IRS vs. William E. Benson

Nos. 08-1312 and 08-1586

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff - Appellee, v. WILLIAM J. BENSON, Defendant - Appellant Appeal From The United States District Court For the Northern District of Illinois, Eastern Division Case No. 1:04-cv-07403 The Honorable Samuel Der-Yeghiayan

RESPONSE AND REPLY BRIEF OF APPELLANT WILLIAM J. BENSON

Jeffrey A. Dickstein Attorney for the Defendant-Appellant and CrossAppellee William J. Benson 500 W. Bradley Rd., C-208 Fox Point, WI 53217 (414) 446-4264

Table of Contents
Page
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii RESPONSE OF APPELLANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Arguments the United States Forfeit by Failing to Address . . . . . . . . . . . 1 Response to Arguments Made by United States . . . . . . . . . . . . . . . . . . . . 4 Benson has not organized and sold a plan or arrangement within the meaning of § 6700(a)(1)(A)(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Benson has not made a false statement regarding tax benefits to be derived from the reliance packages . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Benson has no reason to know that 35 is more than 36 . . . . . . . . . . . 11 Benson made no false statements, so materiality of those statements is immaterial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 An injunction is necessary to stop the United States from violating the First Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 The injunction absolutely infringes on Benson’s First Amendment rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 THE GOVERNMENT’S CROSS APPEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 The District Court Did Not Err In Refusing To Order Benson To Provide His “Customer” List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 A. The Government’s request for Benson’s customer list does not fall within the District Court’s authority under I.R.C. § 7402(a) 25 B. Benson has a valid Fifth Amendment right not to admit the existence of the requested records, much less produce i

their contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 C. The requested list is privileged under the First Amendment . . . . . . 31 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Certificate of Compliance with F.R.A.P. 28.1(e)(2)(A)(1) . . . . . . . . . . . . . . . . . 38 Circuit Rule 31(e)(1) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Proof of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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Table of Authorities
Page
Cases: Associated Students v. Attorney General, 368 F.Supp. 11 (C.D.Cal. 1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Bolger v. Youngs Drug Products Corp., 463 U.S. 60 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 20 Brandenburg v. Ohio, 395 U.S. 444 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 18 Breard v. City of Alexandria, La., 341 U.S. 622 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Coleman v. Miller, 307 U.S. 433 (1939) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Day v. South Park Indep. School Dist., 768 F.2d 696 (5th Cir.1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Field v. Clark, 143 U.S. 649 (1892) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Gibson v. Fla. Leg. Investigation Comm., 372 U.S. 539 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Heffron v. International Society for Krishna Consciousness, 452 U.S. 640 (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Heiner v. Donnan, 285 U.S. 312 (1932) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 In re First Nat'l Bank, Englewood, Co., 701 F.2d 115 (10th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781 (3d Cir. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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King v. Federal Bureau of Prisons, 415 F.3d 634 (7th Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Lamont v. Postmaster General of United States, 381 U.S. 301 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Leblanc-Sternberg v. Fletcher, 781 F.Supp. 261 (S.D.N.Y. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Leser v. Garnett, 258 U.S. 130 (1922) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Maness v. Meyers, 419 U.S. 449 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Marbury v. Madison, 5 U.S. 137 (1803) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Marshall v. Barlow's, 436 U.S. 307 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Mathis v. New York Life Ins. Co., 133 F.3d 546 (7th Cir.1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 McDonald v. Smith, 472 U.S. 479 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Miller v. United States, 868 F.2d 236 (7th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 33

NAACP v. Alabama ex rel. Patterson, 57 U.S. 449 (1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 33 New York Times Co. v. Sullivan, 376 U.S. 254 (1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Pelfresne v. Village of Williams Bay, 917 F.2d 1017 (7th Cir.1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Pollock v. Farmers’ Loan & Trust Company, 157 U.S. 429, 574, aff. reh., 158 U.S. 601 (1895) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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Resistance v. Commissioners of Fairmont Park, City of Philadelphia, Pa., 298 F.Supp. 961 (E.D.Penn. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Sandstrom v. Montana, 442 U.S. 510 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Schlesinger v. State of Wisconsin, 270 U.S. 230 (1926) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Stanley v. Georgia, 394 U.S. 557 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Stanley v. Illinois, 405 U.S. 645 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Tot v.United States, 319 U.S. 463 (1943) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914 (3d Cir.1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 United States v. Argomaniz, 925 F.2d 1349 (11th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 United States v. Ballin, 144 U.S. 1 (1892) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 9 United States v. Belgrave, 484 F.2d 915 (3rd Cir. 1973). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 United States v. Bell, 414 F.3d 474 (3rd Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 33 United States v. Benson, 941 F.2d 598 (7th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 United States v. Bowen, 414 F.2d 1268 (3rd Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 United States v. Brown, 899 F.2d 677 (7th Cir.1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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United States v. Ernst & Whinney, 735 F.2d 1296 (11th Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 United States v. Grayson County State Bank, 656 F.2d 1070 (5th Cir.1981), cert. denied, 455 U.S. 920 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 United States v. Hempfling, Case No. 1:05-CV-00594 (E.D.Cal. 2005) . . . . . . . . . . . . . . . . . . . . . . . . 4 United States v. Hughes, Case No. 1:07-CR-0085 (W.D.Mich.S.D. 2007) . . . . . . . . . . . . . . . . . . . . . 30 United States v. Kaun, 827 F.2d 1144 (7th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 33 United States v. Mobil Corp., 543 F.Supp. 507 (N.D.Tex.1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-28 United States v. Neff, 615 F.2d 1235 (9th Cir. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 United States v. Papia, 910 F.2d 1357 (7th Cir.1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 United States v. Perry, 474 F.2d 983 (10th Cir. 1973) United States v. Raymond, 228 F.3d 804 (7th Cir. 2000) ................................ 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 33

United States v. Sharp, 920 F.2d 1167 (4th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 United States v. Simmons, 476 F.2d 33 (9th Cir. 1973) .................................. 3

Vlandis v. Kline, 412 U.S. 441 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Whitney v. California, 274 U.S. 357 (1927) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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Yates v. United States, 354 U.S. 298 (1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Statutes:
18 U.S.C. § 371 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 26 U.S.C. § 6001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26 26 U.S.C. § 6700 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 14, 15, 22 26 U.S.C. § 6700(a)(1)(A)(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 5, 8 26 U.S.C. § 6700(a)(2)(A)-(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 26 U.S.C. § 7201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 26 U.S.C. § 7203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 26 U.S.C. § 7402(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 25, 26, 28, 37 26 U.S.C. § 7408 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 26 U.S.C. § 7609 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 26 U.S.C. § 7609(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 26 U.S.C. § 7609(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 26 U.S.C. § 7609(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 26 U.S.C. §§ 7602-7610 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

United States Constitution:
U.S. CONST. amend. I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 15, 24, 29, 31, 37 U.S. CONST. amend. V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 29, 31, 37 U.S. CONST. amend. XVI . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 12, 19, 20, 22

