## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 08

- 1312 and 08- 1586 U NI T ED S TATE SOF A MERI CA, P la intif f-A pp ellee, C ross -App el lant, v. W I L L I A M J. B E NS ON, D ef endant-Appellant, C ross-A pp ellee.

A pp ealsfr o m the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 04 C7403

— SamuelD er-Yegh iayan, Judg e.
A RGUED O CT OB ER 28, 2008

— D ECI DE D A PRI L 6, 2009

Befo re B AUER, R IPPLE an d E VANS, C ircu it Judges . B AUER, Cir cu i tJudg e . The di str i ct c ourtenj oi ned W il l i am J
. Benson, a “tax prot est er, ” fro m pro m oting, o r g an i zing, o r s el l i nghi s “R el i an ce Defen se Pa ck ag e” a nd “16th A m endm ent Rel i ance Pa ckage,” w hi ch w er e ba sed o n the f al se pr em ise tha t cus to m er s co ul d s to p pa y i ng federa lincom e t axes and avoi d ordefeatpro secuti on by2 N os. 08

- 1312 and 08- 1586

r ely i ngo n the mate r i al s in th e Pa ck ag es . Howev er, the cou rt de nied the gove rnm en t’s requ est to requ ire Ben so n t o di vu lge a l i sto fhi s cus to m er s. W e affi r m the i nj u n c t i o n, b u t r e v e r s e a s t o th e c u s t o me r l i st, a nd re m and fo r furtherappropr i ate pro ceedi ngs.

I . B AC KGR OUND B e n s o n w ro te a b oo k t itle d , The Law ThatNe ve rWas , in whi chhe c l ai m s th atthe S i xt ee nth A m en d m entt o the Uni t e d S t a t e s Co ns t i t ut i o n wa s n e v e r p r o pe r l y r a t i fi e d. Benson packa ged hi s bo ok w i th se ver alex c er pts fro m sta te l egi sl ati ve h istor i es and rec or ds fro m the nati onal ar chi v e s a s we l l a s c o ur t c a s e s a nd o the r mat e r i a l s t o c r e a t e wh a th e c a l l e d th e “ R e l i a n c e De fe n s e P a c k a g e . ” He advert i sed the Packag e a nd i ts com pon en t par ts f or sa l e o n h i s webs i te , ww w. th el aw thatne ve r was . co m . The enti re Pack age w as offer ed f orsa l e for$3 500. Benson b r a nd e d a s i mi l a r s e t o f mat e r i a l s a s the “ 1 6 th Am e nd

m en t Re l ianc e Pa ck ag e, ” whi chwas pr o m o te d a nd offer ed f orsa l e o n the w ebsi te ofthe Fr ee En ter pri se So ci ety
. The detai l s o fBenson’ s pro m oti onalcl ai m s wil lbe m or e thor oughl y di scusse d bel ow, but the y c an be boi l ed d ow n to t w o t he ories. Be ns on’s fi rst an d prim ary the ory w as th at t h e S ix te en th A m en d m en t w as n ev er p ro p er ly ra ti fi ed beca use s eve ra lst ate s intenti onal l y a tte m pted to m odi fy the l anguage o fthe propos ed am endm en t and so di d no t r at i fy the a ctua la m en dm en t pr o po se d b y Co ng r es s. W i th o ut th e S i xt ee nth Am en dm en t, Benson e xpla i ned, the federa li ncom e t ax sy ste m i s unconst i tuti onalN os. 08

- 1312 and 08- 1586 3

T he injun ction read s in p art: 1 The defen dant, W i l l i am J
. Ben s on, i ndi vi dual l y a nd doi ng bus i ne s s as Cons t i t ut i ona l Res ea rc h Ass oc i at es , an d any one (co n tin u ed ...) ac c or d in g t o th e Su p re m e C ou rt
. Se ePol l oc k v. Far m e rs ’Lo an & Trust Co. , 1 57U. S
. 4 29 ( 18 95 )
. Be ns o n s ta te d tha t he d oes not fil e an inc o m e tax return and that his cus tom ers m ay choos e t o do the sam e. Benson’ s s eco n d theor y, wh i ch w as al l ud ed to o n Ben so n’ s webs i te a nd mor e th o r o ughly d i sc us se d i n the Rel i ance Defense Packag e i tse l f, was thatan ind i vi du al coul d not be succe ssfully pr osecu ted i fhe t rul y b el i eve d he was not re qu ire d to pay i ncom e t axes. Benson c l ai m ed thatthe S upr eme Co ur t he l d i n C heekv. U nited Sta tes , 4 9 8 U. S
. 1 9 2 ( 1 9 9 1 ) “ tha twh e n a de fe nd a nth a d a g o o df ai th be l i efhe was notr equi re d to fi l e, he m ust be per m i tted to pre sent that bel i efto the j ury. ” Benso n al so ci ted U nite d State s v. P ow el l , 9 55 F
. 2d 12 06 ( 9th Ci r . 1 99 1) f o r the p rin c ip le th at th e d efe n d an ts ’ co n vic tio n for fa ilin g t o file tax r etur ns “ coul d not be susta i ned i f t he [d efen dan t s] sin cerely be li eve d t h e y w ere not requ ir ed t o fi le

— w hate ver t heir f ound at i on f or t ha t bel i ef

. ” And Benson pro m i sed thatthe Rel i ance Defense Packag e w ou ld all ow cus tom ers to de velop that sincere belief. A t the go ver nm ent’ s r eq u es t, the dist ri ct c ourtgr anted s ummar y j ud g e men ta nd i s s ue d a n i nj un c t i o n a g ai nst B en so n ; ho w eve r the di str i ct c ourtdeni ed the part of the r equeste d i nj uncti on thatwould have re quir ed Benson to tur n ove r hi s cust om erl i st. 14 N os. 08

