228 F.3d 804 (7th Cir. 2000)
United States of America, Plaintiff-Appellee,v.Robert R. Raymond, individually and doing  business as Morningstar Consultants,  and Robert G. Bernhoft, individually and  doing business as Morningstar Consultants, Defendants-Appellants.
No. 99-4024
In the  United States Court of Appeals  For the Seventh Circuit
Argued June 2, 2000Decided September 26, 2000

Appeal from the United States District Court  for the Eastern District of Wisconsin.  No. 97-C-207--Charles N. Clevert, Judge.[Copyrighted Material Omitted]
Before Flaum, Chief Judge, and Evans and Williams,  Circuit Judges.
Flaum, Chief Judge.


1
Robert Raymond and Robert  Bernhoft appeal the district court's entry of a  permanent injunction preventing them from  engaging in a number of activities related to the  sale of a collection of materials known as the  "De-Taxing America Program." For the reasons  stated herein, we affirm.

I.  BACKGROUND

2
Raymond and Bernhoft are active members of the  U.S. Taxpayers Party and were the chief  participants in a business known as Morningstar  Consultants ("Morningstar"). Between January and  June of 1996, Morningstar ran a weekly  advertisement in a local Wisconsin newspaper  under the caption "Just Say No." The Just Say No  advertisement contained the following statements: 1) "Federal, State & Social Security Taxes are  Voluntary;" and 2) "The Internal Revenue Service  has no Statutory Authority to: Compel you to file  a Tax Return, Require withholding from your  paycheck, Levy or Lien your property, Audit your  Books & Records." This advertisement was part of  an effort by Morningstar to market the "De-Taxing  America Program" (the "Program").


3
The Program consists of three volumes of  materials. These materials contain information  presenting the view that, among other things, the  federal income tax is unconstitutional and that  persons who are not federal employees or  residents of the District of Columbia are not  legally required to pay federal income tax. In  addition to providing information regarding  general tax-protest principles, the Program  includes several forms and instructions to guide  the purchaser through the process of "de-taxing."  Purchasers are informed that if they complete the  materials and directions in the Program they will  be "withdrawn" from the jurisdiction of the  federal government's taxing authorities and the  social security system and will no longer be  required to pay federal taxes.


4
The materials in the Program are pre-printed  with the purchaser's name and various personal  information. The Program instructs the purchaser  to, among other things, send pre-printed letters  and numerous Freedom of Information Act ("FOIA")  requests to various government agencies,  including the Internal Revenue Service ("IRS"),  the Social Security Administration ("SSA") and  the Attorney General. Program customers are  instructed to file W-4 forms with their employers  asserting that they are exempt from federal  taxation and requesting that the employers stop  withholding federal income tax and social  security payments from their paychecks. The  Program also informs the purchaser that since any  previous tax payments were made entirely  voluntarily, he or she may request a refund of  taxes paid in prior years. The Program then  directs the purchaser to file several forms with  the IRS requesting a refund of taxes paid over  the previous three years. The Program also  provides the purchaser with instructions on how  to complete future tax returns to reflect that  the purchaser has not incurred any tax liability  in the previous year and consequently does not  owe any federal income or social security taxes.  The Program represents that all of the activities  it instructs its purchasers to pursue are legal  and that it is legal for purchasers to cease  paying federal taxes after completing the  instructions provided in the Program materials.


5
Morningstar sold the Program to fifty-five  customers in several different states for a  negotiated price ranging from $445 to $2,600 and  earned at least $34,578 from the sale of the  Program. At least 12 Program customers informed  their employers that they were exempt from  withholding and requested that the employers stop  withholding federal tax payments from their  paychecks. At least 20 Program customers failed  to file income tax returns for either the 1995,  1996 or 1997 tax year, which the IRS estimates  resulted in a loss of $691,731 to the United  States. In addition, the IRS estimates that it  spent a total of 291 hours responding to more  than 124 FOIA and Privacy Act requests sent by  the appellants or their customers. The IRS also  estimates that it spent more than 500 hours on  administrative functions such as audits,  responding to frivolous W-4 forms, and collecting  delinquent taxes as a result of the conduct of  persons who purchased Program materials.


