In the

United States Court of Appeals
               For the Seventh Circuit

Nos. 08-1312 and 08-1586

U NITED S TATES OF A MERICA,
                                                    Plaintiff-Appellee,
                                                     Cross-Appellant,
                                  v.

W ILLIAM J. B ENSON,
                                               Defendant-Appellant,
                                                    Cross-Appellee.


            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
           No. 04 C 7403—Samuel Der-Yeghiayan, Judge.



     A RGUED O CTOBER 28, 2008—D ECIDED A PRIL 6, 2009




 Before B AUER, R IPPLE and E VANS, Circuit Judges.
  B AUER, Circuit Judge.     The district court enjoined
William J. Benson, a “tax protester,” from promoting,
organizing, or selling his “Reliance Defense Package” and
“16th Amendment Reliance Package,” which were based
on the false premise that customers could stop paying
federal income taxes and avoid or defeat prosecution by
2                                Nos. 08-1312 and 08-1586

relying on the materials in the Packages. However, the
court denied the government’s request to require
Benson to divulge a list of his customers. We affirm the
injunction, but reverse as to the customer list, and
remand for further appropriate proceedings.


                  I. BACKGROUND
  Benson wrote a book titled, The Law That Never Was, in
which he claims that the Sixteenth Amendment to the
United States Constitution was never properly ratified.
Benson packaged his book with several excerpts from
state legislative histories and records from the national
archives as well as court cases and other materials to
create what he called the “Reliance Defense Package.” He
advertised the Package and its component parts for
sale on his website, www.thelawthatneverwas.com. The
entire Package was offered for sale for $3500. Benson
branded a similar set of materials as the “16th Amend-
ment Reliance Package,” which was promoted and
offered for sale on the website of the Free Enterprise
Society.
  The details of Benson’s promotional claims will be
more thoroughly discussed below, but they can be boiled
down to two theories. Benson’s first and primary theory
was that the Sixteenth Amendment was never properly
ratified because several states intentionally attempted to
modify the language of the proposed amendment and so
did not ratify the actual amendment proposed by Con-
gress. Without the Sixteenth Amendment, Benson ex-
plained, the federal income tax system is unconstitutional
Nos. 08-1312 and 08-1586                                       3

according to the Supreme Court. See Pollock v. Farmers’ Loan
& Trust Co., 

(1895). Benson stated that he
does not file an income tax return and that his customers
may choose to do the same.
  Benson’s second theory, which was alluded to on
Benson’s website and more thoroughly discussed in the
Reliance Defense Package itself, was that an individual
could not be successfully prosecuted if he truly believed
he was not required to pay income taxes. Benson claimed
that the Supreme Court held in Cheek v. United States,

(1991) “that when a defendant had a good-
faith belief he was not required to file, he must be permit-
ted to present that belief to the jury.” Benson also cited
United States v. Powell, 

(9th Cir. 1991) for the
principle that the defendants’ conviction for failing to file
tax returns “could not be sustained if the [defendants]
sincerely believed they were not required to
file—whatever their foundation for that belief.” And
Benson promised that the Reliance Defense Package
would allow customers to develop that sincere belief.
  At the government’s request, the district court granted
summary judgement and issued an injunction against
Benson; however the district court denied the part of
the requested injunction that would have required
Benson to turn over his customer list.1


1
    The injunction reads in part:
      The defendant, William J. Benson, individually and doing
      business as Constitutional Research Associates, and anyone
                                                   (continued...)
4                                      Nos. 08-1312 and 08-1586

                        II. DISCUSSION
  On appeal, Benson claims that he did not violate the
statute the district court relied on to grant the injunction.
He also argues that the injunction violates his First Amend-
ment rights. The government counters that there was