U.S. CONST, art. V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 22

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Rules of Court:
FED. R. EVID. 803(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 FED. R. EVID. 902 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 FED. R. APP. P. 28(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Other Authorities:
ORWELL, GEORGE, 1984, Chapter 20 (1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Practitioner’s Handbook for Appeals, p. 74 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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RESPONSE OF APPELLANT
Arguments the United States Forfeit by Failing to Address.
The United States does not address any of the eight specific “Statement of the Issues” raised in Benson’s Opening Brief. This failure violates the Court’s admonition that: “The appellee’s brief should squarely meet the appellant’s points.” Practitioner’s Handbook for Appeals, p. 74. FED. R. APP. P. 28(a)(4) requires litigants to cite to relevant authorities in support of their arguments. United States v. Papia, 910 F.2d 1357, 1363 (7th Cir.1990). "A litigant who fails to press a point by supporting it with pertinent authority . . . forfeits the point.” Mathis v. New York Life Ins. Co., 133 F.3d 546, 548 (7th Cir.1998). See also Pelfresne v. Village of Williams Bay, 917 F.2d 1017, 1023 (7th Cir.1990) (the court will not do a party's research); United States v. Brown, 899 F.2d 677, 679 (7th Cir.1990) (this court has no duty to construct legal arguments for litigants). In particular, the United States forfeits Benson’s legal argument that the federal judiciary is not precluded from resorting to legislative journals to determine if a law was actually passed by the requisite number of votes, United States v. Ballin, 144 U.S. 1 (1892), and that with respect to whether a sufficient number of states voted to ratify the Sixteenth Amendment, the courts have uniformly misapplied the doctrine of stare decisis by holding Field v. Clark, 143 U.S. 649 (1892), Leser v. Garnett, 258 U.S. 130 (1922) and Coleman v. Miller,

1

307 U.S. 433 (1939) preclude such review. Benson’s argument is set forth at pp. 13-16 of his Opening Brief and nowhere rebutted by the United States. The United States also forfeits Benson’s argument that in no case regarding the Sixteenth Amendment have the issues ever been raised that: 1) some states intentionally amended the proposed language passed by Congress; 2) that neither Secretary of State Knox nor the Solicitor ever considered this possibility because Article V precludes such conduct; 3) that taking into account those states that did intentionally amend the proposed Sixteenth Amendment less than the constitutionally mandated thirty-six states voted for ratification; 4) that Secretary of State Knox relied upon a false presumption; 5) that to the extent Revised Statute 205 allows the Constitution to be amended by presumption rather than ratification as required by U.S. CONST. art. V, the statute is unconstitutional; and 6) that to the extent the “enrolled bill rule” prohibits the federal judiciary from examining whether U.S. CONST. art. V was complied with, the “enrolled bill rule” is unconstitutional. (Benson’s Opening Brief, id.) The United States also forfeits Benson’s argument that the District Court’s finding that his statement was false as a matter of law violated the holdings of Sandstrom v. Montana, 442 U.S. 510, 521-523 (1979); Stanley v. Illinois, 405 U.S. 645, 654-657 (1972); Heiner v. Donnan, 285 U.S. 312, 325-29 (1932); Schlesinger v. State of Wisconsin, 270 U.S. 230 (1926); Tot v. United States, 319 U.S. 463, 468-69 (1943); Vlandis v. Kline, 412 U.S. 441, 446 (1973); 2

United States v. Bowen, 414 F.2d 1268, 1273 (3rd Cir. 1969); United States v. Simmons, 476 F.2d 33, 37 (9th Cir. 1973); United States v. Perry, 474 F.2d 983, 984 (10th Cir. 1973); and United States v. Belgrave, 484 F.2d 915 (3rd Cir. 1973). (Benson’s Opening Brief, pp. 16-17). The District Court used a conclusive presumption to preclude Benson from presenting facts as to an essential element to the cause of action; i.e., whether his statement was true or false. Benson relied on facts contained in documents certified by the Secretaries of the several States and from the National Archives. The United States has never asserted those documents do not prove exactly what Benson contends they prove: 1) Secretary of State Knox relied upon presumptions which were false; 2) that only forty-two states provided certificates of ratification to Knox; 3) that six of those states rejected ratification; 4) that of the remaining thirty-eight states, Oklahoma, Missouri and Washington intentionally amended the proposed language of the Sixteenth Amendment and cannot be counted; and 5) that thirty-five is less than the mandated thirty-six required by U.S. CONST. art. V. The United States forfeits Benson’s arguments that: 1) the District Court in essence directed a verdict against Benson as to an essential element of the government’s cause of action (Benson’s Opening Brief, p. 21); and 2) the record discloses that Benson did present sufficient evidence to establish the existence of a genuine issue of material fact whether his statements were true or false,

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which precluded the issuance of summary judgment against Benson (Benson’s Opening Brief, p. 23).

Response to Arguments Made by United States. Benson has not organized and sold a plan or arrangement within the meaning of § 6700(a)(1)(A)(iii).
The United States argues at p. 33 of its brief that it is undisputed that Benson offered the 16th Amendment Reliance Package for sale on the Free Enterprise Society website. What is undisputed is that the 16th Amendment Reliance Package was offered for sale on the Free Enterprise Society website, but there is no evidence that Benson offered it for sale there. The United States makes no distinction whether the “customers” purchased from Benson or from the Free Enterprise Society, a point that will be critical later when the Internal Revenue Service asserts penalties for violation of the abusive tax shelter law. Neither in the court below nor in the section 6700 action brought against the Free Enterprise Society (United States v. Hempfling, Case No. 1:05-CV-00594 (E.D.Cal. 2005) was any proof presented that Benson received any of the proceeds of the sales of what the Free Enterprise Society sold on its website. These were separate lawsuits that were not joined; joint liability is not appropriate. The case should be remanded to the district court to correct this error. The United States argues at p. 33 of its brief that because the Reliance Defense Package was presented as a “compendium of information” in written, 4

digital, and video form while the 16th Amendment Reliance Package comprised an array of written materials, each package is thus a “plan or arrangement” within the meaning of I.R.C. § 6700(a)(1)(A)(iii). Contrary to this bald assertion, more is required than the fact of existence. What differentiates protected political speech from an abusive tax shelter is some affirmative conduct, for pay, such as the preparation of tax returns by the promoter. (Benson’s Opening Brief, pp. 21-45). The United States argues that Benson was “inciting the imminent breaking of the tax laws” by advertising and selling “preprinted letters with the purchaser’s name and . . . personal information and “individually tailored form letters, just as in United States v. Raymond, 228 F.3d 804 (7th Cir. 2000) and United States v. Kaun, 827 F.2d 1144 (7th Cir. 1987). The allegation is false; Benson never advertised such letters for sale. (Record as a whole). What Benson did advertise for sale was a “compendium of information” (Doc. 42, Ex. A at 7-10, 16, 17) and what Benson urged, rather than the non-filing of tax returns1 or other imminent breaking of the law, was “political action”: Let the people answer the question the government refuses to answer–and let the people preserve our Constitution. We the people must take political action in an attempt to force the government to decide a very important question, i.e., “Was the 16th Amendment legally certified and ratified?” If it was not, there is no law which can be violated and therefore, the people are being politically prosecuted.

