A president suing a federal agency he runs almost sounds like something out of a movie. That’s pretty much what happened in January 2026, when Donald Trump sued the IRS for $10 billion over the leak of his tax returns in 2020. The breach was caused by contractor Charles Littlejohn, who later admitted guilt and was sentenced to five years in prison. The lawsuit made people look twice right away. If you are the head of the government you are suing, how do you argue in an adversarial court case?
It turned out that you don’t. We couldn’t tell because the suit didn’t last long enough. By May 2026, the Defense Department had settled the case without going to court. The settlement itself became the story.
The words were very strong. “Anti-Weaponization Fund,” a $1.776 billion fund, was to be set up to help people who say the DOJ was used politically against them. As a separate addendum, acting Attorney General Todd Blanche told the IRS to stop any current or future audits of the Trump family and the Trump Organization for good. The lawsuit went away without a trace. The settlement showed up in silence. The questions then came up.
The case had been thrown out by U.S. District Judge Kathleen Williams, but she wasn’t quite ready to close the case. Before she was fired, she had already voiced concerns, pointing out that Trump had a lot of power over both his own legal team and the government lawyers who were supposed to be against him. Williams paid attention when 35 former federal judges wrote to her and asked that the case be reopened, saying that the lawsuit was a fake attempt to get a settlement. She said that their claims were “grievous” and told Trump’s lawyers to write a response.
If you follow legal filings, that answer came on a Friday night in Miami. That’s when people usually put out things they don’t want to be on the front page of Saturday’s paper. Trump’s lawyers made a strong case that a judge has no more power over a case once it has been thrown out. They said that the former judges who signed the letter had no authority in the matter and could not bring back proceedings that had already ended. When it came to the settlement, they were honest: “Settlement is not evidence of collusion; it is evidence of a rational settlement decision.” That might be technically correct. It’s also true that the word “rational” does a lot in that sentence.
The political fallout happened quickly and in a way that was a little unusual: it involved both parties. Democrats said the fund was an abuse of power by the president. There were also concerns from some Republicans, though they were quiet. Blanche said she was leaving the Anti-Weaponization Fund in early June, but the Trump family and businesses were still protected from IRS audits. In the end, the DOJ confirmed in writing that it would not go after the fund.
What stays is the bigger question that the case keeps bringing up. There was a real IRS leak. Littlejohn did something very bad: he purposely looked for a way to get to Trump’s tax returns and then gave them to reporters. There were valid legal complaints. But because of how this lawsuit was put together, filed, and then quickly dropped in favor of a broad settlement, even people who felt sorry for the people involved found it hard to understand as a normal court case.
One gets the feeling that this wasn’t just about tax return privacy. It had to do with a bigger issue: who runs the government and what happens when the same person is the plaintiff, the defendant’s boss, and the head of the department that is settling the case? The courts aren’t really made for that kind of thing. And it looks like the ethics that guide them aren’t either.
Judge Williams is still not sure if he will officially reopen the case. If she does, Trump’s lawyers have said they will take the case right away to the 11th Circuit. In other words, it’s likely not over yet.