- 1312 and 08- 1586

(
. . . c on t i nu e d) 1 in ac tiv e con cert or p articip atio n w ith him , are p erm an en tly e nj o i n e d fr o m: ( a) prom oti ng, organizi ng o r se ll ing the “Relianc e Defen s e Pac kage ” o r “1 6 Am en dm en tRel i anc e Pac k- th age, ” w hich are abu si ve tax shel ter s, plans, or ar rangem en ts that ad v ise or as si st cu stom ers to a ttem p t to evad e the as se ss m ent or col le ct ion oftheir corre ct federal tax ; ( b) prom oti ng, organizi ng or se ll ing ( or hel ping others t o pr om ot e, orga ni ze , or s el l ) an y othe r t ax s he l t er, pl an, ora r r a ng e m e nttha ti nc i t e s or as s i s t s othe r s to a t t e m pt to v iola t e t he intern al rev en u e law s or u nla w fully evad e the as se ss m ent or col le ct ion ofthe irfederal tax liab ilities or un law fully claim im p ro p er tax re fun d s; ( c) m aking or furnis hing ( in connect ion w ith o rg anizing , p ro m otin g , or selling an y p lan or a rra ng em en t) f a l s e s t a t e me n t s a b o u tth e e x c l u d a b i l i t y o f a n y i n c o me or the s ec ur i ng o fan y othe r t ax be ne fi tby reaso n of p articip atin g in the p lan or a rra ng em en t; (d) eng ag ing in an y oth er ac tiv i t y sub ject to p en alty underthe I nt er nalReve nue Code ; an d (e) eng ag ing in an y o t h e r c on d u ct tha t interferes w ith the a dm i ni s t r a t i ono r e nfor c e m e nto fthe i nt e rnal rev en u e law s.

I I . DI S C US S I ON On a p p e a l, B e n s o n c l a i ms th a t h e d i d n o t v i o l at e th e st atut e th e di st r i ctc o ur t r el i ed o n to g r an t th e i nj unc ti o n. He a l s o a r g ue s tha tthe i nj un c t i o n v i o l a t e s h i s F i r s tAmen dm ent r i ghts. The go ver nm ent c ou n ters that ther e wasN os. 08

- 1312 and 08- 1586 5

am ple st atuto ryand const i tuti onalsup portforthe i nj uncti o n. The g o ve r nm en t’ s cr o ss - cl ai m co nt en ds th at the dist ri ct c ourterr ed bynotr equi ring Benson to produce a l i sto fhi s cus to m er s. W e r ev i ew a d is tr i ctc o ur t’ s g r an t of sum m ar y j u d gm en t deno vo a nd i ts de ci si o n t o g r an t an inju n c tio n for a b u s e o f d isc re tio n . U ni t e d S t at e s v. Raym ond, 228 F.3d 80 4, 81 0 ( 7 t h C ir. 20 00 ); U nited Sta tes v. Kaun , 827 F.2d 114 4, 1148 ( 7th Cir. 1987).

A . Statutory Au t hor i ty f ort he I njuncti on A dist ri ct cour t i s author i zed to enteran inj uncti on aga i nst a ny p er son i fi t fi nd s “ ( 1) thatthe perso n has e ng a g e d in a ny [ c o nd uc ts ubj e c tt o p e na l t y u nd e r 2 6 U. S
. C. § 6 700] , and ( 2) thati nj uncti ve re l i efi s a pp ro pri ate to p reven t recu rrenc e of su ch c ond uc t.” 26 U
. S. C
. § 7408(b).

1. V i ol at i on of26 U . S.C. § 6700 S ec ti o n 6 70 0 i m po se s a pen al tyo n a ny pe r so n who ( 1) o rg ani zes (or assi sts i n the or gani zati on o f ) any pla n or arr an ge m en t, or p ar tic ip at es (d ire c tly or in d ire c tly ) in the s al e o fany i nter esti n an e nti ty orpl an o r ar ra ngem ent, and ( 2) i n con necti on with such or gani zati on o r sa l e, make s o r fur ni sh es a s ta te m en t wi thr espec t to the al l owabil i ty ofany ded ucti on o r cre dit, the excl ud abi l i ty or an y in c om e, or t h e s e c u r in g of a n y ot h er ta x be n efit by re aso n ofhol ding an i nter esti n the enti ty orpart i ci pati ng i n the pla n o r ar ra ngem ent ( 3) wh i ch the perso n knows orhas reas on t o know i s f al se orfra ud ule nt ( 4) as to any m aterial m atter. 26 U
. S. C
. § 6700(a).6 N os. 08

- 1312 and 08- 1586 Benson cl ai m s that he was si m plyurg i ng pol i ti calact i on and w as not prom oti ng anypl an bec ause he di d not en ga ge in a ff i rm at ive co n d u c t s u c h as offe rin g t o h elp prepar e t rust s, f al se W

- 4 for m s, fals e inco m e t ax r etur ns, l ett er s t o hara ss the I RS, cl ai m s forta x re fund s, et c ., as som e t ax pro tes tor s hav e in the past. Benson i s wrong, both l ega l l y a nd f actual l y. Fir st, th e d efin itio n of a p l a n f or p u rp os es of § 6 70 0 is b ro ad