1. The record is barren of any evidence that Benson ever advised anyone not to file a tax return.

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Doc. 40, Exhibit K, pp. 8-9 (emphasis added). Urging “political action” does not constitute the sale of an abusive tax shelter. Urging political action is protected speech that cannot be enjoined. (See Benson’s Opening Brief, pp. 21-45). The United States argues at p. 35 of its brief that Benson’s supplying someone with a personalized statement that it is “insanely unrealistic” for that person to believe that he would be required to file tax forms, and that he “relies on” Benson’s book “as his state of mind, frame of mind, reliance and belief” is neither education nor a choice. What Benson believes is “insanely unrealistic” is irrelevant to the issue. Stating an opinion as to what is insanely unrealistic comes nowhere close to proscribable "incitement to imminent lawless action." See Brandenburg v. Ohio, 395 U.S. 444, 447 (1969). Relevant here is that Benson does not instruct anyone to copy the letter and send it to the IRS, does not instruct anyone not to file a tax return, does not prepare or help in the preparation of tax returns, or do anything else other than express his opinion that the Sixteenth Amendment was not ratified and that political action is necessary to restore adherence to the apportionment requirements for direct taxes. (Record as a whole). Relevant also is that Benson nowhere advocates that anyone violate the law. Every denunciation of existing law tends in some measure to increase the probability that there will be violation of it. Condonation of a breach enhances the probability. Expressions of approval add to the probability. ... Advocacy of law-breaking heightens it still further. But even advocacy of violation, however reprehensible morally, is not a justification for 6

denying free speech where the advocacy falls short of incitement and there is nothing to indicate that the advocacy would be immediately acted upon. Whitney v. California, 274 U.S. 357, 376 (1927) (Brandeis, J., concurring). There is absolutely no proof in the record that any of the purchasers identified by the United States stopped filing returns because of anything contained in the information they obtained. The United States chose not to present any evidence as to when any of the six stopped filing and when those six obtained the information. The United States’ mere inference that the six stopped filing because of the information hardly rises to proof by any evidentiary standard. As found by the District Court: Nor can it be assumed that Benson’s customers did not pay their taxes merely because they purchased the Reliance Defense Package or related package. Memorandum Opinion, Doc. 106, p. 19. Furthermore, Doc. 74 establishes that one of Benson’s audience, who files tax returns, used the material to petition for redress of grievance (Doc. 74, p. 4, ¶ 11). Perhaps Benson’s material incited him to do that, but petitioning for redress of grievance does not constitute illegal conduct. Doc. 74 also establishes that one of Benson’s audience, who files tax returns, obtained the material for the sole purpose of educating himself as to Benson’s opinion, and has never used the material for any other purpose (Doc. 74, pp. 4-5, ¶ 12). This

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record belies the United States’ argument that the material could not be used to give one an education or choice. Benson has not organized and sold a plan or arrangement within the meaning of § 6700(a)(1)(A)(iii).

Benson has not made a false statement regarding tax benefits to be derived from the reliance packages.
The United States, at p. 37 of its brief, hits the nail right on the head. The United States acknowledges that “the crux of Benson’s advise to customers is that ‘it is entirely possible to challenge the very foundation’ of the federal taxing power on the ground of non-ratification of the Sixteenth Amendment.” Benson nowhere, however, advises anyone on how to make this challenge other than through “political action.” (Record as a whole). Although the United States next attempts to assert Benson made other false statements than what was alleged in the Complaint, there is only one false statement Benson is charged with making: Benson falsely tells customers that the federal income tax is unconstitutional because, according to his legally frivolous theory, the Sixteenth Amendment to the Constitution–which was adopted in 1913 and permits Congress to impose federal income taxes–was not properly ratified by the states. Doc. 1, p. 3, ¶ 8. Whatever conclusion the readers of this statement may come to, the statement itself does not meet the conduct proscribed by 26 U.S.C. § 6700(a)(2)(A)-(B) which requires a statement with respect to the allowability of

8

any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement, or a gross valuation overstatement as to any material matter. Both the District Court’s findings and conclusions, and the United States’ arguments here, are based upon inference as opposed to actual facts. Advising people that “political action” is necessary and stating a factual basis for the challenge is protected by the First Amendment. Such statements do not constitute any type of tax advice proscribed by the statute. The United States argues at p. 41 of its brief that because the issue of the ratification of the Sixteenth Amendment is beyond review, Benson’s statements must be false as a matter of law. According to the Supreme Court, however, the issue is not beyond review, even after a bill is properly enrolled. United States v. Ballin, 144 U.S. Furthermore, the cases relied upon by the District Court and the United States do not directly address the precise issue raised by Benson in the District Court or here. Not only has the United States failed to respond to the stare decisis issue, it fails to acknowledge the issue raised by Benson is one of first impression. If only thirty-five states voted to ratify the proposed Sixteenth Amendment as passed by Congress, Benson’s statement is correct as a matter of law. The United States argues that the District Court correctly declined to hold an evidentiary hearing because there were no disputed facts. The relevant facts could not be disputed because the legislative journals are indisputable. Benson 9

moved the Court to have the facts deemed admitted. In response, the District Court relied upon a conclusive presumption in violation of the Due Process Clause of the Fifth Amendment, thereby committing reversible error. (Benson’s Opening Brief, pp. 16-21). The United States next argues the District Court’s refusal to exercise equity jurisdiction was valid because such determination is based on the court’s sound discretion. A district court has no discretion, however, to deny a litigant due process by finding an ultimate issue against him based on a conclusive presumption. Facts that directly prove or disprove an essential and ultimate element of the cause of action are never irrelevant or immaterial. The United States falsely argues at p. 43 of its brief that Benson was not prevented from “presenting a defense.” The facts, however, are clear. An element of the cause of action was whether Benson’s statement was true or false. The United States alleges the statement is false. Benson’s defense is the statement is true. Benson was not allowed to present this defense. The argument of the United States is false.