6
By the summer of 1996, the appellants had  stopped selling and promoting the Program. On  November 15, 1996, the IRS informed the  appellants that an investigation of their  involvement with the sale of the Program had been  completed and that the IRS would pursue penalties  and a civil injunction as a result of this  investigation. On March 3, 1997, at the request  of IRS Assistant District Counsel Edward G.  Langer, the Attorney General filed a civil suit  under 26 U.S.C. sec. 7408, requesting a permanent  injunction against the appellants' sale of the  Program and against the appellants' participation  in any conduct intended to interfere with the  enforcement of the internal revenue laws.1


7
The suit was referred to a magistrate judge  where the Government moved for summary judgment.  The magistrate judge issued a report recommending  that the Government's motion be granted and a  permanent injunction be entered against the  appellants.2 The magistrate's report also  informed the parties that they had ten days to  submit objections to the report and that failure  to file objections within that time period "shall  result in a waiver of your right to appeal all  factual and legal issues." The appellants  requested an extension of time to file their  objections that the district court granted.  However, the appellants did not file their  objections until two days after the extended  deadline. Because the appellants' objections were  filed late, the district court issued an order  adopting the magistrate's recommendation in its  entirety without review. The appellants then  filed a motion to reconsider that the district  court denied because it found there was no  excusable neglect for the appellants' late filing  of their objections. The district court then went  on to state that it would have adopted the  magistrate's recommendation even if the  appellants had filed their objections in a timely  fashion. Raymond and Bernhoft now appeal.

II.  DISCUSSION
A.  Jurisdiction

8
The appellants first assert that the district  court had no jurisdiction to hear this case  because the Secretary of the Treasury had not  authorized suit against the appellants as  required by the provisions of 26 U.S.C. sec.  7408.3


9
The appellants assert that the district court  receives jurisdiction from sec. 7408 to enter an  injunction to enforce a violation of sec. 6700.  However, the district court in fact is granted  jurisdiction to enter injunctions to enforce the  provisions of the Internal Revenue Code ("IRC"),  26 U.S.C. sec. 1 et seq., through the broad grant  of power authorized by sec. 7402(a).4 Section  7402(a) explicitly grants district courts the  authority to issue injunctions to enforce the tax  laws and states that all remedies that are  normally available to the United States to  enforce its laws are not limited by that section.


10
Section sec. 7408, on the other hand, provides  a cause of action for injunctive relief to the  United States against a party suspected of  violating the tax laws that is independent of any  other cause of action. The specific provisions of  that section, including the provision that the  suit must be authorized by the Secretary of the  Treasury or his delegate, are procedural and not  jurisdictional. Therefore, even if we were to  conclude that the United States had not received  proper authorization from the Secretary of the  Treasury, that fact would not affect the  jurisdiction of the district court.


11
However, we conclude that this suit was  properly authorized by a delegate of the  Secretary of the Treasury. On January 28, 1997,  Edward G. Langer, Assistant District Counsel for  the Internal Revenue Service, wrote a letter to  Loretta C. Argrett, Assistant Attorney General  for the Tax Division of the Department of  Justice, requesting and authorizing that the  Justice Department commence an action to seek  injunctive relief against the appellants under 26  U.S.C. sec.sec. 7402 and 7408. Assistant District  Counsel Langer submitted a declaration to the  district court asserting that he was duly  authorized by the Secretary of the Treasury to  request that this action be commenced. The  appellants had ample opportunity to produce  evidence that contradicts this declaration and  have not done so. Therefore, we consider his  declaration sufficient evidence of Langer's  authority to authorize this suit. See First  National Bank v. Insurance Co. of N. Amer., 606  F.2d 760, 768 (7th Cir. 1979) ("It is a general  rule of summary judgment procedure that denying  the allegations of affidavits supporting a motion  for summary judgment does not, Ipso facto, create  a genuine issue of material fact. Mere denials  unaccompanied by statements of any facts which  would be admissible in evidence at a hearing, are  not sufficient to raise a genuine issue of  fact.") (citation omitted); Wang v. Lake  Maxinhall Estates, Inc., 531 F.2d 832, 835 n.10  (7th Cir. 1976) (stating that at the summary  judgment stage uncontradicted affidavits are  taken as true). Thus, we conclude that the  district court had jurisdiction to hear the  Government's claims against Bernhoft and  Raymond.5

B.  Waiver

12
The Government argues that because the  appellants failed to file timely objections to  the magistrate's report, they have waived their  right to appeal all factual and legal issues to  either the district court or to this Court.