. Ra y mon d , 2 28 F. 3d at 811 ( “any ‘ pla n orar ra ngem ent’ having so m e connecti on t o taxes ” ( ci ti ng Kaun , 82 7 F
. 2d at1 14 7) )
. Co ur ts ha ve no t be en hes i ta nti n fi ndi ng ta x p ro te st er s’ a c tiv itie s t o q u alify as p lan s. Kaun , 82 7 F.2d at 114 8 (“w o r d s ‘an y othe r plan or arran gem en t’ are clearly broad enou gh to i nc lud e a ta x p rotester grou p ”); R a ym ond, 22 8 F
. 3d at 811- 12 ( sal e o fpro gr am thatto ld custo m er s they c oul d lega l l y r efuse t o pay federa l incom e tax w as sale of an int erest in a p lan un d er § 6700); Uni t e d S t at e s v. Schulz , 5 29 F
. S upp. 2 d 3 41 , 3 48 ( N
. D. N
. Y. 2 0 0 7 ) ( i ns t r uc t i o n g ui de o n s t o pp i nge mpl o y e r wi thh o l din gs w as p lan or a rra n ge m en t), aff’d, 51 7 F
. 3d 606, 60 7 ( 2d Cir
. 20 08)
. Ben son’s pla n w as si m ple r than so m e pr i or t a x p r o t e s t e r s c h e me s , b u ti t s p u r p o s e w a s th e s a me

— to evade tax l i abi l i ty. Instea d offi l ing f al se tax r etur ns, Benson’ s pl an enco urag ed custo m er s no t to fi l e a ta x re turn a t a l l

. S uch a don’t

- do

- i t
- y o ur s e l fk i tdo e s n ot r equi r e f o r m s o r f il ings
. Her e, the de vi li s no t i n the detai l s. Li ke eve ryo therta x prot est er, Benson was s e l l i nga n i l l e g a lme tho d b y wh i c h t o a v o i d p a y i ngt a xe s; th e d et ails of th at m et h od are im m at er ial. S ec o nd, Be ns o n’ s m at er i al s wer e pr epa r ed i n s ucha w ay so that the e nti re ty ofei therPack age co uld be se nt toN os. 08

- 1312 and 08- 1586 7 the I RS i ftheybeg an an inves ti gat i on. The Rel i ance D efense Pac kage inclu d ed a cus tom ized Reliance Le tter, whi c h c o nc l ud e d: I t i s insanel y unre al i sti c fo r som eone l i ke [ cu stom er’s n a me ] t o b el i ev e th athe woul d b e r equi r ed to fi l e an y f or m s with any st ate ta xi ng ag ency orthe Feder al G overn m en t, w he n th e 16th A m en d m en t to the U

. S. Consti tuti on i s a n abso lu te co m ple te tot alfra ud as prove n by Th e Law Th atN eve rW as V olu m e I an d in excess of 17, 000 docum ents etc. that [ c u s t o me r ’ s n a me ] r e l i e s o n a s h i s S T AT E OF MI ND, F RAME OF MI ND R EL IAN CE,AN D B EL I EF. The enti re Rel i ance Pr og r a m s ha l lb e c o me a p a r to fh i s p e r man e ntr e c o r d. Therefore , Benso n w as provi ding hi s cust om er s with so m ethi ngto s en d t o the I RS i n a n e ff o r t to a vo i d pa y i ng taxes
. A t l eas t o ne ta xpayer subm i tte d the Rel i ance Letterand sev er alo therel em ents ofthe Re liance Defen se Pa ck ag e al o ngwi ththe e nt i r e 16 thAm en dm en t Re l i an ce Pa ck ag e to the I RS whenque st i o ne d abo ut f ai l i ng to fi l e a n i ncom e t ax r etur n. The o nl y di stincti on betw e e n B en son ’s plan an d other p lans is that B en son ’s m ate ri al s were to be uti l i zed afte r the I RS l aunched an i nv es ti gation. S o Be ns o n di d or gani ze a pl an o r ar ra ngem en t an d pa r ti ci pated i n the s al e o fa n int er es t i n the p lan or arrangem en t. 26 U
. S. C
. § 6700(a)(1)
. Benson m ade num er ous s tat em ents about t h e t ax ben efi ts to be e njoy e d by cu stom ers as a resu lt ofpu rchasi ng hi s m ate ri al s a nd part i ci pati ng i n h is pl an o r ar r an g ement
. 26 U. S
. C. § 67 00 ( a) ( 2) ( A). I n pro m o ting hi s m ate ri al s, Benson c l ai m ed th at h e “ disc ove re d that8 N os. 08

- 1312 and 08- 1586 th e 16 thAm en dm en t was not rati fi ed” a nd t o ha ve do cum ents “ pr o v i ngtha tthe 1 6 th Am e nd men t
. . . i s a n abso

lu te , com p let e , tot al fra u d .” B en so n als o c laim ed on h is w ebsi te that: A fte r se rv in g t im e in fed er al p ris on for n otp ay in g h is U ni ted S tat es i ncom e t ax es , B i l lBenson s ti l ldoes not payi nc o m e tax es a nd y eto urfede r alg o ve r nm en t choos es not to ar re st hi m . W hy? Because now he can u s e th i s b o o k, wh i c h h e h a s wr i t t e n : ‘ T HE L AW T HAT N EV ER W A S’ i n hi s defense. B en so n m ar ke te d th e R elia n c e D efe n se P a c k ag e o n h is webs i te a s a “c o m pen di um o fi nf or m at i o n g i vingy o u the education a nd choi ce t oward not fi l i ng an I ncom e t ax re turn. Thi s co m pend i um wil lgi ve you the e du cati on t o say‘ Based on m y st at e- of- m i nd ,f r am e o fmind ,r el i ance a nd be l i efI am o beying the di ctat es ofConsti tuti onal La w. ’ ” Be ns onb o a s t e d tha t“ [ t ] o da t e , the I RSh a s s t e a dfas tly refu s e d t o p ro se c u te an y p er so n st an d in g on th is defe nse. W hy do they do thi s? B ecau se they know th ey can n ot w in!! ” Benso n al so sta ted that“ i ncl ud ed i n yourPackage wil l be n um er ous D V D s and m any other refe ren c es p rov in g th at y ou are n ot a tax p ay er! ” Benson knew orh ad re aso n to know that hi s s tat em ents w ere fal se or frau d ulen t. 26 U
. S. C
. § 67 00 ( a) ( 2) (A ). Be ns on’s cl ai m t o ha ve di sc o ve r ed th atthe S ixte en thAm en dm en t w as no t ratified h as been rej ecte d by th is C ou rt i n B en son ’s ow n cr im in al a p p ea l. U ni t e d St at e s v. Be ns on , 94 1 F
. 2d 598, 60 7 ( 7th Ci r . 1 99 1) ( “In Thom as , w e speci fi cal l y e xam i ned th e ar g um en ts made i n The Law ThatNe ve rWas , a nd c on c lu d e d t h a t ‘B en so n . . . d id n otd isc ov er an yt h in g.’ ”N os. 08