10

Benson has no reason to know that 35 is more than 36.
Another example of the United States refusing to acknowledge the facts is its repeated assertion, asserted again at p. 44 of its brief, that Benson had been previously convicted while pursuing the very defense he advocates in the Reliance Defense Package. Benson’s conviction, as this Court well knows, did not involve a failure to file based on anything having to do with the Sixteenth Amendment. See United States v. Benson, 941 F.2d 598 (7th Cir. 1991). What Benson knew or should have known from the Benson case, and other cases cited by the United States, was that the courts are closed to the argument. That he learned what he should have learned is clearly evident because he does not advocate taking the issue to court, but advocates instead taking “political action.” It is the United States that failed to learn the courts are closed, evidenced by the fact it chose to file a court action in which the ratification of the Sixteenth Amendment issue is an essential element. Benson challenged the propriety of that conduct below (See Benson’s Motion to Dismiss, Doc. 11), and does so here. Equally disturbing is the United States’ position, asserted at p. 44 of its brief, that there is no distinction between cases holding something is nonjusticiable and cases determining a factual issue after full briefing and considered opinion. Only the latter is entitled to stare decisis precedent. Pollock v. Farmers’ Loan & Trust Company, 157 U.S. 429, 574, aff. reh., 158 U.S. 601 (1895), and only the latter can be said to give Benson adequate notice. While 11

the United States’ position correlates nicely with its refusal to address Benson’s stare decisis argument, it fails to address the United States’ Orwellian contention that Benson knew, or should have known, that 35 is more than 36.2

Benson made no false statements, so materiality of those statements is immaterial.
The United States asserts at p. 47 of its brief that it is “undisputed that Benson’s materials advance the position that U.S. citizens are not required to file federal income returns or pay federal income taxes and (according to Benson) may refrain from doing so.” Benson disputes the contention. What is undisputed is that Benson’s materials advance the position that if the Sixteenth Amendment was not ratified, U.S. citizens are not required to file federal income tax returns or pay federal income taxes; that less than the required thirty-six states voted to ratify the Sixteenth Amendment, the courts refuse to address the issue, and the people must take political action. The United States falsely asserts that Benson admitted that Ronald Doyle used the Reliance Defense Package precisely as it was intended, i.e., as a purported justification for failing to file returns or pay tax. Benson admitted no such thing. Benson admitted no more than Doyle presented material to the IRS
2. See, ORWELL, GEORGE, 1984, Chapter 20 (1949). "You are a slow learner, Winston," said O'Brien gently. "How can I help it?" he blubbered. "How can I help seeing what is in front of my eyes? Two and two are four." "Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane."

12

after the IRS contacted Doyle and requested information. The United States continues to bend the facts and its allegations, making contrary assertions at will. The United States first contends that the material was to be used as a defense to a criminal prosecution for failure to file. That, of course, does not amount to a filing with the Internal Revenue Service that would constitute an abusive tax shelter. The United States next contends that the material was to be used to incite imminent lawless conduct by convincing people not to file returns. Here the United States contends the material was to be used to respond to a direct inquiry by the Internal Revenue Service. As stated elsewhere, all of these contentions are nothing but inferences drawn by the United States; the only fact proven by the record, however, is that Benson intended the information to be used to urge people to take “political action,” leaving the form of the political action to his audience. The United States next asserts at p. 48 of its brief that “[i]t strains credulity to suppose that taxpayers would pay hundreds and even thousands of dollars for the Reliance Packages unless they were buying into Benson’s promise of freedom from tax.” Whether it strains the United States or not, the record discloses that John Doe I, a person who files tax returns and pays tax, obtained the information to take “political action,” John Doe II, another tax payer, for purely educational reasons, and Jane Roe would, if she could, obtain the material to read it. (Doc. 74, pp. 4-5, ¶¶ 11-13).

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The United States observes that the record is devoid of proof as to why the decisions of Doyle, or any other non-filer, shouldn’t be attributed to Benson’s material. The burden of proof, however, is on the United States, and as noted above, it failed to establish when the individuals stopped filing, and whether it was before or after they obtained the information from Benson or elsewhere. Even the order of the events would not establish causation; it would merely establish the order of the events. Furthermore, according to the Supreme Court, what is protected speech is not to be judged based on the conduct of those who hear the speech. This issue was fully briefed in Benson’s Opening Brief, and is pretty much ignored by the United States as shown by its argument here.

An injunction is necessary to stop the United States from violating the First Amendment.
The United States, at page 50 of its brief, states Benson has pursued an extensive campaign to promote “tax defiance,” and that Benson was the prime mover in his “tax-fraud schemes.” All of the name-calling by the United States does not convert Benson’s urging “political action” into conduct prohibited at I.R.C. § 6700, and if it does, I.R.C. § 6700 is unconstitutional in its application. (See Benson’s Opening Brief). Protesting the government’s refusal to even look at whether one of its own committed fraud, i.e., Secretary of State Knox, in light of the overwhelming evidence that he did, is neither “tax defiance” nor a “tax-fraud scheme.” Benson’s speaking out on the Internet about what he 14

considers governmental abuse of power is protected by the First Amendment. It is the very essence of what the First Amendment is designed to protect. To partially quote the United States, what the United States “fails to grasp” is that Benson’s protest and call to “political action” is protected from statutory injunction as a matter of law since Congress is prohibited from passing a law respecting such speech. (Benson’s Opening Brief, pp. 21-45). Regardless of whether the injunction proceeds by way of 26 U.S.C. § 7408 or 26 U.S.C. § 7402(a), when used to enjoin Benson’s “political action” speech, the statutes transcend conduct prohibited by the First Amendment.

The injunction absolutely infringes on Benson’s First Amendment rights.
The United States, at p. 55 of its brief, states that as an initial matter, it bears noting exactly what has been enjoined. What has been enjoined is the distribution of Benson’s speech and documents conclusively showing the Sixteenth Amendment was not constitutionally passed by the requisite thirtysix states. Benson’s Opening Brief lists the documents contained in his material. (See Benson’s Opening Brief, pp. 38-40). It is the distribution of those documents that has been enjoined on the ground that distributing the documents constitutes conduct subject to penalty under Section 6700. Thus, Benson has been enjoined from distributing pages from his criminal trial transcript, a public record. Benson has been enjoined from distributing this Court’s opinion in his criminal case, another public record. Benson has

15

been enjoined from distributing correspondence between himself and members of Congress. Benson has been enjoined from distributing public documents on file with the National Archives of the United States as well as legislative journals of the forty-eight States. Trial transcripts, court opinions, legislative journals, and other similar documents, whether distributed piecemeal or in a compendium, are not abusive tax shelters. The government has no legal authority to prohibit Benson, or anyone else, from distributing those documents or speaking about their content, or expressing an opinion regarding that content. The United States argues enjoining the distribution of, and speech regarding, those documents passes constitutional muster under Raymond, Kaun and other cases. If so, the United States is just one case away from controlling the distribution of anything. When the people are prohibited from reviewing legislative journals and court cases, and discussing their content, there is no liberty and there is no freedom of speech. If the injunction, as written, is allowed to stand, then the continued distribution of public records will subject Benson to criminal contempt. This result would constitute a perverse violation of the prohibition placed on the government by our Founding Fathers. The distribution of public records, regardless of what those records say, cannot be enjoined unless they are classified and involve national security. The documents at issue here are not

16

classified, do not involve national security, and their authenticity and trustworthiness are beyond cavil. See FED. R. EVID. 803(8) and 902. Here, the United States argues not only for the exclusion of such public records as proof of an ultimate fact in the civil case they instituted, but for a ban on their entire distribution. The manifest evil of what the United States seeks is apparent on its face, regardless of how they package it for sale to this Honorable Court. The United States argues at p. 58 of its brief that public records sold by Benson loses First Amendment protection because of the way in which some of the purchasers use them. The Supreme Court disagrees: The fact that some misguided participants or spectators at the rally may ‘turn in’ their draft cards, as symbolic of their disapproval of the Vietnam War, does not justify the denial of the right of citizens to express views which may provoke such conduct. Any individual who, by his voluntary act, surrenders his draft card, can be effectively prosecuted under existing federal law. That potential provocation may result from heated debate is not a valid reason to preclude discussion. Resistance v. Commissioners of Fairmont Park, City of Philadelphia, Pa., 298 F.Supp. 961, 963 (E.D.Penn. 1969). The fact that some recipients of Benson’s material may not file income tax returns does not justify the denial of the right of Benson to express views which may provoke such conduct, nor the right of others to receive the material. See Yates v. United States, 354 U.S. 298, 313-322 (1957)(“Throughout our decisions there has recurred a distinction between the statement of an idea which may prompt its hearers to take unlawful action, and advocacy that such