13
In Thomas v. Arn, 474 U.S. 140, 155 (1985), the  Supreme Court held that a circuit rule permitting  both the district court and the court of appeals  to refuse to review a magistrate's report absent  timely objection does not violate the  Constitution, provided that the parties are given  clear notice that they may request an extension  of time for filing objections and that their  failure to file timely objections may result in  their inability to appeal the magistrate's  recommendation. The Court then noted that  "because [this] rule is a nonjurisdictional  waiver provision, the Court of Appeals may excuse  the default in the interests of justice." Id. In  Video Views, Inc. v. Studio 21, Ltd., 797 F.2d  538 (7th Cir. 1986), we adopted such a rule in  this Circuit, concluding that failure to file  objections to a magistrate's report with the  district judge waives the right to appeal but  that the party who failed to object has "the  opportunity to demonstrate that it had sufficient  cause for failing to object, such that waiver  should not be applied." Id. at 539-40; see also  Provident Bank v. Manor Steel Corp., 882 F.2d  258, 261 (7th Cir. 1989). In Hunger v. Leininger,  15 F.3d 664 (7th Cir. 1994), we clarified our  standard for determining when wavier should be  found because objections to a magistrate's report  are filed late. We concluded that waiver should  not be applied where "the filing [of objections]  was not egregiously late and caused not even the  slightest prejudice to the [opposing party]." Id.  at 668; see also United States v. Robinson, 30  F.3d 774, 777 (7th Cir. 1994) (holding that the  appellant had not waived his right to appeal  where he filed objections to a magistrate's  report two days late and the Government was not  prejudiced by the late filing).


14
In this case, the appellants filed their  objections to the magistrate's report only two  days late. The objections were actually mailed on  the day that they were due and the appellants  claim that their error was based on a good faith  misapprehension of the law--they thought the  objections would be considered filed on the day  they were mailed rather than the day they were  received. In addition, the appellants were  scrupulous in meeting all of the other deadlines  in this case. The Government has identified no  prejudice that it incurred because of the late  filing of the appellants' objections, and those  objections were not egregiously late. Therefore,  we decline to conclude that the appellants have  waived their right to appeal, and we now address  the merits of that appeal.

C.  Summary Judgment

15
The district court granted summary judgment for  the Government and entered a permanent injunction  against the appellants forbidding them from  engaging in certain activities that incited  others to violate the tax laws. We review the  district court's decision to grant summary  judgment de novo, drawing all reasonable  inferences in favor of the non-moving party. See  Anderson v. Liberty Lobby, Inc., 477 U.S. 242,  255 (1986). Summary judgment is appropriate only  if there is no genuine dispute of material fact  and judgment is appropriate as a matter of law.  Fed. R. Civ. P. 56(c); see Doe v. Cunningham, 30  F.3d 879, 882 (7th Cir. 1994).


16
The district court entered this injunction under  26 U.S.C. sec. 7408. Section 7408 grants a  district court the authority to enter a permanent  injunction against a defendant if it finds "(1)  that the person has engaged in any conduct  subject to penalty under section 6700 . . ., and  (2) that injunctive relief is appropriate to  prevent recurrence of such conduct." 26 U.S.C.  sec. 7408(b); United States v. Kaun, 827 F.2d  1144, 1147 (7th Cir. 1987). The appellants argue  that there is a genuine issue of material fact as  to whether the Government proved each of these  elements and that, therefore, the district court  erred in entering summary judgment for the  Government.

1. Violation of 26 U.S.C. sec. 6700

17
In order to establish a violation of 26 U.S.C.  sec. 6700, the Government must prove "(1) that  the defendant was involved in an abusive tax  shelter, and (2) that the defendant made  statements about the tax benefits investors would  receive if they participated in the shelter which  the defendant knew or had reason to know were  false or fraudulent." Kaun, 827 F.2d at 1147.