- 1312 and 08- 1586 9 ( quoti ng U ni t e d S t at e s v. Thom as , 78 8 F
. 2d 1250 , 12 53 (7th Cir
. 19 86) ) )
. “[ W ] e have re peatedl y rej ecte d the cl ai m that th e S i xt ee nth Am en dm en t w as i m pr o per l y r at i fi ed. One woul d thi nkthi s r epe at ed r ej ec ti o n o fBe ns o n’ s S i xtee nth A m endm en t argum ent woul d pu t the m att erto re st. ” Ben s on , 941 F.2d at 607( citations om itted ). Benson kno w s that hi s cl ai m that h e can rel y on hi s bo ok t o p r e v e ntfe de r a lp r o s e c ut i o n i s e qu a l l y f a l s e b e cause h is at te m pt to r el y o n hi s bo ok i n hi s o w n cr i m i nalcas e w as ine ffec tiv e. Ben s on , 94 1 F
. 2d at 60 7. Benson’ s bo ok h as b ee n re p ea te d ly d isc re d ite d b y th e c o u rt s. M i l l e rv. U nited Sta tes , 8 68 F
. 2d 23 6, 2 41 ( 7th Ci r . 1 98 9) ( “We fi nd i t ha r d t o unde r st and why th e l o nga nd unbr o k enl i ne ofcas es up hold in g the co nsti tuti onal i ty ofthe si xteenth amendmentg en er al l y, a nd tho se s pec i fi ca l l y r ej ec ting th e ar gum en t adv an ce d i n The Law ThatNe ve rWas , have not p er su ad ed M i l l erand hi s co m patri ots to se ek a m o r e effec ti ve f o r um f o r a i r i ngthe ira tt ac ko n the fede ral incom e tax struc tu re. ” (ci tations om itted ))
. Benson’ s s tat em ent that the go ver nm ent c an n ot succe s s ful l y p r o s e c ut e a nyp e r s o n c ho o s i ngn o tt o fi l e a t ax re turn b ase d on hi s be l i efthath e i s obeying the di ctat es ofco nsti tuti onall aw i s a l so f al se. T hi s argum ent seem s t o b e d e r i v e d fr o m C heekv. U nited Sta tes , 4 98 U
. S. 1 92 (1991), as d isc ussed abo ve. But C heeko nl y s up port s a defense th atthe defen dan t m i su nde r st o o d th e r equi r ement s o fthe tax co de, notthathe b el i eve d thos e re quir em ents to be u n c on st itu tio n al. Id

. a t 2 0 5

- 0 6 ( “ C l a i ms th a t s o me o ft he provi si ons ofthe tax co de ar e unconst i tuti onalar e s ubm issi ons of a d ifferent ord er [from a good -f aith m isun d er-10 N os. 08

- 1312 and 08- 1586 st an di ngo fthe l aw]
. . . . [ D] efen dan t’ s view s a bo utthe val i dity o fthe ta x s ta tutes ar e i rr el evantto the i ssue of w illfu ln es s . . . .”); U nited Sta tes v. D un k el , 92 7 F
. 2d 955, 95 5- 56 ( 7th Ci r. 19 91) ( sta ti ng tha t C heekhel d that “j ud ges m ay rebu ff d efense s bas ed on erroneou s con stitut ional be li efs (su c h as that the 1 6th Am endm ent was notpro perly ratifi ed )”). Benson ar gues that because he m ade n o fals e s tat em ents, m ate ri al i ty i s no t a t i ssue. W e obvi ously di sag re e w i th Benson ’s prem i se and so m ust deci de w hether B en son ’s f alse stat e m en ts p ertained to a m aterial m atter. 26 U .S .C
. § 6700(a)(2) (A ). Th ere is no m atter m ore m ate ri alto th e sale o fa tax a voi dance packag e than w hetherthe packag e e ffec tive l y a l l ows custom er s t o avo i d taxes. B en son’ s pro gr am was or gani zed and prom ot ed as a go ld e n tic ke t w h er eb y p u rc h as er s c ou ld a v oid incom e tax l iabil ity and crim inal l iabil ity. Be ns on’s f al se s ta te m en ts r eg ar di ngthe v ul ne r ab i l ity ofthe S i xtee nth A m en dm ent a nd the abi l i ty ofhi s cust om er s t o refuse to p ay tax es w ithou t being p rosecu ted w ere m ate ri albec ause they w oul d have a “ ‘ substa nti ali m pact’ on the deci si on to pu rchas e [ hi s] tax packa ge. ” U nited St at e s v. Gl e as on , 4 32 F
. 3d 67 8, 6 83 (6th Ci r . 2 00 5) ( ci ting U nite d State s v. B uttor

ff , 761 F.2d 105 6, 1062 ( 5th Cir. 1985); s e e a l so U nited Sta tes v. W hit e, 7 69 F
. 2d 51 1, 5 15 ( 8th Cir. 1985 ) ( mat e r i a l b e c a us e “ t a xp a y e r s who ha v e b e e n or ar e n ow be in g a u d ite d by th e IR S or are inv olv ed in l i ti gat i on be cause they re l i ed up on app el l ant’ s r epres entati o ns s ho ul d cer ta i nl y ha ve b ee n inf o r m ed ab o ut th eir com p lete l ack of m erit”). E ven i f som e of B en son ’s fol l ow er s p u rc h as ed th e P ac ka ge s fo r ed u c ati onalpurposesN os. 08

- 1312 and 08- 1586 11

orto ta ke pol i ti cal actio n, as Benson c l ai m s, i t i s har d to be l i e v e th e y wo u l d h a v e b o u g h tth e ma t e r i a l s kn o wi ng they w er e f al se.