1
    (...continued)
       in active concert or participation with him, are permanently
       enjoined from:
          (a) promoting, organizing or selling the “Reliance
          Defense Package” or “16 th Amendment Reliance Pack-
          age,” which are abusive tax shelters, plans, or arrange-
          ments that advise or assist customers to attempt to
          evade the assessment or collection of their correct
          federal tax;
          (b) promoting, organizing or selling (or helping others
          to promote, organize, or sell) any other tax shelter, plan,
          or arrangement that incites or assists others to attempt
          to violate the internal revenue laws or unlawfully
          evade the assessment or collection of their federal tax
          liabilities or unlawfully claim improper tax refunds;
          (c) making or furnishing (in connection with organiz-
          ing, promoting, or selling any plan or arrangement)
          false statements about the excludability of any income
          or the securing of any other tax benefit by reason of
          participating in the plan or arrangement;
          (d) engaging in any other activity subject to penalty
          under the Internal Revenue Code; and
          (e) engaging in any other conduct that interferes with
          the administration or enforcement of the internal
          revenue laws.
Nos. 08-1312 and 08-1586                                   5

ample statutory and constitutional support for the injunc-
tion. The government’s cross-claim contends that the
district court erred by not requiring Benson to produce a
list of his customers. We review a district court’s grant
of summary judgment de novo and its decision to grant
an injunction for abuse of discretion. United States v.
Raymond, 

, 810 (7th Cir. 2000); United States
v. Kaun, 

, 1148 (7th Cir. 1987).


  A. Statutory Authority for the Injunction
  A district court is authorized to enter an injunction
against any person if it finds “(1) that the person has
engaged in any [conduct subject to penalty under 26 U.S.C.
§ 6700], and (2) that injunctive relief is appropriate
to prevent recurrence of such conduct.” 26 U.S.C. § 7408(b).


      1.   Violation of 26 U.S.C. § 6700
  Section 6700 imposes a penalty on any person who
(1) organizes (or assists in the organization of) any plan
or arrangement, or participates (directly or indirectly) in
the sale of any interest in an entity or plan or arrange-
ment, and (2) in connection with such organization or
sale, makes or furnishes a statement with respect to the
allowability of any deduction or credit, the excludability
or any income, or the securing of any other tax benefit
by reason of holding an interest in the entity or participat-
ing in the plan or arrangement (3) which the person
knows or has reason to know is false or fraudulent (4) as
to any material matter. 26 U.S.C. § 6700(a).
6                                Nos. 08-1312 and 08-1586

  Benson claims that he was simply urging political action
and was not promoting any plan because he did not
engage in affirmative conduct such as offering to help
prepare trusts, false W-4 forms, false income tax returns,
letters to harass the IRS, claims for tax refunds, etc., as
some tax protestors have in the past. Benson is wrong,
both legally and factually.
  First, the definition of a plan for purposes of § 6700 is
broad. 

(“any ‘plan or arrange-
ment’ having some connection to taxes” (citing 

)). Courts have not been hesitant in finding
tax protesters’ activities to qualify as plans. 

(“words ‘any other plan or arrangement’ are
clearly broad enough to include a tax protester group”);

-12 (sale of program that told
customers they could legally refuse to pay federal
income tax was sale of an interest in a plan under § 6700);
United States v. Schulz, 

, 348 (N.D.N.Y.
2007) (instruction guide on stopping employer withhold-
ings was plan or arrangement), aff’d, 

, 607 (2d
Cir. 2008). Benson’s plan was simpler than some prior
tax protester schemes, but its purpose was the same—to
evade tax liability. Instead of filing false tax returns,
Benson’s plan encouraged customers not to file a tax
return at all. Such a don’t-do-it-yourself kit does not
require forms or filings. Here, the devil is not in the
details. Like every other tax protester, Benson was
selling an illegal method by which to avoid paying taxes;
the details of that method are immaterial.
 Second, Benson’s materials were prepared in such a
way so that the entirety of either Package could be sent to
Nos. 08-1312 and 08-1586                                7

the IRS if they began an investigation. The Reliance
Defense Package included a customized Reliance Letter,
which concluded:
   It is insanely unrealistic for someone like [customer’s
   name] to believe that he would be required to file any
   forms with any state taxing agency or the Federal
   Government, when the 16th Amendment to the U.S.
   Constitution is an absolute complete total fraud as
   proven by The Law That Never Was Volume I and in
   excess of 17,000 documents etc. that [customer’s name]
   relies on as his STATE OF MIND, FRAME OF MIND
   RELIANCE, AND BELIEF. The entire Reliance Pro-
   gram shall become a part of his permanent record.
Therefore, Benson was providing his customers with
something to send to the IRS in an effort to avoid paying
taxes. At least one taxpayer submitted the Reliance
Letter and several other elements of the Reliance
Defense Package along with the entire 16th Amendment
Reliance Package to the IRS when questioned about
failing to file an income tax return. The only distinction
between Benson’s plan and other plans is that Benson’s
materials were to be utilized after the IRS launched an
investigation. So Benson did organize a plan or arrange-
ment and participated in the sale of an interest in the
plan or arrangement. 26 U.S.C. § 6700(a)(1).
  Benson made numerous statements about the tax
benefits to be enjoyed by customers as a result of pur-
chasing his materials and participating in his plan or
arrangement. 26 U.S.C. § 6700(a)(2)(A). In promoting
his materials, Benson claimed that he “discovered that
8                                 Nos. 08-1312 and 08-1586