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action be taken. [Citation omitted.] There is nothing in Dennis which makes that historic distinction obsolete.”); Brandenburg v. Ohio, 395 U.S. 444, 447-49 (1969)(“[t]he mere abstract teaching * * * of the moral propriety or even moral necessity for a resort to force and violence, is not the same as preparing a group for violent action and steeling it to such action”). The Brandenburg test does not rise and fall on the actions of listeners, but on the actual conduct of the speaker. This principle does not change merely because the issue involves federal taxation. Furthermore, the record shows some of Benson’s readers take no action at all, much less dive into imminent lawless action. The United States next argues Benson’s speech may be enjoined because it is sold. Here too, the Supreme Court disagrees: In addition, plaintiffs' distribution of literature does not lose First Amendment status simply “because the written materials sought to be distributed are sold rather than given away, or because contributions or gifts are solicited in the course of propagating the faith.” Heffron v. International Society for Krishna Consciousness, 452 U.S. 640, 647 (1981). See also Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66-67 (1983); New York Times Co. v. Sullivan, 376 U.S. 254, 265-66 (1964); Associated Students v. Attorney General, 368 F.Supp. 11, 24 (C.D.Cal. 1973). It is impossible to give credence to the United States’ argument at p. 59 of its brief that Benson’s “life’s work”3 is “solely related to the economic interest of the speaker and his audience” in not paying taxes. The United States notes at p. 5 of its Brief that this Court has recognized Benson’s book as the

3. United States’ Brief at p. 50.

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“manifesto” of the “tax protester movement.” The Court itself recognized Benson and his compatriots are involved in attacking the federal income tax structure. Miller v. United States, 868 F.2d 236, 241 (7th Cir. 1989). No doubt if it then existed, the Internal Revenue Service would have attempted to enjoin our Founding Fathers’ protest of being taxed without their consent, or the protest against a tax on tea from which one of our most cherished blows for freedom was struck. Labeling Benson and his audience as “tax defyers” does not, however, turn his protest into commercial speech. So too, the exorbitant interest and penalties which triple the amount collected from those who do not file tax returns belie the argument that nonfiling as a protest is motivated by economics. Furthermore, when the Sixteenth Amendment goes away, Congress will pass a new law, hopefully constitutional, to replace it, in which the same amount of tax, or more, will be collected. And finally, the facts before the Court documented by the Applicant Intervenors below at Doc. 74, conclusively show the issue is protest and education, not tax evasion. The United States’ argument that Benson’s motives are only or primarily financial and that he is engaged in nothing more than an advertising plot cannot be taken seriously. This Court knows, as evidenced by its words in Miller, that Benson sees himself as a crusader against injustice and an opponent to governmental oppression. This brings him firmly within the democratic tradition and within the protection of the Bill of Rights. 19

There is no economic motive involved in Benson’s protest. His motive is to force the federal government, through political action, to be bound by the chains of the Constitution. Urging such political action neither constitutes illegal action or involves speech that is false, unless of course, 35 is determined by this Court to be more than 36. Commercial speech is defined as "expression related to the economic interests of the speaker and its audience, generally in the form of a commercial advertisement for the sale of goods and services." U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 933 (3d Cir.1990). To determine whether speech is commercial, courts should consider whether: (1) the speech is an advertisement; (2) the speech refers to a specific product or service; and (3) the speaker has an economic motivation for the speech. Bolger, 463 U.S. at 66-67; In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781, 793-794 (3d Cir. 1999). The compendium of information at issue here, consisting of court transcripts, opinions of courts, government publications and public records of the National Archives and legislative journals, the distribution of which has been enjoined, nowhere contains an advertisement or refers to a specific product or service. These documents do not constitute commercial speech. Any finding that they do constitute commercial speech is a manifest abuse of discretion. Yet the injunction of the District Court bans distribution of those documents.

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In United States v. Bell, 414 F.3d 474 (3rd Cir. 2005), in concluding the materials on Bell's website were predominantly commercial speech, the District Court made a factual finding that his website was the internet version of "a television infomercial" made to entice visitors to join Bell's organization and pay him for tax advice. Bell, 414 F.3d at 479. That is commercial speech. At note 6 of its opinion, the Third circuit stated: We are mindful generally of the "difficulty of drawing bright lines that will clearly cabin commercial speech in a distinct category." City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 419, 113 S.Ct. 1505, 123 L.Ed.2d 99 (1993). We have also noted that "often, speech consists of complex mixtures of commercial and noncommercial elements." In re Orthopedic Bone Screw, 193 F.3d at 793 (quoting Bolger, 463 U.S. at 81, 103 S.Ct. 2875 (Stevens, J. concurring)). No such complex mixture exists here. Customers paid Bell for his advice and services in preparing fraudulent tax returns, not for his colorful views on the tax code. Bell, 414 F.3d at 480, n. 6 (emphasis added). In an ironic twist, after arguing that Benson’s argument regarding the necessity of finding affirmative conduct for pay, such as preparing tax returns, is a red herring at p. 57 of its brief, the United States then cites, commencing at p. 60 of its brief, those cases wherein courts have issued injunctions to restrain affirmative conduct being offered for pay, such as preparing fraudulent tax returns. Still missing, however, is the citation to any case where an injunction was issued when the activity did not involve advertising for, or receiving compensation for, providing, preparing or assisting in the preparation of: 1) trusts to protect assets for those evading taxes; 2) false Forms W-4; 3) false income tax returns or amended income tax returns; 4) letters to harass 21

and impede employees of the IRS; 5) pleadings to file court actions to claim refunds of taxes paid; 6) FOIA requests; 7) letters and forms to rescind social security numbers; or 8) inciting the imminent breaking of the tax laws.