18
a.  Tax shelter


19
Under sec. 6700 any "plan or arrangement"  having some connection to taxes can serve as a  "tax shelter" and will be an "abusive" tax  shelter if the defendant makes the requisite  false or fraudulent statements concerning the tax  benefits of participation. See 26 U.S.C. sec.  6700(a)(1)(A); Kaun, 827 F.2d at 1147.6 In  United States v. Kaun, we held that the  definition of a tax shelter in sec. 6700 is  "clearly broad enough to include a tax protester  group." Kaun, 827 F.2d at 1148. In that case, we  concluded that the Wisconsin Society for Educated  Citizens ("WSEC"), an organization whose primary  purpose was to incite members to evade the tax  laws by engaging in a variety of activity  disruptive to the IRS including the filing of  false or fraudulent returns, was a plan or  arrangement that operated as an abusive tax  shelter as defined by sec. 6700. Id. at 1149.


20
In this case, the appellants participated in  Morningstar Consultants in order to promote and  sell the De-Taxing America Program. The Program  purported to provide step-by-step instructions  for "removing" the purchaser from the federal  income and social security tax systems. The  Program materials assured readers that the  federal government is without authority to tax  them and that by following the instructions  outlined in the Program individuals can legally  refuse to pay federal income and social security  tax. Several of Morningstar's customers took  steps to evade the federal tax laws and filed  false or fraudulent income tax returns relying on  the instructions and assertions made in the  Program materials. As with the WSEC in Kaun, we  conclude that the Program is a tax shelter as  defined by sec. 6700 and that the appellants'  sale of the Program to over 55 customers in  several states through the business known as  Morningstar Consultants is the sale of an  interest in a plan that constitutes a tax shelter  as defined by sec. 6700(a)(1)(B).


21
b.  False statements concerning tax benefits


22
In order to prove a violation of sec. 6700, the  Government must also show that the appellants  made false or fraudulent statements concerning  the tax benefits of participating in the plan or  arrangement. 26 U.S.C. sec. 6700(a)(2)(A); Kaun,  827 F.2d at 1147. In Kaun, the defendant held  WSEC meetings where he encouraged members and  potential members to file frivolous FOIA  requests, request that their employers forego  withholding federal taxes from their paychecks,  file false tax returns, and file fraudulent  requests for tax refunds. Id. at 1149. We held  that this activity was sufficient to satisfy the  false or fraudulent statements element of sec.  6700.


23
In this case, there is a disputed question of  fact concerning whether the appellants held  meetings where they made statements to Program  customers and potential customers that encouraged  them to evade federal tax laws. However, it is  undisputed that from January through June of  1996, the appellants ran the "Just Say No"  advertisement in a local Wisconsin paper in an  effort to induce potential customers to purchase  the De-Taxing America Program. In that  advertisement, the appellants made the  representations that payment of income tax is a  voluntary activity and that individuals cannot be  legally compelled to file tax returns or submit  to tax investigations or penalties. The  advertisement directed readers to contact  Morningstar Consultants "for more information"  regarding these assertions. Upon contacting  Morningstar, callers were encouraged to purchase  the De-Taxing America Program, and several  individuals in fact purchased the Program from  the appellants.


24
The statements appellants made in the Just Say  No advertisement are clearly false  representations concerning the government's  authority to tax its citizens. See, e.g., United  States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir.  1993) (stating that the argument that an  individual is a sovereign citizen of a state who  is not subject to the jurisdiction of the United  States and not subject to federal taxing  authority is "shop worn" and frivolous); United  States v. Sloan, 939 F.2d 499, 500-01 (7th Cir.  1991) (same); Coleman v. Commissioner of Internal  Revenue, 791 F.2d 68, 70-72 (7th Cir. 1986)  (stating that the assertions that the federal  income tax is not a tax on all income, that wages  are not income, and that a tax on wages is  unconstitutional are "tired arguments" that are  "objectively frivolous"); Kile v. Commissioner of  Internal Revenue, 739 F.2d 265, 267-68 (7th Cir.  1984) (noting the "universal and longstanding  rejection" of the argument that wages are not  subject to income tax and that the federal income  tax is unconstitutional). These statements made  in conjunction with the sale of the Program  operated as false assurances that refusing to pay  taxes in accordance with the Program's  instructions is a lawful activity for which the  government has no legal authority to punish  Program subscribers. As the district court noted,  the appellants are intelligent men. Bernhoft has  recently graduated from the University of  Wisconsin Law School. Raymond has run his own  business for twenty years and was the U.S.  Taxpayers Party's candidate for the United States  Senate. We attribute to both appellants a basic  knowledge of the law such that they should  reasonably be aware that their personal belief  that paying taxes is a voluntary activity does  not represent the current state of the law.  Therefore, we conclude that the statements the  appellants made in the Just Say No advertisement  were representations concerning the tax benefits  of purchasing and following the De-Taxing America  Program that the appellants reasonably should  have known were false.


