Trump ordered to address ‘grievous’ fraud allegations in settlement with IRS

U.S. President Donald Trump attends a cabinet meeting at the White House on May 27, 2026. Photo by Kent NISHIMURA/AFP via Getty Images

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A federal judge ordered President Donald Trump to respond to “grievous allegations” that his deal with the government to create a US$1.8 billion fund to resolve his lawsuit against the Internal Revenue Service was the result of a “fraud” on the court.

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In an order on Friday, U.S. District Judge Kathleen Williams gave the president’s personal attorneys until June 12 to respond to a request by a group of former federal judges that she reopen the proceedings to investigate conduct by the president and the Justice Department.

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Williams had closed the case after Trump’s attorneys notified her they were dropping his claims seeking to hold the IRS liable for a past leak of his tax information.

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At the same time, the Justice Department announced that in exchange for Trump ending the case, it would create a US$1.776 billion fund to benefit what officials described as victims of “weaponization” by the government. Opponents have slammed the arrangement as a “slush fund” for Trump’s allies and supporters. The deal also includes a bar on investigations into Trump’s past tax returns.

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Earlier Friday, a federal judge in Virginia temporarily barred the Trump administration from operating the “anti-weaponization fund“ while she weighs a longer-term block. The case in Virginia is one of at least four lawsuits filed objecting to the plan since it was announced earlier this month.

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Amid a growing backlash that includes some key Republican senators, Trump’s top aides have discussed whether he should kill the fund in exchange for getting immigration-enforcement funding passed next month, the Wall Street Journal reported late Friday, citing unidentified people familiar with the matter.

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The group of 35 former federal judges filed a request earlier this week arguing that Williams had authority to reopen the case to probe whether fraud was involved, since courts only have jurisdiction over disputes in which the parties are at odds. Trump filed the case against the IRS, which is part of the executive branch that he runs, in January.

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The settlement “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,” lawyers for the 35 judges wrote.

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Williams ordered Trump’s lawyers to address “the charges of collusion and whether the parties are truly adverse,” whether her dismissal of the case “was premised on deception by the parties,” and whether she should reopen it because the court was a “victim of a fraud.”

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The Justice Department did not immediately respond to a message seeking comment on the judge’s order.

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A spokesman for Trump’s legal team said the settlement is justified by the alleged mistreatment of “America First Patriots.”