the 16th Amendment was not ratified” and to have docu-
ments “proving that the 16th Amendment . . . is an abso-
lute, complete, total fraud.” Benson also claimed on his
website that:
    After serving time in federal prison for not paying his
    United States income taxes, Bill Benson still does not
    pay income taxes and yet our federal government
    chooses not to arrest him. Why? Because now he can
    use this book, which he has written: ‘THE LAW THAT
    NEVER WAS’ in his defense.
Benson marketed the Reliance Defense Package on his
website as a “compendium of information giving you the
education and choice toward not filing an Income tax
return. This compendium will give you the education to
say ‘Based on my state-of-mind, frame of mind, reliance
and belief I am obeying the dictates of Constitutional
Law.’ ” Benson boasted that “[t]o date, the IRS has stead-
fastly refused to prosecute any person standing on this
defense. Why do they do this? Because they know
they cannot win!!” Benson also stated that “included in
your Package will be numerous DVDs and many other
references proving that you are not a taxpayer!”
  Benson knew or had reason to know that his statements
were false or fraudulent. 26 U.S.C. § 6700(a)(2)(A). Benson’s
claim to have discovered that the Sixteenth Amendment
was not ratified has been rejected by this Court in Benson’s
own criminal appeal. United States v. Benson, 

,
607 (7th Cir. 1991) (“In Thomas, we specifically examined
the arguments made in The Law That Never Was, and
concluded that ‘Benson . . . did not discover anything.’ ”
Nos. 08-1312 and 08-1586                                  9

(quoting United States v. Thomas, 

, 1253 (7th
Cir. 1986))). “[W]e have repeatedly rejected the claim that
the Sixteenth Amendment was improperly ratified. One
would think this repeated rejection of Benson’s Six-
teenth Amendment argument would put the matter to
rest.” 

(citations omitted).
   Benson knows that his claim that he can rely on his book
to prevent federal prosecution is equally false because
his attempt to rely on his book in his own criminal case
was ineffective. 

. Benson’s book
has been repeatedly discredited by the courts. Miller v.
United States, 

, 241 (7th Cir. 1989) (“We find
it hard to understand why the long and unbroken line
of cases upholding the constitutionality of the sixteenth
amendment generally, and those specifically rejecting
the argument advanced in The Law That Never Was, have
not persuaded Miller and his compatriots to seek a
more effective forum for airing their attack on the
federal income tax structure.” (citations omitted)).
  Benson’s statement that the government cannot suc-
cessfully prosecute any person choosing not to file a tax
return based on his belief that he is obeying the dictates
of constitutional law is also false. This argument seems to
be derived from Cheek v. United States, 

(1991),
as discussed above. But Cheek only supports a defense
that the defendant misunderstood the requirements of the
tax code, not that he believed those requirements to be
unconstitutional. 

(“Claims that some of the
provisions of the tax code are unconstitutional are sub-
missions of a different order [from a good-faith misunder-
10                                   Nos. 08-1312 and 08-1586

standing of the law]. . . . [D]efendant’s views about the
validity of the tax statutes are irrelevant to the issue of
willfulness . . . .”); United States v. Dunkel, 

, 955-
56 (7th Cir. 1991) (stating that Cheek held that “judges may
rebuff defenses based on erroneous constitutional beliefs
(such as that the 16th Amendment was not properly
ratified)”).
   Benson argues that because he made no false state-
ments, materiality is not at issue. We obviously disagree
with Benson’s premise and so must decide whether
Benson’s false statements pertained to a material matter.
26 U.S.C. § 6700(a)(2)(A). There is no matter more
material to the sale of a tax avoidance package than
whether the package effectively allows customers to
avoid taxes. Benson’s program was organized and pro-
moted as a golden ticket whereby purchasers could
avoid income tax liability and criminal liability. Benson’s
false statements regarding the vulnerability of the Six-
teenth Amendment and the ability of his customers to
refuse to pay taxes without being prosecuted were
material because they would have a “ ‘substantial impact’
on the decision to purchase [his] tax package.” United
States v. Gleason, 