25
Because the appellants participated in the sale  of the abusive tax shelter that is the De-Taxing  America Program and because the appellants made  false or fraudulent statements concerning the  benefits to be derived from the Program, we  conclude that the district court did not err in  finding that the appellants' conduct violated 26  U.S.C. sec. 6700.

2.  Likelihood of Recurrence

26
The appellants next contend that the district  court erred when it found that a permanent  injunction was necessary to prevent the  appellants from engaging in unlawful activity in  the future. They assert that because they stopped  selling the Program before they were even aware  that the government was investigating their  activities and because they submitted  declarations to the district court that they  would not sell the Program in the future, the  district court erred in concluding that there was  a significant chance that the appellants would  engage in unlawful activity such that a permanent  injunction was required.


27
In order to determine whether there is a  significant likelihood that the appellants'  involvement in the illegal activity at issue in  this case will reoccur, we examine the totality  of the circumstances surrounding the appellants  and their violation of the law. See Kaun, 827  F.2d at 1149. We look at factors such as: (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 transaction;" (4) "the defendant's  recognition of his own culpability;" and (5) "the  sincerity of his assurances against future  violations." Id. at 1149-50; see also United  States v. W.T. Grant Co., 345 U.S. 629, 633  (1953).


28
The appellants first challenge the district  court's finding that their activities  significantly harmed the United States. The  appellants assert that the district court erred  when it chose to believe the assertions of IRS  investigators as to the amount of loss suffered  by the United States as a result of the refusal  of Program customers to pay taxes, the numerous  FOIA and Privacy Act requests that were prompted  by Program instructions to which various federal  agencies were required to respond, and the  investigation and collection activities that the  IRS was required to pursue in response to Program  customers' refusal to pay taxes, requests for  refunds and requests that taxes not be withheld  from their paychecks. The appellants note that no  criminal charges were pressed against them in  part because the Assistant United States Attorney  in charge of prosecuting their case determined  that the loss to the government was not  significant enough to merit a criminal  prosecution. The appellants assert that this fact  creates a genuine issue of material fact as to  whether the loss was significant enough to merit  a permanent injunction.


29
The Government presented the declarations of  several Program customers who admitted failing to  file income tax returns, filing requests for  refunds to which they were not entitled, and  submitting numerous FOIA requests. In addition,  the Government presented the declarations of IRS  officers regarding the administrative burden  placed on the IRS when it was required to respond  to Program customers' information requests,  investigate Program customers' unlawful tax  evasion activities, and engage in collection  efforts for taxes that were not paid by Program  subscribers. While disputes about the amount of  loss make it difficult to determine at this stage  the actual loss suffered by the United States as  a result of the appellants' activities, it is  clear from the record that a significant loss did  in fact result. The fact that the Justice  Department did not consider this loss worthy of  criminal sanction does not contradict this  determination. See United States v. Palumbo  Brothers, Inc., 145 F.3d 850, 860 (7th Cir. 1998)  (noting that conduct that violates civil labor  laws must be analyzed independently to determine  whether it also merits criminal sanctions).  Therefore, we conclude that the district court  did not err when it found that the appellants'  activities in selling and promoting the Program  caused a loss to the government sufficient to  support the need for a permanent injunction.


30
Appellants do not dispute that they were the  primary figures in Morningstar Consultants or  that Morningstar's chief purpose was to sell the  De-Taxing America Program. Therefore, we conclude  that the appellants were significant participants  in the sale of the "abusive tax shelter" that is  the subject of this case. Furthermore, when  customers contacted Morningstar to purchase the  Program, they were asked to provide personal  information that would be included on the pre-  printed forms that were part of the Program  materials. Thus, we also conclude that the  appellants acted with the intent that Program  purchasers follow the instructions provided in  the Program materials and submit the forms and  letters contained therein. In addition, the  appellants' activities were not an isolated  instance of misconduct but consisted of the sale  of the Program to at least 55 persons over a six  month period.


