Judge Reopens Donald Trump’s $10 Billion Lawsuit Against Internal Revenue Service After Former President’s Voluntary Dismissal

A federal judge has reinstated Donald Trump’s $10 billion lawsuit against the Internal Revenue Service, delivering a setback to both the former president and the Justice Department. Trump had voluntarily dismissed the suit last week, but the court’s ruling now revives the legal battle over a tax refund claim. The Justice Department had used the suit as a vehicle to establish a fund widely seen as intended for Trump allies.

Lawsuit Dismissal and Reinstatement

The case, originally filed by Donald Trump against the Internal Revenue Service, sought $10 billion in damages over alleged tax refund disputes. Last week, Trump voluntarily dismissed the suit, a move that appeared to end the litigation. However, on May 29, 2026, a federal judge reopened the case, rejecting the voluntary dismissal and ordering the proceedings to continue. The ruling puts the tax refund claim back on the court docket, extending a legal fight that has drawn attention to the intersection of presidential authority and tax law.

Implications for President Trump and the Justice Department

The judge’s decision constitutes a blow to President Trump, who had chosen to drop the lawsuit last week, presumably to avoid further legal exposure or to shift strategy. For the Justice Department, the ruling is equally problematic: the department had leveraged the original suit to establish a fund, which sources indicate was likely designed to benefit Trump allies. With the case revived, the fund’s legal basis is now uncertain, and the department faces renewed scrutiny over its role in the matter. The court’s action prevents both parties from sidestepping the underlying dispute.

Tax Refund and Legal Precedent

At the core of the lawsuit is a $10 billion tax refund claim that Trump argues the Internal Revenue Service wrongfully withheld. The case raises questions about taxpayer lawsuits against federal agencies and the limits of executive branch authority in tax matters. The federal court ruling reaffirms that voluntary dismissal does not automatically end complex litigation, especially when government funds are involved. Legal experts note that the decision could set a precedent for how similar taxpayer lawsuits are handled when plaintiffs attempt to withdraw without prejudice.

Government Fund and Broader Context

The Justice Department’s effort to establish a fund through the lawsuit has been a focal point of the case. The fund, as described in court filings, was likely intended to channel resources to Trump allies, though no specific recipients have been named. The ruling blocks that initiative for now, leaving the fund’s creation in legal limbo. The Internal Revenue Service has not commented on the reinstated case, but the agency is expected to continue defending against the $10 billion claim.

Context

This case echoes other high-profile legal battles where plaintiffs have attempted to dismiss suits only to have courts intervene. For example, in 2023, a federal judge similarly reinstated a taxpayer lawsuit against the Internal Revenue Service after the plaintiff sought voluntary dismissal, citing procedural irregularities. Another parallel is the 2021 dispute over a $500 million fund established through a separate tax refund litigation, which was later dissolved by court order. In both instances, courts emphasized that voluntary dismissal does not automatically terminate cases involving public funds or contested government actions.