Judge sanctions Trump lawyers in IRS case over improper-purpose fund

On July 13, 2026, U.S. District Judge Kathleen M. Williams of the Southern District of Florida sanctioned attorneys involved in Trump v. Internal Revenue Service (case no. 1:26-cv-20609-CV-WILLIAMS), finding the IRS-related lawsuit was pursued for an “improper purpose” under Rule 11—even after the plaintiffs had already dismissed the case with prejudice.

The order also restricts how the parties may describe a purported “settlement” and an “anti-weaponization” fund concept in future official proceedings, and it triggers potential attorney-discipline review at multiple bar authorities.

What the judge ruled: Rule 11 “improper purpose”

The court’s core finding was not a final decision on the underlying tax dispute. Instead, the judge concluded the case was filed and pursued for an “improper purpose” under Rule 11—framing it as misuse of the judicial process tied to the lawsuit’s settlement structure.

Judge Williams also made clear that voluntary dismissal does not necessarily end the court’s ability to address Rule 11 abuses tied to how the case was brought and handled.

Sanctions and referrals: Florida plus other bar authorities

The order imposed non-monetary sanctions and referrals, including:

• Referral to the Florida Bar: The court referred attorney Alejandro Brito for potential professional discipline.
• Pro hac vice restriction in S.D. Florida: The court denied future pro hac vice admission for attorney Daniel Z. Epstein for one year (or until further order).
• Copy mailed for potential discipline: The clerk was directed to send copies of the order to the State Bar of New York and the District of Columbia Bar for disciplinary proceedings involving Acting Attorney General Todd Blanche and Associate Attorney General Woodward.

In addition, the order described a schedule for possible further monetary sanctions related to court-appointed amici—separate from the non-monetary discipline and the evidentiary-use restrictions.

The court’s key restriction: no using or citing the “settlement” provisions

A central part of the sanctions is an order restricting future courtroom and government use of the deal-like terms. The court prohibited the parties from referring to the purported “settlement agreement,” and from using, offering, admitting, or citing any of its provisions in any judicial, administrative, regulatory, arbitration, or other official proceeding as evidence that a settlement was reached.

Where the “anti-weaponization” fund fit in—per court and DOJ descriptions

In explaining the settlement framework the judge addressed, the order recounted that the “anti-weaponization” fund was described as being financed by the U.S. Treasury’s Judgment Fund, totaling $1.776 billion.

Earlier, the Justice Department described a similarly named “anti-weaponization” fund, including its stated purpose and financing mechanism through the Judgment Fund.

What comes next (and what remains uncertain)

• Bar discipline takes time and may not end in sanctions: A referral or mailing of the order to bar authorities does not automatically mean discipline will be imposed.
• Limits on future “settlement” characterization are immediate: The restriction affects what parties can argue or submit in official proceedings going forward.
• Don’t read this as a merits win/loss on the IRS dispute: This is a sanctions and Rule 11 accountability ruling tied to litigation conduct and court-ordered limits after dismissal, not a conclusive national determination of the underlying tax/liability issues.

Next to watch: whether any parties seek further review of the sanctions, and how bar authorities handle the disciplinary referrals triggered by the order.

Sources

• Civil Rights Litigation Clearinghouse (University of Michigan) — PDF of Order (July 13, 2026) in Trump v. IRS (S.D. Florida)
• AP News — Judge says Trump IRS lawsuit was filed for “improper purpose,” refers lawyer for possible discipline (July 13, 2026)
• Axios — Sanctions details tied to the anti-weaponization fund (July 13, 2026)
• U.S. Department of Justice (Office of Public Affairs) — “Justice Department Announces Anti-Weaponization Fund” (May 18, 2026)
• Reuters (republished by Investing.com) — Judge finds Trump misused court in IRS case, refers lawyers for discipline (July 13, 2026)