Conclusion
The issue in this case is quite simple. Is 35 more than 36? If it is not, the requirements of Article V were not met; the Sixteenth Amendment was not, ratified; Benson’s speech is true; and, therefore, the United States did not carry its burden in establishing a violation of 26 U.S.C. § 6700. In the absence of such violation, the granting of summary judgment was an abuse of discretion, as was the issuance of the permanent injunction, and the District Court’s refusal to alter or amend its judgment. Self-authenticating, non-hearsay documents, the existence of which is not denied by the United States or the District Court, establish that several states intentionally amended the language of the Sixteenth Amendment. Other selfauthenticating, non-hearsay documents, the existence of which is not denied by the United States or the District Court, establish that Secretary of State Knox relied on a false presumption that the States did not intentionally amend the proposed language of the Sixteenth Amendment. The United States does not contest the Constitution cannot be amended by presumption, that to the extent the enrolled bill rule stands for the contrary proposition it is unconstitutional, and that courts have the absolute power, and duty, Marbury v. Madison, 5 U.S. 137, 177-180 (1803), to review legislative 22

journals when a non-frivolous argument is made that such journals show a sufficient number of states failed to vote for a law, Ballin, 144 U.S. The sources of Benson’s facts have not been, and cannot be, challenged; therefore, he has made a non-frivolous argument. The United States admits through the Office of Chief Counsel of the Internal Revenue Service that Benson’s speech and distribution of documents are protected by the First Amendment. The plethora of case law cited in Benson’s Opening Brief shows that the admission of the Department of the Treasury is legally correct. The District Court deprived Benson of his right to present the only defense available to him. There is no clearer denial of due process, as shown by the plethora of case law cited in Benson’s Opening Brief. Are trials, whether by court or jury, no longer to be the place for impartial fact finding? Are defendants no longer to have the right to present any defense when charged with illegal conduct? Are the people now forced to accept that 35 is greater than 36 because whether that is true or not is non-justiciable in the Courts of this country? Is the First Amendment to be no more than meaningless words on a worthless piece of paper? It was reversible error for the District Court to grant the United State’s motion for summary judgment, to refuse to alter or amend the judgment, and to issue an injunction prohibiting the distribution of public records. The

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judgment of the District Court should be reversed and the case remanded with instructions to dismiss the Complaint.

24

THE GOVERNMENT’S CROSS APPEAL
The District Court Did Not Err In Refusing To Order Benson To Provide His “Customer” List.
A. The Government’s request for Benson’s customer list does not fall within the District Court’s authority under I.R.C. § 7402(a). The United States admits at p. 67 and p. 73 of its brief that the request for Benson’s customer list is premised on § 7402(a). That section, however, does not provide authority for the requested release of names. The law requires the United States to proceed by way of administrative summons. In United States v. Mobil Corp., 543 F.Supp. 507 (N.D.Tex.1981), the IRS sought an injunction under § 7402(a) to require an employer to provide records pertaining to his employees. The IRS argued the requirement to keep records at 26 U.S.C. § 6001 implied the IRS could inspect them at will. Mobil argued the records could only be inspected by the use of an administrative summons. The court first noted that the request put into issue whether it was constitutionally permissible for the IRS to inspect without a warrant or its equivalent. Mobil, 543 F.Supp. at 509. The Court concluded that if the IRS’s contention regarding Section 6001 was adopted, it would be giving to the IRS authority to inspect without the judicial supervision arguably required under the fourth amendment. The court cited to the Supreme Court’s holding in Marshall v. Barlow's, 436 U.S. 307 (1978). Mobil, 543 F.Supp. at 517-18.

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The Court next sought to ascertain congressional intent regarding the right of the IRS to obtain records by an injunction issued under Section 7402(a). The Court reasoned a clue to congressional intent was found in the structure of the I.R.C. because it is a comprehensive code with a logical organizational structure. That organizational structure, the Court held, mandated the conclusion that “Section 6001 requires record keeping depending upon its companion provisions found in Sections 7602-7610 for the procedure for inspection of those records.” Mobil, 543 F.Supp. at 511. Continuing its scholarly analysis, the Court reviewed the legislative history of Sections 7602-7610 and found that Congress intended that those provisions were to be the sole means under the Code for the IRS to obtain information regarding taxpayers held by third parties. Mobil, id. In particular, Senator Haskell, the Chairman of the Senate subcommittee which, in 1976, reported amendments to the provisions of the Code concerning administrative summons, remarked on the Senate floor concerning the new provision governing the issuance of "third party" summons, Section 7609, as follows: PROTECTION OF THE TAXPAYERS' RIGHTS AND PRIVACY Mr. Haskell. Mr. President, I rise to briefly clarify a point raised about a provision in the tax bill, H.R. 10612, which we have just passed. The provision in question, Sec. 1205, restricts the use of administrative summons by the IRS to gain access to records held by third parties, such as banks, brokers, lawyers, and accountants. The question which has been raised is whether these rules are the exclusive method of access to these records or whether the IRS can avoid

26

these rules and get the records by informal access without any type of summons. As chairman of the Administrative Subcommittee of the Finance Committee, I studied this issue in depth. Senator Doyle, the ranking Republican on the subcommittee, and I proposed the provision to the committee and it was adopted. We heard much testimony on the abuses of taxpayer's rights by the IRS in various situations. As a result, the tax bill contains many administrative provisions designed to protect the taxpayers' rights and privacy and limit the unbridled power of the IRS to examine a taxpayer's records. In the future, the use of an administrative summons will require the person whose records are sought to have notice and the opportunity to object and require the more formal processes of a court-ordered summons. We drew these strict rules to protect the right of privacy that we felt every citizen expects, and rightfully so, in their personal bank records, lawyer's files, et cetera. At no time did we discuss the questions of allowing informal access to these records without a summons of any sort. We carefully defined the safeguards and spelled out several extraordinary situations in which these procedures can be avoided where they might jeopardize an investigation or the safety of a witness. It seems to me absurd to suggest that the Congress would act so clearly to protect citizens from the processes of an agency and make those protections optional, binding only when the agency chose. ... (emphasis supplied). 127 Cong.Rec. 34772 (1976) (Comments of Sen. Haskell, Chairman, Administrative Subcommittee of Senate Finance Committee.) Mobil, 543 F.Supp. at 512. Recognizing that Mobil was not a third party record keeper as defined by I.R.C. § 7609(a)(3), the Court nonetheless held that the IRS, for purposes of the notice requirements of 7609(a), would be required to comply with the "John Doe" summons provisions of 7609(f) because the IRS has not identified "the

27

person(s) with respect to whose liability the summons is issued." Mobil, 543 F.Supp. at 516. The Court denied the IRS's request for an injunction under § 7402(a) commanding inspection of records because Congress had provided an administrative procedure to serve precisely that purpose, and specifically found that § 7402(a) could not be used to circumvent the required administrative procedure. Mobil, 543 F.Supp. at 519. In United States v. Ernst & Whinney, 735 F.2d 1296 (11th Cir. 1984), the IRS filed a civil suit seeking to enjoin the accounting partnership Ernst & Whinney from actions allegedly interfering with the administration of Internal Revenue laws. Ernst & Whinney, 735 F.2d at 1298. Although the Mobil case was raised for another point, the District Court stated: The district court's conclusion that § 7402(a) creates no right to inspect is clearly correct in light of congressional intent that IRS inspection be carried out pursuant to 26 U.S.C.A. § 7602 et seq., with the procedural safeguards therein provided. Ernst & Whinney, 735 F.2d at 1300. The situation here is closely analogous to Mobil. The IRS is seeking records from Benson regarding un-named taxpayers for the purpose of investigating their tax liability. Congressional intent and case law dictates such records must be sought by administrative summons, not through an injunction issued under Section 7402(a).