, 683 (6th Cir. 2005) (citing
United States v. Buttorff, 

, 1062 (5th Cir. 1985);
see also United States v. White, 

, 515 (8th Cir.
1985) (material because “taxpayers who have been or
are now being audited by the IRS or are involved in
litigation because they relied upon appellant’s representa-
tions should certainly have been informed about
their complete lack of merit”). Even if some of Benson’s
followers purchased the Packages for educational purposes
Nos. 08-1312 and 08-1586                                 11

or to take political action, as Benson claims, it is hard to
believe they would have bought the materials knowing
they were false.


      2.   Likelihood of Recurrence
  In determining whether an injunction is appropriate
to prevent recurrence of the illegal conduct, the court
must consider the totality of the circumstances including:
    (1) the gravity of harm caused by the offense; (2) the
    extent of the defendant’s participation and his degree
    of scienter; (3) the isolated or recurrent nature of the
    infraction and the likelihood that the defendant’s
    customary business activities might again involve
    him in such [a] transaction; (4) the defendant’s rec-
    ognition of his own culpability; and (5) the sincerity
    of his assurances against future violations.

(quoting 

-
50) (internal quotations omitted). Lengthy discussion of
this matter is not warranted. Reliance on Benson’s
false promises has deprived the government of revenue
and has harmed Benson’s customers who were deceived
by the “siren call of the tax protester movement.” United
States v. Engh, 

, 956 (7th Cir. 2003). Benson
was at the heart of this scheme, which he knew or
should have known had been thoroughly rejected by the
courts. His violation of § 6700 was not isolated, but con-
tinuous since his false assurances about the efficacy of his
products were posted on his website. Benson does not
acknowledge his culpability, and, despite any assurances
12                               Nos. 08-1312 and 08-1586

to the district court, he is not likely to stop without an
injunction. The district court adequately examined the
necessary factors and did not abuse its discretion in
concluding that an injunction was necessary. See 

.


 B. First Amendment
   Of course, even though the injunction was properly
granted under 26 U.S.C. § 7408, it still must meet the
standards of the First Amendment. Benson claims that
the injunction is a violation of his constitutional right
to engage in political expression and that the government
is trying to squelch his view that the Sixteenth Amendment
was never ratified. The government contends that the
injunction enjoins false commercial speech, which
receives no First Amendment protection.
  The First Amendment provides broad protection to
speech, but not all speech. Commercial speech receives
lesser protection and false or misleading commercial
speech receives no protection at all. Central Hudson Gas &
Elec. Corp. v. Public Service Comm’n of New York, 

, 562-63 (1980). “For commercial speech to come
within [the protection of the First Amendment], it at least
must concern lawful activity and not be misleading.” 

When deciding if speech is commercial, appropri-
ate considerations include whether: (1) the speech is an
advertisement; (2) the speech refers to a specific product;
and (3) the speaker has an economic motivation for the
speech. Bolger v. Youngs Drug Products Corp., 

,
66-67 (1983).
Nos. 08-1312 and 08-1586                                      13

  There is some debate about what the injunction in this
case actually prohibits. Benson repeatedly asserts that it
prevents him from distributing court opinions, legislative
journals, and other public records, and from speaking
about or expressing an opinion about those documents.
We interpret the injunction as the government did at oral
argument: that it prohibits “false statements made in
connection with the sale of a product.” The government
clarified that the injunction does not prevent Benson
from promoting his opinion in the public square. Neither
is Benson prohibited from selling his book, The Law
That Never Was, according to the government’s brief.2
Therefore, Benson is not prohibited from distributing
his opinion that the Sixteenth Amendment was not
ratified or public documents that he believes support his
claim—both of which are contained in his book.
  What Benson is prohibited from is engaging in unpro-
tected false commercial speech. This interpretation is
evidenced in the language of the injunction the govern-
ment originally requested, prohibiting Benson
    from directly or indirectly, by means of false, deceptive, or
    misleading commercial speech:
        (1) Organizing, promoting, marketing, or
        selling . . . the tax shelter, plan, or arrangement
        known as “The Reliance Defense Package,” or any


