Trump IRS lawsuit appeal challenges order faulting $10 billion case

President Donald Trump’s Trump IRS lawsuit appeal moved Friday to the U.S. Court of Appeals for the 11th Circuit, challenging a federal judge’s order that found his $10 billion case was filed in bad faith to support a disputed settlement. The fight bears directly on a $1.776 billion Department of Justice fund that Trump said Friday has been abandoned, even as he said he wished it had survived.

The notice of appeal was filed in U.S. District Court in Miami by Trump, two of his adult sons, the Trump Organization and two of their attorneys, according to the court filing. They are seeking review of U.S. District Judge Kathleen Williams’ July 13 order, which criticized the lawsuit and imposed non-monetary sanctions.

Williams wrote that the case, which was tied to the earlier leak of Trump’s tax returns by a former IRS employee, was used to give legal cover to a settlement that she said lacked a sound basis in law or fact. She found that the plaintiffs improperly used the suit to obtain access to public money and protection from audits and other investigations.

What is the Trump IRS lawsuit appeal about?

The appeal concerns Williams’ findings and sanctions, rather than a new lawsuit over the tax-return leak. The filing asks the 11th Circuit to review an order that referred one Trump attorney, Alejandro Brito, to the Florida Bar for possible discipline and barred another, Daniel Epstein, from admission to the Southern District of Florida federal court for one year.

Williams also prohibited Trump and the other parties from citing the settlement agreement as proof that the court case had actually been settled. Her order did not expressly invalidate the private agreement, saying the enforceability of any private arrangement between the sides was not before her court.

A spokesman for Trump’s legal team, responding after the appeal notice was filed, repeated a prior statement condemning the IRS leak and said Trump “continues to hold those who wrong America and Americans accountable.”

The contested settlement called for Trump and his co-plaintiffs to drop the case in exchange for the Justice Department creating a $1.776 billion fund for people claiming they were victims of government “lawfare.” It also included a provision under which the Justice Department agreed that past federal tax returns of Trump, his family members and related entities would be shielded from IRS enforcement actions.

Why is the fund affecting Todd Blanche’s nomination?

The fund has become a confirmation issue for Todd Blanche, Trump’s nominee for U.S. attorney general. Some Republican senators have sought written assurance that the fund is no longer operative, according to the account of the Senate dispute, amid concerns that it could return if Blanche is confirmed.

Trump addressed the issue at a Cabinet meeting at Camp David on Friday, saying the parties had agreed not to maintain the fund. He added: “The fund is dead, but, you know, I wish it weren’t.” Earlier on Truth Social, Trump defended compensation for people he described as victims of government abuse, writing that their lives had been ruined.

Blanche previously told senators that he would not rule out the possibility that some money could go to people charged with assaulting police officers during the Jan. 6, 2021, Capitol riot. Trump has pardoned nearly all Capitol rioters and has regularly expressed sympathy for them.

Sen. Thom Tillis of North Carolina, one of the Republicans withholding support for Blanche, was among those who interpreted Trump’s Truth Social post as potentially referring to Jan. 6 participants and as raising questions about whether the fund was actually dead.

The Justice Department, responding when Williams issued her order, denied collusion and said the judge had disregarded precedent. Williams’ order and the new appeal leave the legal fight active while the political dispute over the fund continues in the Senate.

This story draws on original reporting from CNBC.