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Although the United States is able to cite to a number of cases in which courts have granted its request for records by injunctive order under § 7402(a), in none of those cases was a direct challenge made that such relief was not authorized by § 7402(a) and the IRS was required to proceed by administrative summons. Subsequent to the District Court’s refusal to require Benson to turn over the names, the IRS issued an administrative summons, although not a John Doe summons. After losing his bid to quash the summons in the District Court (Doc. 158), Benson, through his undersigned attorney, sent a letter to the agent who issued the summons not only asserting his right to remain silent under the Fifth Amendment, but claiming the list sought by the IRS was privileged under the First Amendment. To date, the IRS has not seen fit to bring a summons enforcement action, although that remedy is still available to it. Hence the United States loses no rights by the denial of its requested injunctive relief and the people are served by requiring the United States to comply with the law. Because the United States cannot prevail on this issue as a matter of law, it has not shown it is entitled to the injunction, and the District Court did not abuse its discretion in failing to order injunctive relief. B. Benson has a valid Fifth Amendment right not to admit the existence of the requested records, much less produce their contents.

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The United States, at p. 5 of its brief, states: “Benson has not filed a federal income tax return since 1976.” The United States asserts Benson sold Reliance Packages for “hundreds and even thousands of dollars.” Brief at p. 48. Benson is under criminal investigation by the Internal Revenue Service regarding the distribution of his opinion that the Sixteenth Amendment was not in fact ratified. See Exhibit A to Doc. 6. Not only did the District Court opine that some customers may be potential co-conspirators with Benson and tax cheats (Doc. 106, pp. 19-20), but Benson is specifically named in a four count indictment of Charles Evans Hughes for wilful evasion of federal income tax for purchasing Benson’s Reliance Package. See Indictment, p. 2, ¶ 8 in United States v. Hughes, Case No. 1:07-CR-0085 (W.D.Mich.S.D. 2007).4 These facts establish there is a substantial and real hazard of selfincrimination if Benson admits he has records regarding customers and/or produces those records. See Maness v. Meyers, 419 U.S. 449, 461 (1975); United States v. Sharp, 920 F.2d 1167, 1170 (4th Cir. 1990); United States v. Neff, 615 F.2d 1235, 1239 (9th Cir. 1980); United States v. Doe, 465 U.S. 605, 612-613 (1984); and United States v. Argomaniz, 925 F.2d 1349 (11th Cir. 1991). Prosecution for wilful failure to file income tax returns, 26 U.S.C. § 7203, wilful tax evasion, 26 U.S.C. § 7201, conspiracy to assist others to commit those crimes and conspiracy to defraud, 18 U.S.C. § 371, are just a few

4. The Court is requested to take judicial notice of this document, available on Pacer.

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of the potential crimes for which Benson could be charged. Benson has an absolute right to refuse to provide a link in the chain of evidence, whether that link be the names of potential co-conspirators, an admission of income sufficient to require the filing of tax returns, a substantial tax liability due and owing and/or an overt act establishing an evasion charge. Benson’s right to claim protection from self-incrimination under the Fifth Amendment is clear. Not only does the United States allege here that Benson and his customers have criminally violated, or are currently criminally violating, the tax laws, but one prosecutor has made receiving Benson’s material an overt act of income tax evasion. The information requested is incriminatory on its face. The District Court did not abuse its discretion in refusing to grant the injunctive relief because such an order would violate Benson’s right, under the Fifth Amendment, not to be compelled to be a witness against himself. C. The requested list is privileged under the First Amendment. The United States argues at p. 76 of its brief that the interests of Benson’s customers do not outweigh the Government’s need for his customer list. The United States is mistaken.5

5. The United States may argue in reply that Benson is precluded from raising here the Constitutional rights of his audience. Those rights, however, were directly put into issue by the United States inclusion of those rights in its brief. Furthermore, those rights may be properly argued here under NAACP v. Alabama ex rel. Patterson, 357 U.S at 459-460.

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NAACP v. Alabama ex rel. Patterson, 357 U.S. 449 (1958) involved a suit against an association to enjoin it from conducting further activities, wherein the association was adjudged in contempt for noncompliance with a court order requiring it to produce records including the names of its members. In refusing to require the production of the requested records, the Supreme Court held: It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as the forms of governmental action in the cases above were thought likely to produce upon the particular constitutional rights there involved. This Court has recognized the vital relationship between freedom to associate and privacy in one's associations. When referring to the varied forms of governmental action which might interfere with freedom of assembly, it said in American Communications Ass'n v. Douds, supra, 339 U.S. at page 402, 70 S.Ct. at page 686: `A requirement that adherents of particular religious faiths or political parties wear identifying arm-bands, for example, is obviously of this nature.' Compelled disclosure of membership in an organization engaged in advocacy of particular beliefs is of the same order. Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs. Cf. United States v. Rumely, supra, 345 U.S. at pages 56-58, 73 S.Ct. at pages 550-551 (concurring opinion). NAACP, 357 U.S. at 462 (emphasis added). See also Gibson v. Fla. Leg. Investigation Comm., 372 U.S. 539, 544 (1963) (holding compelled disclosure of affiliation with groups engaged in advocacy may constitute an effective restraint on freedom of association). Other courts recognize that the chilling effects of a summons served by an IRS agent to obtain membership records of a tax protester group is "readily apparent."

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United States v. Grayson County State Bank, 656 F.2d 1070, 1074 (5th Cir.1981), cert. denied, 455 U.S. 920 (1982). The same conclusion was reached regarding a subpoena issued by a grand jury. In re First Nat'l Bank, Englewood, Co., 701 F.2d 115, 118 (10th Cir. 1983). There is little, if no, distinction between these cases and the case here. Miller, 868 F.2d, identifies Benson and “his compatriots” as people engaged in protest activities, thereby establishing them as a group espousing dissident beliefs. The nature of the protest is immaterial. NAACP, 357 U.S. at 460-61. A critical fact here is that the record discloses that not every recipient of Benson’s material failed to file tax returns or pay the tax. (See Doc. 74 and Memorandum Opinion, Doc. 106, p. 19). People who participate in protester type abusive tax shelters and commit federal tax crimes most typically send forms or documents to the IRS in which they specify the grounds, whether claiming lack of citizenship, the source argument, wages are not income, etc. This is well documented in the cases cited by the United States, such as Raymond, Kaun and Bell. The IRS is well equipped with their Abusive Tax Shelter and Illegal Tax Protester divisions to identify those who violate the tax laws. The record discloses, furthermore, that Benson both posted the permanent injunction on his website and filed a declaration stating he mailed a copy of the injunction to every person for whom he has a mailing address. (See Docs 138 and 162). The United States’ argument that it needs the names to monitor continued compliance and to notify past customers is false on its face. 33