2
  While Benson may sell his book, he may not promote its sale
by claiming the ability to rely on it to avoid prosecution as he
used to do on his website, or by making any other false prom-
ises.
14                                Nos. 08-1312 and 08-1586

        other abusive tax shelter, plan or arrangement
        that incites taxpayers to attempt to violate the
        internal revenue laws . . . ;
        (2) Engaging in any conduct subject to penalty
        under IRC § 6700, i.e., making or furnishing, in
        connection with the organization or sale of an
        abusive tax shelter, plan, or arrangement, a state-
        ment [he] know[s] or [has] reason to know is false
        or fraudulent as to any material matter; and
        (3) Engaging in any conduct that interferes with
        the administration and enforcement of the
        internal revenue laws;
(emphasis added). We read the injunction issued in this
spirit. Therefore, the injunction prohibits “only false,
deceptive or misleading commercial speech that is
related to the provision of tax advice.” 

(citing 

).
  Benson was engaged in false commercial speech. As
detailed above, Benson made many false statements
about the benefits of buying his materials. Specifically,
Benson promised potential customers that his products
would free them from taxation and protect them from, or
defend them in the event of, prosecution. These false
statements were made for the purpose of promoting the
sale of his materials and were therefore commercial.
Benson purported to be selling a way to avoid tax liability;
what he was actually selling was a way to increase tax and
criminal liability for failing to pay taxes. That is false
advertising, which may be banned consistent with the
First Amendment. In re R.M.J., 

, 203 (1982)
Nos. 08-1312 and 08-1586                                  15

(“Misleading advertising may be prohibited entirely.”); see
United States v. Schiff, 

, 630 (9th Cir. 2004)
(“An advertisement is fraudulent when it misleads cus-
tomers about the benefit of the offered product.”).
  To the extent that the injunction prohibits Benson
from actually selling the Packages, as opposed to falsely
advertising for their sale, this is appropriate because the
sale of the Packages inherently involves false commercial
speech. Their very names, Reliance Defense Package and
16th Amendment Reliance Package, imply that a
customer may properly rely on the materials he is about
to buy. And since the customer must know that he is
buying information about taxes, he is being made to
believe that he is buying a theory or defense on which
he may rely as it pertains to his taxes. This belief is
false. “Because the injunction at issue merely restrains
[Benson] from advertising, marketing, and selling
materials that are based on false and misleading theories
under the guise of tax advice, [Benson’s] First Amendment
claim fails.” 

.
  Benson argues that he was simply encouraging the
public to take political action. Nothing in this opinion
prohibits him from doing as much. The government
explains in its brief that the injunction “leaves Benson free
to communicate a political message.” Benson may openly
share his views about the ratification of the Sixteenth
Amendment or the tyranny of the federal government and
IRS. It is not illegal for Benson to urge his followers to
take political action. What is illegal, and enjoined, is for
Benson to try to sell something he does not posses—the
16                                    Nos. 08-1312 and 08-1586

golden ticket of tax evasion without consequences. There-
fore, according to our great tradition of tolerating
nutty opinions, the marketplace of ideas remains open to
Benson; the commercial marketplace, however, is appro-
priately limited to speech that is not deceptive. See Virginia
State Bd. of Pharmacy v. Virginia Citizens Consumer Council,

, 771-72 (1976) (First Amendment “does not
prohibit the State from insuring that the stream of com-
mercial information flow cleanly as well as freely”).3


    C. Customer List
   The government contends that the district court should
have required Benson to provide the government with a
list of names and identifying information of persons
who purchased the Reliance Defense Package or the 16th
Amendment Reliance Package from Benson. Benson argues
that the district court acted properly because requiring
him to turn over his customer list is not authorized by
any statute and would violate the First and Fifth Amend-



3
  Because we find that the injunction properly enjoins Benson
from engaging in false or misleading commercial speech, we do
not need to consider the alternate theory of whether the in-
junction is proper because it prohibits commercial “speech
proposing an illegal transaction, which a government may
regulate or ban entirely.” Village of Hoffman Estates v. Flipside,
Hoffman Estates, Inc., 

, 496 (1982) (citations omitted);

(“Appellant’s promotion of his trust
does advocate the attempt to take tax benefits repeatedly
declared invalid by the courts.”).
Nos. 08-1312 and 08-1586                                     17

ments. We review a district court’s decision to grant or
deny an injunction for an abuse of discretion. 