2. Li keli hood ofRecu r r ence I n d eterm i ni ng wh etheran inj uncti on i s a pp ro pri ate to p reven t recu rre n c e o f th e il legal con d uc t, th e cou rt m ust co nsi der the t ota l i ty ofthe ci rcum sta nces i ncl ud i ng: ( 1) the g r av i ty o fha r m c au se d b y the o ffen se ; ( 2) the extent of the defendant’s part i ci pati on a nd hi s degr ee o fs ci en te r ; (3) the i so l at ed o r r ec ur r en t na tu r e o fthe infraction an d th e likel ihood that the d efend an t’s custo m ar y b usi ness acti vi ti es m i ght a gain i nvol ve h im i n such [ a] tr ansact i on; ( 4) the defe nd ant’ s r ecogni ti on o fhi s o w n cul pabi l i ty; and ( 5) the sincer i ty ofhi s a ssur ances aga i nst future vi ol ati ons. Raym ond, 228 F. 3d at 81 3 (qu oting Kaun , 82 7 F
. 2d at 1149

- 50) ( i nter nalqu ot ati ons om i tte d). Lengthy disc ussi on o f th is m atter is not w arran ted

. Reliance on B en son ’s f al se pr o m i se s ha s depr i ve d the g o ve r nm en t o fr ev enue an d has har m ed Benson’ s cust om er s who w er e dece i ved by the “ si re n cal lo fthe tax pro tes term ov em ent. ” U nited States v. Engh , 33 0 F
. 3d 954, 95 6 ( 7th Ci r. 20 03)
. Benson w as at the he ar t o fthi s schem e, wh i ch he knew o r sh o ul d ha ve kno wn ha d b ee n tho r o ug hl y r ej ec te d b y the co u r t s . Hi s v i o l a t i o n o f § 6 7 0 0 wa s n o t i s o l a t e d , b u tc o ntin u ou s s in c e h is fa lse as su ra n c es ab ou t t h e e ffica c y of his products were posted o n hi s websi te. Benson doe s no t ackno w l edge hi s cul pabi l i ty, and, despi te any a ssur ances12 N os. 08

- 1312 and 08- 1586 to th e di s t r i c t c o ur t, he i s no t l i k e l y t o s t o p wi tho ut an i nj unc ti o n. The di st r i ctc o ur t ade qua te l y e xa m in ed th e n ec es sa ry fac to r s an d d id n otab u se its d isc re tio n in c on c lu d in g t h at an inju n c tio nw as n ec es sa ry . Se eKaun , 827 F. 2d at 1148
.
B . Fi r s tAme ndme nt O f co u rs e, ev en th ou gh th e inj u n c t i o n w as p ro p er ly g r an te d unde r 2 6 U. S
. C
. § 740 8, i t st i l lmustmeetthe sta nd ar ds ofthe Fi rs t Am endm ent. Be n son cl ai m s that th e i nj unc ti o n i s a vi o l at i o n o fhi s co ns ti tu ti o na lr i g ht to e ng ag e i n po l i ti ca le xpr es si o n a nd tha t th e g o ve r nm en t i s try i ngt o s que l chhi s v i ew tha t th e S i xt ee nth Am en dm en t was ne ve r r at i fi ed. The g o ve r nm en t c o nt en ds th atthe i nj uncti on e nj oi ns f al se com m er cial speech, wh i ch r ec ei ve s no F i r stAm en dm en t pr o te ct i o n. The Fi rs t Am endm ent pr ovi des br oad pro tect i on t o speech, but not al lspeec h. Com m er ci alspeech re cei ves l es s e r p r o t e c t i o n a nd f a l s e o r mi s l e a di ngc o mm e r c i al sp ee c h rec eiv es n o p ro te c tio n atall. C e n tral H ud son G a s & E lec. C o rp. v. P ubli c Serv ice C o m m ’n o f New Yo rk, 447 U
. S. 5 5 7, 5 6 2

- 6 3 ( 1 9 8 0 )
. “ F o r c o mme r c i a l s p e e c h t o c o me w i thi n [ the pr ote cti on o fthe Fi rs t A m endm ent] , i t at l eas t m ust co ncer n l aw ful acti vi ty and not be m i sl eadi ng. ” Id. at 56 6. W h en d ec id in g if sp ee c h is c om m er c ial, ap p ro p riate co nsi derat i ons i ncl ud e whether: ( 1) the speech is an advert i sem ent; ( 2) the speech r efer s t o a s peci fi c pro du ct; an d ( 3) the s pea k erha s ane co no m i c m o ti va ti on f o r the sp ee c h

. Bolge rv. Youngs D r ug Prod uc t s Corp. , 46 3 U
. S. 60 , 66-67 (1983).N os. 08

