A federal appeals court has upheld a lower court's finding that President Donald Trump's $10 billion lawsuit against the Internal Revenue Service (IRS) was improperly coordinated, rejecting a challenge to the ruling and related sanctions.

Appeals Court Upholds IRS Lawsuit Ruling

On Tuesday, a three-judge panel of the 11th U.S. Circuit Court of Appeals backed U.S. District Judge Kathleen Williams' finding that the litigation lacked genuine adversity between Trump and the IRS.

"The appellants did not submit or offer any evidence to explain their litigation conduct or demonstrate that the lawsuit and the settlement were not collusive," the appeals court wrote.

The court added that Trump's attorneys had not made "a strong showing that the district court committed clear error in its collusion and bad faith findings."

Judge Criticized Trump IRS Lawsuit

Williams ruled in July that Trump's lawsuit, filed over the leak of his tax returns, was used to support an agreement with the IRS after Trump returned to office.

The Department of Justice subsequently created a $1.776 billion "anti-weaponization" fund.

"In sum, the facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy," Williams wrote.

She also determined that the lawsuit was "brought for an improper purpose—to gain the imprimatur of judicial legitimacy for a 'settlement' that had no viable basis in law or fact."

The appeals court also upheld sanctions against two Trump attorneys, finding Williams had the authority to impose them.

White House did not immediately respond to MarketDash's request for comments.

Trump-IRS Lawsuit

Earlier this year, Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization sued the IRS and Treasury Department for $10 billion over the alleged leak of their confidential tax information, citing "reputational and financial" damage.

In May, Trump was expected to drop the lawsuit under a proposed settlement that could have created a $1.7 billion compensation fund, but the deal was not finalized.

In July, Trump and the other plaintiffs appealed Judge Williams' finding that the lawsuit had been filed in bad faith.

Trump's legal team said he continued to hold accountable those who had wronged Americans, while Trump said of the proposed $1.776 billion fund, "The fund is dead, but, you know, I wish it weren't."

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