. However, “[a] district court by definition
abuses its discretion when it makes an error of law.” Koon
v. United States, 

, 100 (1996).
  The district court denied the requested customer list
order because it determined the order was not related to
preventing future misconduct by Benson and was
beyond the scope of Benson’s wrongdoing. Whether true
or not, the district court’s observations are not relevant
under the applicable law. District courts possess jurisdic-
tion under 26 U.S.C. § 7402(a) to “issue . . . writs and orders
of injunction . . . and such other orders . . . as may be
necessary or appropriate for the enforcement of the
internal revenue laws.” 4
  The government has identified seven individuals who
have received Benson’s materials and have failed to file
income tax returns. Reliance on Benson’s materials has
and will continue to irreparably harm Benson’s customers,
who have exposed themselves to increased tax and crimi-
nal liability, and the government, which is “not receiving
required tax payments and [is] forced to expend resources
to [identify and] collect the unpaid taxes.” United States



4
  Section 7402(a) makes clear that the remedies it provides “are
in addition to and not exclusive of any and all other remedies
of the United States in such courts or otherwise to enforce”
the tax laws. The government was not required to seek the
customer list through an administrative process as Benson
argues.
18                                Nos. 08-1312 and 08-1586

v. Schulz, 

, 607-08 (2d Cir. 2008). Without a
customer list, it is unlikely that the government will
identify each of Benson’s customers who followed his
advice before the statute of limitations has run. Benson
will not be harmed by identifying his customers and it
will serve the public interest for the government to
receive a full list of Benson’s customers, both to warn
them of the falsity and ineffectiveness of Benson’s
claims, and to enforce the income tax laws. Production of
Benson’s customer list is also proper to monitor compli-
ance with the injunction’s requirement that Benson
“mail . . . a copy of the injunction order to every person
and entity to whom he sold or furnished the [Packages].”
See 

that this is not the first time a promoter of
false tax schemes has been required to divulge his cus-
tomer list. E.g. United States v. Bell, 

, 485 (3d
Cir. 2005); 

; United States v.
Kotmair, Civ. No. WMN-05-1297, 

at *7-8
(D. Md. Nov. 29, 2006), aff’d, 234 Fed. Appx. 65, 65-66 (4th
Cir. 2007); United States v. Harkins, 

,
1182 (D. Or. 2004); United States v. Stephenson, 

1054, 1061 (W.D. Wash. 2004).
  Such an order will not infringe on the First Amendment
rights of Benson’s customers. Benson’s attempt to analo-
gize this case to NAACP v. Alabama ex rel. Patterson, 

(1958) is misplaced. Benson operated an Internet
marketing scheme, not a membership organization. As
in 

, Benson’s “operation was
primarily a commercial enterprise, not a political group.
Producing a customer list does not offend the First Amend-
ment because commercial transactions do not entail the
Nos. 08-1312 and 08-1586                                19

same rights of association as political meetings.” Benson’s
claim that divulging his customer list will violate his
customers’ right to receive and read what they choose
also falls short. The government acknowledges that
Benson’s customers are free to receive, possess, read, and
speak about materials from Benson and others
challenging the validity of the Sixteenth Amendment or
protesting the federal tax system. Additionally, as the
government suggests, we expect the district court to enter
an appropriate protective order to prevent public disclo-
sure of the customers’ identities.
  Finally, Benson’s Fifth Amendment claim need not
delay us because the government asked the district court
to issue an order of immunity in connection with Benson’s
compelled act of producing his customer list. The gov-
ernment’s brief indicates that it remains open to this
solution and we expect the district court to issue such an
order upon remand, thereby eliminating Benson’s Fifth
Amendment claim.


                   III. CONCLUSION
  For the reasons discussed above, we A FFIRM the injunc-
tion imposed by the district court, but R EVERSE as to the
customer list, and R EMAND for further appropriate pro-
ceedings.




                           4-6-09