WASHINGTON – Despite a federal judge saying this week that Donald Trump acted in “bad faith” settling a lawsuit with his own administration, and that the terms of the purported settlement were illegal and unconstitutional, the president intends to keep the sweetheart deal he gave himself: an end to any ongoing tax enforcement against him or his family.
In an unusual order on Monday, months after Trump withdrew his lawsuit, U.S. District Judge Kathleen M. Williams referred the president’s lawyers for formal sanctions and forbade the president from describing the deal he reached with his own government as an actual settlement of the case in any future official proceedings.
Williams said Trump “improperly employed this lawsuit to justify a particular award in this matter – access to taxpayer funds and exemption from audits and other investigations.” But Williams said in a footnote that the legality of the May 19 Justice Department order that “FOREVER BARRED” the government from continuing any already-started tax enforcement against Trump “is not before this Court.”
A spokesperson for the Justice Department said in an email that means the order is “still in effect.”
The order will likely be a major topic during Wednesday’s Senate hearing on whether to confirm Trump’s nomination of Todd Blanche as attorney general. Blanche previously worked as Trump’s personal attorney and, as the acting attorney general, signed the orders creating the now-abandoned $1.8 billion “Anti-Weaponization Fund” and Trump’s personal tax benefit.
Democrats said the judge’s scathing order showed that Blanche shouldn’t be confirmed, and they’ve previously introduced legislation to kill the slush fund and the Trump tax break. But Republicans, too, were furious about the weaponization fund and the self-dealing nature of the purported legal settlement.
“I’m going to see how he answers some of the questions, not only about the weaponization fund, but the audit,” Sen. John Cornyn (R-Texas) told reporters on Monday. Cornyn, who lost a primary earlier this year to a Trump-backed challenger, is one of a handful of potential GOP “no” votes.
Sen. Dick Durbin (D-Ill.), the top Democrat on the Senate Judiciary Committee, met with Blanche on Tuesday ahead of the hearing. He said Blanche told him he “had nothing to do with” Trump’s IRS lawsuit, and believes he was “a victim of a hit job” by Williams.
Talking with reporters, Durbin said Blanche defended the tax deal by stressing that it didn’t apply to potential future tax audits of Trump’s family or their businesses. The order specifies that it applies to tax returns from before the date of Blanche’s order.
“He said ‘No, it wasn’t prospective,’” Durbin said. “That was his defense. Having said that, that’s not much of a defense, as far as I’m concerned. Why would they be exempt from tax laws because of some question about whether somebody disclosed his income tax return?”
Trump sued the IRS in January, demanding $10 billion for a leak of his tax information to The New York Times by an IRS contractor during his first term. Williams questioned how the president could be on both sides of the lawsuit, and Blanche announced the “settlement” days before a hearing scheduled to address whether the case should be thrown out.
The personal stakes for Trump could be huge. Using the records it obtained, The New York Times reported in 2020 that an adverse ruling in a decade-long ongoing audit over questionable deductions could cost Trump as much as $100 million.
The White House referred questions about the IRS part of his deal to the Justice Department, which said there had been “no collusion” between Trump and his administration.
“This case was brought by President Trump in his personal capacity, as well as by several members of his family, who were all victims of admitted violations of law,” the DOJ spokesperson said. “There was a live dispute because the plaintiffs sought relief that the government had not provided. The plaintiffs did not receive any money and were barred from receiving any from the now-defunct Anti-Weaponization Fund.”
Not long after the fund was created – apparently to pay cash rewards to Jan. 6 rioters – Blanche announced that it would not be “moving forward.” But he said Trump’s tax benefit would remain, and lawmakers have asked fewer questions about it. In a separate case, a federal judge blocked the government from establishing the anti-weaponization fund but not the IRS deal.
Williams said the IRS deal “directly contravenes” a federal law forbidding the president or his underlings “to request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer.”
Williams also pointed to the Constitution’s Domestic Emoluments Clause, which says the president shouldn’t receive any compensation from the government other than his fixed salary.
Sen. Ron Wyden (D-Ore.) called the IRS deal “an obscene act of corrupt self-dealing” and said in a statement that Blanche’s nomination should be rejected.
“It is clear that Trump, his family and his business associates will stop at nothing to continue using the federal government and taxpayer dollars to enrich themselves and operate under a separate set of rules from everyday Americans who are struggling to get by,” Wyden said.