IRS vs. William E. Benson

7/31/2019 IRS vs. William E. Benson

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Nos. 08-1312 and 08-1586

UNITED STATES COURT OF APPEALSFOR 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 Cross-

Appellee William J. Benson

500 W. Bradley Rd., C-208

Fox Point, WI 53217

(414) 446-4264


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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 violatingthe First Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The injunction absolutely infringes on Bensons First Amendment

rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

THE GOVERNMENTS CROSS APPEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

The District Court Did Not Err In Refusing To Order Benson To Provide His

Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

A. The Governments request for Bensons customer list does

not fall within the District Courts 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


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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

Fieldv. 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

United States v. Raymond,

228 F.3d 804 (7th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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

Practitioners 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 Bensons Opening Brief. This failure violates the Courts

admonition that: The appellees brief should squarely meet the appellants

points. Practitioners 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 Bensons 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 ofstare decisisby holding Fieldv. Clark, 143

U.S. 649 (1892), Leser v. Garnett, 258 U.S. 130 (1922) and Coleman v. Miller,


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307 U.S. 433 (1939) preclude such review. Bensons argument is set forth at

pp. 13-16 of his Opening Brief and nowhere rebutted by the United States.

The United States also forfeits Bensons 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. (Bensons Opening

Brief, id.)

The United States also forfeits Bensons argument that the District

Courts finding that his statement was false as a matter of law violated the

holdings ofSandstrom 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);


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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). (Bensons 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 Bensons arguments that: 1) the District Court in

essence directed a verdict against Benson as to an essential element of the

governments cause of action (Bensons 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 (Bensons

Opening Brief, p. 23).

Response to Arguments Made by United States.

Benson has not organized and sold a plan or arrangementwithin 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,


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

5

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. (Bensons 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

purchasers 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

answerand let the people preserve our Constitution. We the people

must take political actionin 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.


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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

Bensons Opening Brief, pp. 21-45).

The United States argues at p. 35 of its brief that Bensons 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 Bensons 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


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7

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 Bensons 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 Bensons audience, who files

tax returns, used the material to petition for redress of grievance (Doc. 74, p. 4,

11). Perhaps Bensons material incited him to do that, but petitioning for

redress of grievance does not constitute illegal conduct. Doc. 74 also

establishes that one of Bensons audience, who files tax returns, obtained the

material for the sole purpose of educating himself as to Bensons opinion, and

has never used the material for any other purpose (Doc. 74, pp. 4-5, 12). This


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8

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 taxbenefits 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 Bensons 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 Constitutionwhich was adopted in 1913

and permits Congress to impose federal income taxeswas 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


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9

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 Courts 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, Bensons 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 decisisissue, 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, Bensons 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


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10

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. (Bensons

Opening Brief, pp. 16-21).

The United States next argues the District Courts refusal to exercise equity

jurisdiction was valid because such determination is based on the courts

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 Bensons statement was true or

false. The United States alleges the statement is false. Bensons defense is the

statement is true. Benson was not allowed to present this defense. The

argument of the United States is false.


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11

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. Bensons conviction, as this Court well knows, did

not involve a failure to file based on anything having to do with the Sixteenth

Amendment. SeeUnited 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 (SeeBensons 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 non-

justiciable and cases determining a factual issue after full briefing and

considered opinion. Only the latter is entitled to stare decisisprecedent. 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


21/49

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 noteasy to become sane."

12

the United States position correlates nicely with its refusal to address Bensons

stare decisisargument, 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 thosestatements is immaterial.

The United States asserts at p. 47 of its brief that it is undisputed that

Bensons 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 Bensons 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


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13

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 Bensons 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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14

The United States observes that the record is devoid of proof as to why the

decisions of Doyle, or any other non-filer, shouldnt be attributed to Bensons

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 Bensons 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 fromviolating 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 Bensons urging political action into conduct prohibited at

I.R.C. 6700, and if it does, I.R.C. 6700 is unconstitutional in its application.

(SeeBensons Opening Brief). Protesting the governments 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. Bensons speaking out on the Internet about what he


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15

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

Bensons 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. (Bensons 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 Bensons political action speech, the statutes

transcend conduct prohibited by the First Amendment.

The injunction absolutely infringes on Bensons FirstAmendment 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 Bensons speech and documents conclusively showing the

Sixteenth Amendment was not constitutionally passed by the requisite thirty-

six states. Bensons Opening Brief lists the documents contained in his

material. (See Bensons 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 Courts opinion in his criminal case, another public record. Benson has


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16

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,

Kaunand 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


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17

classified, do not involve national security, and their authenticity and

trustworthiness are beyond cavil. SeeFED.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 Bensons 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


27/49

3. United States Brief at p. 50.

18

action be taken. [Citation omitted.] There is nothing in Denniswhich 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 Brandenburgtest

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 Bensons readers take

no action at all, much less dive into imminent lawless action.

The United States next argues Bensons 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 Bensons lifes work3 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 Bensons book as the


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19

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 non-

filing 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 Bensons 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.


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20

There is no economic motive involved in Bensons 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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21

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 reOrthopedic 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 Bensons 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


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22

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; Bensons 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 Courts

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 self-

authenticating, 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


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23

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 Bensons 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 Bensons speech and distribution of documents are

protected by the First Amendment. The plethora of case law cited in Bensons

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 Bensons 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 meaning-

less words on a worthless piece of paper?

It was reversible error for the District Court to grant the United States

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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24

judgment of the District Court should be reversed and the case remanded with

instructions to dismiss the Complaint.


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25

THE GOVERNMENTS CROSS APPEAL

The District Court Did Not Err In Refusing To Order Benson To ProvideHis Customer List.

A. The Governments request for Bensons customer list does not fallwithin the District Courts authority under I.R.C. 7402(a).

The United States admits at p. 67 and p. 73 of its brief that the request for

Bensons 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 IRSs

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 Courts holding in

Marshall v. Barlow's, 436 U.S. 307 (1978). Mobil, 543 F.Supp. at 517-18.


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26

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, suchas 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


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27

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 thecommittee 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 bankrecords, 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


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28

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

30

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. SeeExhibit 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 Bensons Reliance Package. SeeIndictment, 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 self-

incrimination 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


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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 putinto 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.

31

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.

Bensons 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 Bensons

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

Bensons 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 Bensons

customers do not outweigh the Governments need for his customer list. The

United States is mistaken.5


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32

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 relationshipbetween 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,particularlywhere 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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33

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

Bensons material failed to file tax returns or pay the tax. (SeeDoc. 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, Kaunand 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.


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34

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 Bensons 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 andopinions 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 tohave 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


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35

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 Bensons 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 isprotected 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 ofPickering), cert. denied, 474 U.S. 1101 (1986).


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36

The IRSs contemplated investigation of citizens for the mere possession of

Bensons 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 freesociety. 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 inmaterial 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-AppelleeWilliam 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.



and Cross-AppelleeWilliam 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. DicksteinAttorney 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]



and Cross-Appellee

William J. Benson

IRS vs. William E. Benson

Documents

Transcript of IRS vs. William E. Benson