- 1312 and 08- 1586 13

W hile B en son m ay sell his b oo k , he m ay n ot p ro m ote its sale 2 by c l ai m i ng the abi l i t y t o r el y oni t to a v oi d pro s ec ut i on as he u s e d t o d o o n h i s w e b s i t e , o r b y ma k i n g a n y o th e r f a l s e p r o mise s. T h er e is so m e d eb at e a b ou t w h at th e inj u n c tio n in t h is c as e a c t u ally p ro h ibit s. B en so n rep ea te d ly a ss er ts th at it preve nts hi m fro m dist ributi ng co urt opi ni ons, l egi sl ati ve j o ur na l s, a nd o th erpub l i c r ec o r ds, a nd from s pea k i ng about orexp re ssing an opi ni on about thos e docum ents. W e inter pret the inj uncti on a s the go ver nm ent di d at o ra l ar gu m en t: th at it p ro h ibit s “ fals e s ta te m en ts m ad e in co nne ct i o n w ith the s al e o fa pr o duct

. ” The g o ve r nm en t cl ar i fi ed that the inj uncti on does notpre vent B en son fro m pro m oting hi s op ini on in the pu bl i c squar e. N ei ther i s Benso n prohibi ted fro m se l l i ng hi s bo ok, The L aw That Ne ve rWas , accord ing to the gov ernm en t’s brief

. 2 The r efo r e, Be ns o n i s no t pr o hibi te d fr o m di st r ibut i ng hi s o pi ni o n tha t the S i xt e e nth Am e nd men t wa s no t ra tifie d or p u b lic d oc u m en ts th at h e b elie ve s s u p p or t h is c laim

—both ofwh i ch ar e co ntai ned i n hi s bo ok. W hat Benso n is prohibi ted fro m i s e ngaging i n unp ro te c te d fals e c om m er c ial sp ee c h . Th is in te rp re ta tio n is ev i den ce d i n the l an g ua g e o fthe i nj unc tio n the g o ve r nm ent o ri gi nal l y r equeste d, prohibi ti ng Benson fro m d ire c tly or in d ire c tly , b y m e ans of f al s e, de cept i ve, or m is le ading com m er cial spe ec h : ( 1 ) Organi z i ng, pr om oti ng, m ar ket i ng, o r se l l i ng. . . the ta x sh el te r, pl an, o r a r r an g ement k no wn as “ The Rel i an ce Defen se Pac k ag e, ” o r a ny14 N os. 08

- 1312 and 08- 1586

o th erabus i ve t ax s he l te r, pl anora r r an g ement th ati nc i te s ta xpa y er s to a ttem pt to v i o l at e th e in te rn al re ve n u e la w s . . . ; ( 2) En gag i ng i n any conduct s ubj ect to penal ty u n d er IRC § 67 00 , i.e. , m ak in g or fu r n ish in g, in connect i on with the or gani zati on o r sal e of an abusi ve tax s h elt er, pl an, o r ar ra ngem ent, a sta tem ent [ he] know [ s] or [has ] r eas on t o know i s f al se o r fr au dul en t as t o a ny mate r i almatt er ; a nd ( 3) En gag i ng i n any conduct that i nter fer es w ith th e admi ni st r at i o n an d en f o r ce m en t o fthe i nter nalr eve nue l aw s; (em p h as is a d d ed ). W e re a d t h e inj u n c tio n iss u ed in t h is spi ri t. There f ore, t he i nj uncti on pro hibi ts “onl y f al se, d ec ep tiv e o r m isle ad in g c om m er c ial sp ee c h th at is re l ate d to the pr ovi si on o fta x advi ce. ” Raym ond, 228 F. 3d at 815 ( ci ti ng Kaun , 827 F.2d at 115 2). B e n s o n wa s e n g a g e d i n f a l s e c o mmer ci a ls p e e c h

. As detai l ed abo ve, B enso n m ade m any f al se sta tem ents about the b enefi ts of b u yi ng hi s m ate ri al s. S peci fi cal l y, B enso n prom i sed pote nti alcusto m er s that hi s pro du cts w oul d fr ee them fro m ta xati on and pro tectthem fro m , o r defe nd them i n the eve nt of, pros ecuti on. Thes e fa l se st at ement s wer e m ade f o r the pur po se o fpr o m o tingthe sa le of h is m at er ials an d w er e t h er efo re co m m er c ial. Benson purport ed to be sel l i ng a w ay to avo i d tax l i abi l i ty; whathe was ac tu al l y se l l i ng was a way to i nc r ea se ta x a nd cri m i nall i abi l i ty f orf ai l i ng t o p ay taxes
. That i s f al se adv er ti sing, whi ch m ay be ba nne d co ns i st en t w ith the Fir st A m en d m en t. In re R
. M
. J. , 45 5 U.S
. 19 1, 20 3 ( 1982 )N os. 08

- 1312 and 08- 1586 15 (“M isle ad in g a d ve rt isin g m ay b e p ro h ibit ed en tir ely .”); see U nite d States v . Schif

