## Facts

- Daniel J. Gleason provided tax preparation and representation services individually and through Tax Toolbox, Inc., and My Tax Man, Inc.
- Gleason developed and marketed the “Tax Toolbox,” a package of materials promoting home-based business strategies to reduce taxes.
- Marketing materials asserted consumers could quickly convert personal expenses into “legal and audit-proof” business deductions and “magically” erase taxes through deductions tied to a new home-based business.
- The materials promoted deductions for items characterized as personal expenses, including weddings, college, travel, meals, golf, cars, medical expenses, children’s allowances, and household expenses.
- The Tax Toolbox included suggested arrangements such as “employment agreements” among spouses and children to support claimed deductions.
- The IRS investigated and concluded that Gleason promoted abusive tax schemes and made false or fraudulent statements about tax benefits.
- The United States sought injunctive relief under 26 U.S.C. § 7408 based on conduct subject to penalty under 26 U.S.C. § 6700.

## Issues

1. Whether the district court clearly erred in finding a § 6700 violation where the government did not introduce the entire Tax Toolbox into evidence, relying instead on relevant portions, descriptions, and testimony.
2. Whether the permanent injunction, including a prohibition on providing services to Tax Toolbox customers, was overbroad or unduly restricted Gleason’s ability to earn a living under § 7408.

## Decision

- The Sixth Circuit affirmed the district court’s permanent injunction in full.
- The court held the record contained more than sufficient evidence—through excerpts, descriptions, and testimony—to support findings that Gleason made false or fraudulent, material statements about tax benefits in connection with selling the Tax Toolbox.
- The court upheld the prohibition on servicing Tax Toolbox customers, concluding the injunction was appropriately tailored to prevent recurrence and did not unduly burden Gleason’s livelihood.

## Legal Principles

- Under 26 U.S.C. § 6700, liability may be established when a promoter, in connection with selling a tax shelter or plan, makes materially false or fraudulent statements about the allowability of deductions or credits.
- For § 6700, a statement is material when it would have a substantial impact on a purchaser’s decision to buy or participate.
- Appellate review of factual findings supporting a § 6700 determination is for clear error; findings will be upheld if plausible in light of the whole record.
- Under 26 U.S.C. § 7408, a court may enjoin conduct subject to penalty under § 6700 when appropriate to prevent recurrence, and may craft restrictions aimed at stopping continuation of the proven abusive scheme without imposing unnecessary limits on lawful work.
- The government need not introduce an entire marketed product into evidence if relevant portions, descriptions, and testimony adequately establish the content and false promotional claims.

## Conclusion

The Sixth Circuit upheld a permanent injunction against a tax-scheme promoter, ruling that partial excerpts and witness descriptions were sufficient to prove materially false claims under § 6700 and that restricting the promoter from servicing prior customers was a properly tailored measure under § 7408 to prevent continued abusive conduct without foreclosing legitimate tax practice.


United States v. Gleason, 432 F.3d 678 (6th Cir. 2005)