Trump IRS lawsuit appeal challenges judge’s sanctions order

The Trump IRS lawsuit appeal moved forward Friday, putting a politically charged fight over taxpayer funds, IRS enforcement and a stalled attorney general nomination back before the courts. For retail investors, the case is a reminder that Washington legal fights can affect fiscal policy, agency authority and the people running key federal departments.

President Donald Trump filed a notice of appeal in U.S. District Court in Miami after Judge Kathleen Williams ruled on July 13 that his $10 billion lawsuit was brought in bad faith, according to court filings described by CNBC. The appeal goes to the U.S. Court of Appeals for the 11th Circuit.

Trump, two of his adult sons, the Trump Organization and two of their lawyers joined the filing, CNBC reported. The underlying lawsuit related to the leak of Trump’s tax returns by a former IRS employee years earlier.

What is the Trump IRS lawsuit appeal about?

The appeal challenges Williams’ order finding that the lawsuit was used to give court cover to a settlement that she said lacked a viable legal or factual basis. A settlement is an agreement meant to resolve a dispute without continuing litigation, often with one side giving up claims in exchange for specific terms.

According to CNBC, the agreement called for Trump and the other plaintiffs to drop the case while the Department of Justice created a $1.776 billion fund for people who said they were harmed by government “lawfare.” The agreement also included language barring IRS enforcement actions tied to past federal tax returns of Trump, his family members and related entities.

Williams wrote in her July 13 order that the plaintiffs used the case to seek access to taxpayer funds and exemptions from audits or other investigations by leveraging control over the defendants, CNBC reported. Her order did not expressly cancel the settlement, saying the enforceability of a private agreement between the sides was not before the court.

After the appeal notice, a spokesperson for Trump’s legal team repeated a prior statement criticizing the IRS leak and saying, “President Trump continues to hold those who wrong America and Americans accountable,” according to CNBC.

Why the fund is blocking Todd Blanche’s nomination

The disputed fund has also become a Senate problem for Todd Blanche, Trump’s nominee for U.S. attorney general. CNBC reported that several Republican senators are withholding support while they seek written confirmation that the fund has been terminated.

Trump addressed the issue Friday at a Cabinet meeting at Camp David. “They’ve agreed to not have a fund. But there are a lot of people that are very upset about it,” he said, according to CNBC. He also said, “The fund is dead, but, you know, I wish it weren’t.”

Earlier Friday, Trump defended the fund in a Truth Social post, writing that victims of government abuse “should be paid back for what they were forced to endure,” CNBC reported. Some observers, including Sen. Thom Tillis of North Carolina, interpreted the post as potentially referring to Jan. 6 defendants and raising questions about whether the fund could return.

Blanche previously told senators that he would not rule out payments from the fund to people charged with assaulting police officers during the Jan. 6, 2021, Capitol riot, CNBC reported. Trump has pardoned nearly all Capitol riot defendants and often speaks sympathetically about them.

What sanctions did the judge order?

Williams imposed non-monetary sanctions tied to the case. She referred Trump attorney Alejandro Brito to the Florida Bar for possible discipline and barred another lawyer, Daniel Epstein, from appearing in the Southern District of Florida for one year, according to CNBC.

The judge also prohibited Trump and the other parties from using the agreement as proof that a true settlement had been reached in the lawsuit. The Department of Justice responded at the time by saying there was no collusion and accusing Williams of disregarding precedent, CNBC reported.

This story draws on original reporting from CNBC.