f , 37 9 F
. 3d 621, 63 0 ( 9th Ci r. 20 04) ( “A n adver ti sem en t i s fra ud ule nt wh en i t m i sl eads custom ers abou t the ben efi t of th e offered prod uc t.”)
. To the e xt e nttha tthe i nj un c t i o n pr o hib i t s Be ns on f r o m ac tu ally se llin g t h e P ac ka ge s, as op p os ed to fals ely adv er ti sing fo r the i r s al e, thi s i s appr o pr i at e be ca us e th e sal e o fthe Packag es i nherent l y in vol ves f al se com m er ci al spe ec h. The i r v ery na m es , Re l i an ce De fen se Pa ck ag e an d 16th A m endm ent Rel i ance Packag e, im p ly that a cus t o me r ma y p r o p e r l y r e l y o n th e ma t e r i a l s h e i s ab o ut to bu y. A n d sin c e t h e c u st om er m u st kn ow th at h e is buyi ng i nfo rm ati on about taxes , he i s be i ng m ade to bel i eve thathe i s buying a th eo ry o r defe nse o n w hi ch h e m ay rely as it p e r t a i n s t o h is t ax es . Th is b elie f is f al se . “Be ca us e th e i nj unc ti o n a t i ss ue mer ely r es tr ains [ B e n s o n ] fr o m a d v e r t i s i n g, ma r k e t i n g, a n d s e l l i ng m ate ri al s t h at ar e ba sed o n f al se and m i sl eadi ng the or i es unde r the g ui se o f ta x adv i ce , [ Ben so n’ s] F i r stAm en dm en t cl ai m f ai l s. ” Kaun , 82 7 F
. 2d at 1152
. Ben so n a r g ue s th athe was s i m pl y e nc o ur agi ngthe pu bl i c to ta ke pol i ti calact i on. N othi ng i n thi s opini on pr o hibi ts him fr o m do i nga s m uch

. The g o ve r nm en t expla i ns i n i ts bri ef that the i nj uncti on “l eave s Benson fre e to co m m u n ica te a p olit ica l m es sa ge .” B en so n m ay op en ly shar e h is vi ew s about the r ati fi cati on o fthe Si xteenth Am en dm en t o r the ty r anny o fthe f ede r alg o ve r nm en t an d I RS. I t i s no t i l l ega lf orBenson t o urge hi s fo l l owers to tak e pol i ti calact ion
. W hat i s i l l ega l, and enj oi ned, i s for Benson to tr y t o sel lso m ethi ng he does n ot posse s

— th e16 N os. 08

- 1312 and 08- 1586

Bec aus e w e fi nd thatthe i nj unc t i on pro per l y e nj oi ns Ben s on 3 f r om e ng a gi ngi n f a l s e o r m i s l e a di ngc omm e r c i a l s pe e c h, we do notne ed t o c ons i der the al tern at e the or y ofwhethe r the i nj uncti on is prop er becaus e i t prohibit s com m erc ial “s p ee ch prop osi ng an il le gal t ransac ti on, w hich a g o v ernm ent m ay regu lat e or ban entir el y. ” Vi l l ageo f Hof f man Es t a t e s v. Fl ipsi de, H of f m an Est at es, Inc. , 4 5 5 U .S. 4 8 9 , 49 6 (19 8 2 ) (cit a tio n s o m itt ed ); B u tto rff , 76 1 F.2d at 10 66 ( “A p p ellan t’ s pr om otio n o f his tru st d oe s ad v oca te the a ttem p t to tak e tax b en efits rep eate d ly d ec la re d in v a lid b y th e c o u rt s.” ). gol den ti cketo ftax evas i on w i thout conse quences. There

f o r e, a cc o r di ngt o o urg r ea t tr adi ti o n o ft o l er ati ng nutty opi ni ons , the m ar ket pla ce o fi deas r em ai ns o pen to Benson; the com m er ci alm ar ket pla ce, h owever, i s a pp ro p ria te ly lim ite d to sp ee c h th at is no t d ec ep tiv e. SeeVirgini a StateBd
. of Pha rm acy v. Virginia Citizens C onsum erCo uncil, 4 2 5 U. S
. 74 8 , 7 7 1

- 7 2 ( 1 9 7 6 ) ( F i r s t Am e nd men t “ does not p r o h ib i tth e S t a t e fr o m in s u r i n gth a tth e s t r e a m o fc o mm ercial inform ation fl ow cleanly as w ellas fr eely”). 3

C. Cu st omer Li st T h e g ov er n m en t c on te n d s t h at th e d i s t ric t c ou rtsh ou ld ha ve r equi r ed Ben so n t o pr o vi d e t he g o ve r nm en t wi tha l i sto fna m es a nd i den ti fy i ngi nf orm atio n o fpe r so ns w ho purchase d the Rel i ance Defe nse Pac kag e o r the 1 6th A m endm ent Rel ian c e P ac ka ge from B en so n . B en son argues th atthe di str i ctc o ur t ac te d pr o per l y b ec au se r equi r i ng hi m to tur n o ve r hi s cust om erl i st i s no t a uthor i zed by a ny s t a t ut e a nd wo ul d v i o l a t e the F i r s t a nd F i f th A m en d-N os. 08

- 1312 and 08- 1586 17

Sect ion 7402( a) m akes cl ear that the rem edies it p rovides “ar e 4 in a d d iti o n to and not e xcl usi ve ofany and al l other rem edies ofthe Un it ed Stat es i n s u ch c o urts or otherw is e t o enf orce” the ta x law s . The gove rn m en twas no tr equi re d t o s ee k the c us t om er l i s tthr ough an adm i ni s t ra t i ve pro c es s as Ben s on arg u es. m ents. W e r evi ew a dist ri ct c ourt ’ s d ecis i on t o gr ant o r d en y a n inju n c tio n for a n ab u se of d isc re tio n . Kaun , 827 F. 2d at 1148
. H ow ev er, “[ a] di str i ct c ourtbydefi ni ti on abuses i ts disc re ti on w hen i t m ake s a n er ro r ofl aw . ” Koon v. U nited Sta tes , 518 U
. S. 81, 100 (1996 ). The dis tr i ct c ourtdeni ed the re que ste d custom erl i st or der b ecause i t dete rm i n ed t h e or der was notr el ate d to preve nti ng future m i sco nd uct byBenson a nd was be y o n d th e s c o p e o fB e n s o n ’ s wr o n g d o i n g . Wh e th e r t r ue o r no t, the di st r i ctc o ur t’ s o bs er va ti o ns a r e no t r el ev an t und erthe appli cabl e l aw . Dis tr i ct c ourt s pos ses s j urisd iction un d er 26 U
. S. C
. § 7402(a) to “i ssu e . . . w rits and orders ofi nj uncti on . . . and such o thero rder s . . . as m ay be ne ce ss ar y o r a ppr o pr i at e for th e en f o r ce m en t o fthe in te rn al re ve n u e la w s.” 4 The g o ve r nm en t ha s i den ti fi ed se ve n indi vi dual s who h av e re c eiv ed B en so n ’ s m a t er ials an d h av e fa iled to file i n c om e tax r etur ns. Rel i ance on Benson’ s m ate ri al s has and w i l lconti nue to i rr eparabl y harm Benson’ s cust om er s, w h o h av e ex p os ed th em se lve s to in c re as ed ta x an d cr im ina ll i ab i l i ty, a nd the g o ve r nm en t, whi chi s “n o t r ec ei ving re quir ed tax paym ents and [ i s] f or ced to expend r eso urces t o [ i de nt i fy a nd ] c o l l e c tthe u np a i d t a xe s. ” U nited Sta tes18 N os. 08

