal of this case was premised on a purported settlement between the Parties,” she wrote.
“In turn, movants submit that the settlement ‘is a product of collusion and is itself a fraud on the Court.’”
In reopening the case, Williams largely returns it to where the case was before the parties alerted the judge they would be dismissing it and starting the fund.
That move set off a firestorm, spawning pushback even from congressional Republicans who have sponsored legislation to ban the fund, asserting Congress gave no authority for such spending.
Democrats have also blasted the fund, saying it will be used to funnel money to Trump’s allies, including those who condone actions like the Jan. 6, 2021, attack on the U.S. Capitol, and otherwise back claims from those who were rightfully prosecuted.
In addition to the fund, acting Attorney General Todd Blanche later signed an addendum to “forever bar and preclude” 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 filing came from 35 former federal judges who argued the original case violated the conditional requirement for parties to be truly adverse in court suits.
“The non-party movants 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,” Williams wrote.
“They point to the fact that the settlement in question includes a ‘three-paragraph addendum … [that] purports to ‘forever bar and preclude’ the United States from pursuing claims that could have been [otherwise] asserted [against] Plaintiffs,’ and highlight the fact that Defendants did not ‘even try to defend against Plaintiffs’ claims’ despite their active opposition to nearly identical claims in other litigation.”
The order from Williams launches a new inquiry, directing both Trump and the DOJ to again file briefs to explain “charges of collusion and whether the Parties are truly adverse” as well as “whether the case should be reopened because the Court was the ‘victim of a fraud.’”
Updated at 7:22 p.m. EDT.