President Donald Trump loses latest round in IRS case as judge refuses to halt sanctions during appeal: ‘Each argument’ was ‘unpersuasive,’ judge says

President Donald Trump has lost his latest bid to halt sanctions imposed in his lawsuit against the IRS after a federal judge rejected his arguments for putting the sanctions on hold while he appeals.

U.S. District Judge Kathleen Williams denied an expedited request from the president, his sons Donald Trump Jr. and Eric Trump, the Trump Organization and two of their attorneys on September 14.

The plaintiffs argued that the judge’s July sanctions order was flawed on several grounds, but the judge was unconvinced.

“The Court finds each argument unpersuasive,” she wrote, concluding that they had failed to demonstrate a sufficient likelihood of success on appeal or irreparable harm necessary to justify a stay.

The dispute stems from a lawsuit the president, Don Jr., Eric and the Trump Organization filed against the IRS and the Treasury Department on January 29.

The plaintiffs voluntarily dismissed the case with prejudice on May 18. That same day, the Justice Department announced what it described as a “settlement” and published an agreement that included the creation of a $1.776 billion Anti-Weaponization Fund to compensate people who claimed they had suffered from government “weaponization and lawfare.”

The judge later questioned whether the plaintiffs and the government agencies they sued had actually been opposing parties in a genuine legal dispute.

In her September 14 order, the judge noted that during the 109 days the lawsuit was pending, no attorney representing the federal government filed a notice of appearance or any document stating the government’s position in the case.

The unusual circumstances surrounding the case drew the attention of 35 former federal judges, who filed an amicus brief on May 27 urging Kathleen to reopen the case and investigate whether there had been a genuine underlying case or controversy.

Rather than reopen the case, she ordered the plaintiffs to address questions about whether the two sides had truly been adverse, whether the dismissal had been based on deception and whether the court had been the victim of fraud.

On July 13, the judge imposed sanctions after finding the plaintiffs had engaged in “bad faith conduct and misuse of the judicial system.”

The sanctions included referring attorney Alejandro Brito to the Florida Bar and barring fellow attorney Daniel Epstein from seeking pro hac vice admission in the Southern District of Florida for one year and restricting how the parties can use the purported settlement agreement in future official proceedings.

The president and the other plaintiffs, along with the two lawyers, appealed and asked the judge to put the sanctions on hold while the appeal proceeds.

In her September 14 order, the judge found that the president and the other plaintiffs had failed to demonstrate a sufficient likelihood of success on appeal or irreparable harm needed to justify putting the sanctions on hold.

She also rejected their argument that the restriction involving the purported settlement agreement was an unconstitutional limit on speech.

A federal judge REFUSED to pause her sanctions order pending appeal in Trump v. IRS, the collusive lawsuit that purported to justify Trump's insurrectionist slush fund and tax amnesty.
There's "a significant interest in knowing that the judiciary is fair and that the same rules… pic.twitter.com/EFbCv6eUiV

— Adam Klasfeld (@KlasfeldReports) September 14, 2026

The sanction does not prevent the parties from referring to the private agreement or its terms. Instead, it prohibits them from presenting it in judicial, administrative, regulatory, arbitration or other official proceedings as evidence of a “settlement” reached in the IRS case.

The judge wrote that allowing the agreement to be used that way “would perpetuate the false narrative” that it resolved a dispute between opposing parties in her court.

“Such a narrative deceives the public, impedes official proceedings, and undermines confidence in the courts,” she wrote.

The judge also rejected arguments that the sanctions against the two attorneys would cause them irreparable harm.

She found that referring Alejandro to the Florida Bar merely allows disciplinary officials to examine his conduct and “may or may not result in a sanction.” The judge also noted that Daniel’s one-year restriction applies only to future requests to appear pro hac vice in the Southern District of Florida and does not affect his current representation of clients.

The $1.776 billion Anti-Weaponization Fund, meanwhile, is no longer moving forward. Attorney General Todd Blanche, who was acting attorney general when the agreement was announced in May, testified at his July confirmation hearing that the proposed program was dead. He subsequently rescinded his order establishing the fund.

“As I testified at my confirmation hearing, the Fund is dead,” he later wrote in responses to questions from the Senate Judiciary Committee, according to the judge’s September 14 order.

With the request for a stay denied, the sanctions remain in place as the president and the other plaintiffs pursue their appeal.