Benson has complied with the permanent injunction and stopped selling his Reliance Package shortly after the United States filed its complaint. In addition to infringement on the right to associate, there are additional First Amendment rights held by Benson’s audience subject to being violated by the issuance of the requested injunction. One of those rights is the freedom to receive, possess, and read, what they desire to receive, possess and read: ‘Freedom to distribute information to every citizen wherever he desires to receive it is so clearly vital to the preservation of a free society that, putting aside reasonable police and health regulations of time and manner of distribution, it must be fully preserved.’ Martin v. Struthers, 319 U.S. 141, 146-147 (1943). Breard v. City of Alexandria, La., 341 U.S. 622, 628 (1951). The refusal to allow King to obtain a book on computer programming presents a substantial First Amendment issue. Freedom of speech is not merely freedom to speak; it is also freedom to read. Stanley v. Georgia, 394 U.S. 557, 564, 89 S.Ct. 1243, 22 L.Ed.2d 542 (1969); Lamont v. Postmaster General, 381 U.S. 301, 306-07, 85 S.Ct. 1493, 14 L.Ed.2d 398 (1965); Conant v. Walters, 309 F.3d 629, 643 (9th Cir.2002). Forbid a person to read and you shut him out of the marketplace of ideas and opinions that it is the purpose of the free-speech clause to protect. King v. Federal Bureau of Prisons, 415 F.3d 634, 638 (7th Cir. 2005) (Posner, J.). The right to receive the information also includes the right not to be put on a list: The addressee carries an affirmative obligation which we do not think the Government may impose on him. This requirement is almost certain to have a deterrent effect, especially as respects those who have sensitive positions. Their livelihood may be dependent on a security clearance. Public officials like school teachers who have no tenure, might think they would invite disaster if they read what the Federal Government says contains the seeds of treason. Apart from them, any addressee is likely to 34

feel some inhibition in sending for literature which federal officials have condemned as ‘communist political propaganda.’ The regime of this Act is at war with the ‘uninhibited, robust, and wide-open debate and discussion that are contemplated by the First Amendment. New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S.Ct. 710, 720, 11 L.Ed.2d 686. Lamont v. Postmaster General of United States, 381 U.S. 301, 307 (1965). So too, the recipients of Benson’s message, such as Mr. Doyle, have a protected First Amendment Right to petition the government for redress of grievance: Resort to administrative, legislative, political or judicial processes is protected by the first amendment so long as the petitioner is concerned with obtaining relief afforded by the system. City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991); California Motor Transport. Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972); Noerr, 365 U.S. 127, 81 S.Ct. 523. Even if the seeking of relief is animated by malevolence or self-interest, the first amendment protects the right to petition of the person whose activities are genuinely aimed at procuring favorable government action. Omni, 111 S.Ct. at 1354 (quoting Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500 n. 4, 108 S.Ct. 1931, 1937 n. 4, 100 L.Ed.2d 497 (1988)). Leblanc-Sternberg v. Fletcher, 781 F.Supp. 261, 266 (S.D.N.Y. 1991). The right to petition is inseparable from the right to speak. See McDonald v. Smith, 472 U.S. 479, 482 (1985) (characterizing right to petition as “an assurance of a particular freedom of expression”); Day v. South Park Indep. School Dist., 768 F.2d 696 (5th Cir.1985) (right to petition is governed by “public concern” analysis of Pickering), cert. denied, 474 U.S. 1101 (1986).

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The IRS’s contemplated investigation of citizens for the mere possession of Benson’s literature also violates perhaps the greatest liberty of all, the right to be let alone by government: It is now well established that the Constitution protects the right to receive information and ideas. This freedom (of speech and press) * * * necessarily protects the right to receive * * *.’ Martin v. City of Struthers, 319 U.S. 141, 143, 63 S.Ct. 862, 863, 87 L.Ed. 1313 (1943); see Griswold v. Connecticut, 381 U.S. 479, 482, 85 S.Ct. 1678, 1680, 14 L.Ed.2d 510 (1965); Lamont v. Postmaster General, 381 U.S. 301, 307-308, 85 S.Ct. 1493, 1496-1497, 14 L.Ed.2d 398 (1965) (Brennan, J., concurring); cf. Pierce v. Society of the Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070 (1925). This right to receive information and ideas, regardless of their social worth, see Winters v. New York, 333 U.S. 507, 510, 68 S.Ct. 665, 667, 92 L.Ed. 840 (1948), is fundamental to our free society. Moreover, in the context of this case-a prosecution for mere possession of printed or filmed matter in the privacy of a person's own home-that right takes on an added dimension. For also fundamental is the right to be free, except in very limited circumstances, from unwanted governmental intrusions into one's privacy. ‘The makers of our Constitution undertook to secure conditions favorable to the pursuit of happiness. They recognized the significance of man's spiritual nature, of his feelings and of his intellect. They knew that only a part of the pain, pleasure and satisfactions of life are to be found in material things. They sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations. They conferred, as against the government, the right to be let alone-the most comprehensive of rights and the right most valued by civilized man.’ Olmstead v. United States, 277 U.S. 438, 478, 48 S.Ct. 564, 572, 72 L.Ed. 944 (1928) (Brandeis, J., dissenting). See Griswold v. Connecticut, supra; cf. NAACP v. Alabama, 357 U.S. 449, 462, 78 S.Ct. 1163, 1171, 2 L.Ed.2d 1488 (1958). Stanley v. Georgia, 394 U.S. 557, 564 (1969).

Conclusion

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Contrary to the United States’ assertion, the District Court did not abuse its discretion in not granting the injunctive relief. Not only is such relief not authorized under Section 7402(a), but release of the names violates both the First and Fifth Amendments. The District Court did not err, but correctly followed the law. The cross-appeal of the United States should be denied Respectfully submitted,

JEFFREY A. DICKSTEIN Attorney for Defendant-Appellant and Cross-Appellee William J. Benson

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Certificate of Compliance with F.R.A.P. 28.1(e)(2)(A)(1)
1. This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because it contains 9,451 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Word Perfect Version 12, Bookman Old Style typeface, 12 point size font in the main text, and 11 point size font in the footnotes.

Jeffrey A. Dickstein Attorney for Defendant-Appellant and Cross-Appellee William J. Benson Dated: July 25, 2008.

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Circuit Rule 31(e)(1) Certificate
IT IS HEREBY CERTIFIED than on July 25, 2008, a .pdf version of the Brief of Defendant-Appellant, William J. Benson, generated from Word Perfect, was posted via the Internet to the web-site of the Seventh Circuit Court of Appeals and was e-mailed to counsel for the United States at the following address: [email protected] [email protected]

Jeffrey A. Dickstein Attorney for Defendant-Appellant and Cross-Appellee William J. Benson

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Proof of Service
IT IS HEREBY CERTIFIED that two copies of the RESPONSE AND REPLY BRIEF OF APPELLANT WILLIAM J. BENSON was placed in the United States Mail, postage pre-paid, on July 25, 2008, addressed to counsel for the United States as follows: Richard L. Parker Andrea R. Tebbets U.S. Dept. of Justice, Tax Division Appellate Section P.O. Box 502 Washington, D.C. 20044 IT IS FURTHER HEREBY CERTIFIED than on July 25, 2008, a .pdf version of the foregoing, generated from Word Perfect, was e-mailed to the following address: [email protected] [email protected]

Jeffrey A. Dickstein Attorney for Defendant-Appellant and Cross-Appellee William J. Benson

40