- 1312 and 08- 1586

v. Schulz , 51 7 F
. 3d 606, 60 7- 08 ( 2d Cir

. 20 08). W i thout a c ustom er l i st, i t i s unli kel y that the gov er nm en t w ill id en tify ea c h of B en so n ’s c u st om er s w h o follo w ed h is advi ce b ef or e the st atute o fl i m itati ons has r un. Benson w ill n otbe h ar m ed by id en tify in g h is c u st om er s a n d it w i l lse rv e the publ i c i nter estf orthe gov er nm en t to receive a fulll ist ofBe ns on’s cu stom ers, both to w arn th em of th e f a lsity an d i ne ffectiven ess of Ben son ’s cl ai m s, and to enf or ce the i ncom e t ax l aw s. Pro du ction of B en so n ’s c u st om er list is als o p ro p er to m on ito r c om p liance with the i nj unct ion ’s r equi re m ent that Benso n “m ai l

. . . a copy o fthe inj u n c ti on o rderto ev er y per son an d en tit y t o w h o m h e s old or fu rn ish ed th e [P ac ka ge s].” Seeid . W e n ote thatthi s i s no t the fi rs t t i m e a pro m ote r of f al se tax s chem es has been r equi re d to divul ge hi s custo m er list. E
. g. U nite d States v. Bell, 41 4 F
. 3d 474, 48 5 ( 3d C ir. 20 05 ); Schulz , 51 7 F
. 3d at 607-0 8; U ni t e d S t at e s v. Kotm air, Civ. N o . W M N -05-1297, 2006 W L 48463 88 at *7-8 (D . M d . N ov . 29, 20 06 ), aff’d, 23 4 F ed. A pp x. 65, 65- 66 ( 4th C ir. 20 07 ); U ni t e d S t at e s v. Harki ns , 35 5 F
. S up p. 2d 11 75, 11 82 (D . Or . 200 4); U ni t e d S t at e s v. St ephe ns on , 3 1 3 F
. S up p. 2d 1054, 1061 (W
. D
. W ash

. 2004). S ucha n o r derw i l lno t i nfr i ng e o n the F i r stAm en dm en t ri ghts ofBenson’ s cust om er s. Benson’ s a tte m pt to anal ogi ze thi s case to NAA CP v. Al ab am a ex re l
. Pat t e rs on , 35 7 U
. S. 44 9 ( 1958 ) i s m i spl aced. Be n so n operat ed an Inter net ma r k e t i n gs c h e me , n o ta me mb e r s hi p o r g a n i z a t i o n . As i n B el l , 41 4 F
. 3d at 485, Benson’ s “ oper ati on was pr i mar i l y a c o mm e r c i a l ente r pr i s e , n o ta p o l i t i c a lg r o up . Pr o du c i nga c us t o merl i s tdo e s n o to ffe nd the F i r s tAmen dm en t be ca us e co m m er ci altra ns ac ti o ns do no t en ta i ltheN os. 08

- 1312 and 08- 1586 19

sam e ri gh ts of ass ociation as p oli tical m eetings
. ” B en son ’s c laim th at d ivu lgin g his c u st om er list w ill vio l a t e h is custo m er s’ r i ght to recei ve and rea d w hat they c hoos e al so f al l s s hor t. The go ver nm ent a cknowle dges that Ben so n’ s cus to m er s ar e fr ee t o r ec ei ve , po ss es s, read , a nd sp eak ab o ut m at er i al s f r o m Ben so n and others chal l engi ng the val i dity o fthe Si xteenth A m endm ent o r pr o te st i ngthe fede r alt ax s y st em. Addi ti o na l l y, a s th e gov er nm ent sugge sts , w e e xpect the dist ri ct c ourtto ente r an appropri ate pro tect i ve or der t o preve nt publ i c di scl osure o fthe custo m er s’ i denti ti es. Fi nal l y, Benson’ s F i fth A m endm ent c l ai m need not d elay us b e c a u s e the govern m en t asked the d istri ct cou rt to issue an order of im m un ity in con ne ction w ith B en son ’s com pel l ed act ofpro du ci ng hi s cust om erl i st. The go ver n m en t’s br i e fi n d ica te s t h at it rem ain s o p en to th is soluti on a nd we expec t th e d istr i ct c ourtto i ssue such an or der upon r em and, ther eby el i m i nati ng B en so n’s Fi fth Am e n d me n tc l a i m.

I I I . C ONC L US I ON Forthe re aso ns di scusse d above , we A FFIRM the i nj uncti on i m posed by the di str i ct c ourt, but R EV ERSE a s to the c us t o m er li s t, a nd R EMA ND f orfurtherappropr i ate pro ceedi ngs.

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