WASHINGTON — A U.S. appeals court has refused to halt a Florida federal judge’s decision to penalize President Donald Trump and his lawyers for “bad faith” conduct in his $10 billion lawsuit against the Internal Revenue Service while he appeals.

The order on Tuesday leaves in place a July ruling that barred Trump and certain U.S. officials from citing a deal that ended his case against the IRS in any “official” proceedings as evidence that there was a legitimate settlement.

That sanction appeared to cover a directive from Attorney General Todd Blanche that shields the president, his sons Donald Jr. and Eric, and the Trump organization from audits or claims related to past tax filings.

The latest action from the 11th Circuit undercuts Trump’s efforts to end a legal fight that has persisted months after the U.S. Justice Department announced the agreement to end his case in May. As part of that deal, the department committed to a $1.8 billion fund for victims of alleged government “weaponization” — a plan officials later dropped — as well as the separate immunity order from Blanche.

Trump next could ask all of the 11th Circuit’s active judges to reconsider the panel’s decision or take the dispute to the U.S. Supreme Court.

A three-judge panel of the 11th Circuit U.S. Court of Appeals found that Trump failed to make a “strong showing” that the Florida judge “committed clear error” in imposing the sanctions. U.S. District Judge Kathleen Williams had found that the president and his lawyers acted in bad faith in pursuing the lawsuit against the IRS and then reaching an agreement with federal agencies that he controls as the head of the executive branch.

Trump and his attorneys “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 held. The judges also disagreed with Trump that Williams’ prohibition on referring to the existence of a litigation settlement violated the First Amendment’s free speech protections because it was limited to “official” settings — “judicial, administrative, regulatory, or arbitration” proceedings.

The order came from Judges Adalberto Jordan, Robin Rosenbaum and Kevin Newsom. Newsom was appointed to the 11th Circuit by Trump during his first term. Jordan and Rosenbaum were appointed under the Obama administration.

The penalties at issue in Trump’s appeal also included referring one of his personal attorneys for potential ethics investigations by state bar regulators and restricting another lawyer from practicing in the south Florida federal court. Those provisions remain in effect for now as well.

Trump’s legal team released a statement broadly denouncing the leak of the president’s tax information that had spurred his lawsuit against the IRS and said that the president “continues to hold those who wrong America and Americans accountable.”

A spokesperson for Trump’s attorneys did not immediately respond to a question about next steps in the legal fight. A Justice Department spokesperson also did not immediately respond to a request for comment.

Trump had asked the 11th Circuit to immediately pause the sanctions order from Williams to avoid keeping “an unconstitutional speech restraint and career-altering professional sanctions in force while this court considers an appeal that is overwhelmingly likely to succeed.”

Acting Deputy Attorney General Trent McCotter filed a brief supporting Trump’s stance. McCotter defended the Justice Department’s handling of the IRS case and argued that Williams “lacks the authority to collaterally attack the settlement.”

Williams reopened the IRS case earlier in the summer after a coalition of former federal judges asked her to probe whether Trump had intentionally filed a legally unsound lawsuit against the IRS and Treasury Department — agencies under his control as president — as a pretext to secure a favorable deal with the Justice Department.

In a scathing opinion, Williams concluded that Trump had tried to “manipulate the judicial process” and blasted the Justice Department for signing off on a settlement that “had no viable basis in law or fact.”

Although Blanche walked back the $1.8 billion fund plan after facing pushback from Republicans in Congress, Trump hasn’t signed off on changing the terms of the original settlement agreement. His critics have protested that officials could revisit the compensation proposal in the future.

The immunity protection order from Blanche is also still in effect. McCotter wrote in his submission to the 11th Circuit that the government wasn’t clear on the “scope” of the section of Williams’ sanctions order that blocked Trump and other participants in the case from referring to the settlement or citing the terms in official proceedings.

A separate lawsuit challenging the fund and audit immunity is pending before a federal district judge in Virginia.

The case is Trump v. Thirty-Five Former Federal Judges, 26-12692, U.S. Court of Appeals, 11th Circuit.

_____

©2026 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.