## Facts

- Thurston Paul Bell operated tax-protester businesses and websites selling “tax advice” and related products and services for a fee.
- Bell marketed the “Section 861” or “U.S. Sources” theory, asserting that U.S. citizens’ domestic wages were not taxable “gross income” under the Internal Revenue Code.
- Courts had repeatedly rejected the Section 861 theory as legally baseless.
- Bell provided customized assistance to customers, including drafting letters, pleadings, and other materials for submission to the IRS and state tax agencies.
- Customers used Bell’s methods to file returns seeking unwarranted refunds; between May 2000 and February 2002, over 400 customers paid Bell about $60,000 through PayPal.
- The United States sued under 26 U.S.C. §§ 7402(a) and 7408 to enjoin Bell from promoting and selling the scheme and from assisting others in violating the internal revenue laws.
- The district court entered a preliminary injunction barring Bell from promoting the “U.S. Sources” argument and other abusive arrangements through false, deceptive, or misleading commercial speech, and later converted it into a permanent injunction, including a requirement that Bell provide the government a customer list.

## Issues

1. Whether the permanent injunction against promoting and selling Bell’s tax-avoidance theory violated the First Amendment as an unconstitutional prior restraint.
2. Whether Bell’s communications were protected political speech or unprotected false or misleading commercial speech.
3. Whether noncommercial material could be enjoined as aiding and abetting tax-law violations, and whether the district court wrongly relied on Brandenburg-style “incitement” language.
4. Whether compelled disclosure of Bell’s customer list violated the First Amendment freedom of association.

## Decision

- The Third Circuit affirmed the permanent injunction, subject to a narrowing construction.
- The court held that Bell’s promotion and sale of the Section 861 theory constituted false and misleading commercial speech and could be enjoined consistent with the First Amendment.
- The court concluded that noncommercial website content could also be restrained to the extent it aided and abetted violations of the tax laws.
- The court rejected Bell’s claim that the injunction was invalid merely because it operated prospectively; injunctions against false commercial speech are permissible.
- The court determined the district court’s Brandenburg-like “incite” wording was unnecessary and potentially confusing; the injunction was construed as targeting false commercial speech and facilitating tax-law violations rather than Brandenburg incitement.
- The court upheld the customer-list disclosure requirement as a reasonable, appropriately tailored tool to enforce the tax laws and investigate affected taxpayers.

## Legal Principles

- False or misleading commercial speech is not protected by the First Amendment and may be prohibited, including through injunctive relief.
- Commercial speech does not gain constitutional protection by being packaged with token political commentary; “inextricably intertwined” arguments fail when the commercial component is independently regulable.
- Speech that aids and abets unlawful conduct may be enjoined when authorized by statute and supported by findings that the speech facilitates violations.
- Injunctions are not categorically unconstitutional prior restraints; constitutionality depends on the type of speech and the scope of the restraint.
- Brandenburg’s “imminent lawless action” framework is not required to support an injunction directed at false commercial speech and facilitation of unlawful tax conduct.
- Compelled disclosure of customer identities may be ordered when the government shows a compelling enforcement interest and the requirement is narrowly focused on investigating and remedying unlawful activity.

## Conclusion

The Third Circuit upheld a permanent injunction under 26 U.S.C. §§ 7402(a) and 7408 barring Bell from marketing and selling a fraudulent tax scheme and requiring disclosure of customers, construing the order as a permissible restraint on false commercial speech and conduct that facilitates tax-law violations rather than a broad incitement-based restriction.


United States v. Bell, 414 F.3d 474 (3d Cir. 2005)