A Virginia federal judge blocked a $1.776 billion Trump IRS settlement fund on June 12, and the government refused to submit court-ordered sworn declarations, citing separation of powers.
A federal judge in Alexandria, Virginia, issued a preliminary injunction on June 12, 2026, blocking the Trump administration from establishing a $1.776 billion "Anti-Weaponization Fund" created through a settlement in the long-running litigation over IRS audits of former President Donald Trump [1]. U.S. District Judge Leonie Brinkema of the Eastern District of Virginia ordered Attorney General Todd Blanche and Treasury Secretary Scott Bessent to submit sworn declarations confirming the fund had been abandoned [1]. On June 19, the government filed notice that it would not comply, citing separation of powers concerns [2].
The injunction arises from a civil lawsuit challenging a settlement the Trump administration reached with itself over IRS scrutiny of the former president, a proceeding critics characterized as collusive from the outset [1]. Judge Brinkema's court is one of two federal venues now actively scrutinizing the settlement. In the Southern District of Florida, 35 retired federal judges filed a motion before Chief Judge Kathleen Williams alleging the settlement constituted a fraud on the court, and that court has opened proceedings on whether to reopen the underlying case [1]. Democracy Forward, which has been active in the litigation posture challenging the fund, is among the organizations pressing the legal challenge [2].
The government's refusal to submit the ordered declarations elevates the compliance question from procedural to constitutional. When a cabinet official declines to execute a court-ordered submission on separation of powers grounds, the court's options include contempt proceedings, adverse inferences, or escalated injunctive relief, each carrying significant institutional stakes [2]. The IRS audit immunity addendum embedded in the original settlement remains operative and has not been separately enjoined, meaning a central benefit of the settlement survives even as the fund itself is blocked [1].
The dual-forum structure of this litigation is itself notable. Simultaneous federal proceedings in Virginia and Florida, anchored by different plaintiff classes and different theories of relief, create the possibility of conflicting rulings and may ultimately require appellate coordination [1]. The Southern District of Florida proceedings on reopening the underlying case could, if successful, reach back and unwind the settlement agreement at its root rather than simply restraining one of its products [2]. Meanwhile, the Eastern District of Virginia must now decide how to respond to a government that has, in plain terms, refused to comply with its order.