31
Moreover, the appellants have expressed no  remorse concerning their participation in the  unlawful activities at issue here. Throughout the  documents they presented to the district court  and during oral argument before this Court, the  appellants consistently held to their view that  federal tax laws are unconstitutional and that  the government has no authority to compel the  payment of federal taxes. In Kaun, we concluded  that the fact that the defendant "steadfastly  maintained his total lack of culpability" was an  indication that he would likely engage in similar  unlawful activity in the future in the absence of  an injunction prohibiting such activity. 827 F.2d  at 1150. This case does differ from Kaun, in that  the appellants here stopped selling the Program  before the IRS investigation of their activities  had come to fruition and have asserted before the  district court that they will not engage in such  activities in the future.


32
We recognize that the defendants had not been  involved in the challenged activity for several  months before the action to enjoin this activity  was commenced. However, while voluntary cessation  of unlawful activity and promises not to engage  in that activity in the future are relevant to  determining the necessity of an injunction, they  do not lead inevitably to the conclusion that an  injunction is unnecessary. See W.T. Grant Co.,  345 U.S. at 633 ("Along with its power to hear  the case, the court's power to grant injunctive  relief survives discontinuance of the illegal  conduct."); see also City of Mesquite v.  Aladdin's Castle, Inc., 455 U.S. 283, 289 (1982);  Milwaukee Police Ass'n v. Jones, 192 F.3d 742,  748 (7th Cir. 1999). The appellants continue to  be active members of the U.S. Taxpayers Party and  continue to forcefully advocate their beliefs  regarding the alleged dubious legality of the  federal tax system. In addition, they have  refused to acknowledge that their conduct in this  matter was anything other than perfectly lawful.  In light of these facts, we conclude that their  claims that they will not engage in unlawful  activity in the future are insufficient to  overcome the other circumstances that indicate  that there is a significant likelihood that the  appellants will again incite others to violate  the tax laws. See Haywood v. North Am. Van Lines,  Inc., 121 F.3d 1066, 1071 (7th Cir. 1997)  ("[C]onclusory allegations and selfserving  affidavits, if not supported by the record, will  not preclude summary judgment."); Slowiak v. Land  O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.  1993) ("Self-serving affidavits without factual  support in the record will not defeat a motion  for summary judgment."). Accordingly, the  district court was justified in finding that a  permanent injunction was necessary under these  circumstances.

D.  First Amendment

33
The appellants finally argue that the injunction  entered against them by the district court  violates their right to freedom of speech. The  appellants contend that their activities  concerning the promotion and sale of the De-  Taxing America Program constitute political  advocacy that is protected by the First Amendment  and that the district court's injunction is an  unconstitutional prior restraint on political  speech.


34
The injunction issued by the district court in  this case is virtually identical to the  injunction at issue in Kaun.7 See 827 F.2d at  1146 n.1. In that case, we expressed our grave  concern regarding the constitutionality of the  injunction issued by that district court.  However, we elected to construe the injunction  narrowly so that its provisions fit within the  bounds of the Constitution rather than strike  down the injunction and require the district  court to fashion a more narrowly-drawn order. See  id. at 1150. Like the Kaun injunction, we  conclude that the injunction here is a prior  restraint on speech. See id.; see also Alexander  v. United States, 509 U.S. 544, 550 (1993)  ("Temporary restraining orders and permanent  injunctions--i.e., court orders that actually  forbid speech activities--are classic examples of  prior restraints."). However, as in Kaun, we  construe the injunction narrowly such that it is  not an impermissible prior restraint that  violates the First Amendment rights of the  appellants.


35
The district court has re-written the first  paragraph of the Kaun injunction so that it  clearly applies only to activities that incite  others to violate the tax laws. Incitement to  imminent unlawful activity is unprotected speech,  see Brandenburg v. Ohio, 395 U.S. 444, 447  (1969), and an individual may be enjoined from  engaging in it. See Pittsburgh Press Co. v.  Pittsburgh Comm'n on Human Relations, 413 U.S.  376, 390 (1973); Times Film Corp. v. City of  Chicago, 365 U.S. 43, 47-48 (1961); Near v.  Minnesota, 283 U.S. 697, 716 (1931). As in Kaun,  we interpret this paragraph to mean that the  appellants may be found in contempt only where  the evidence shows that they "actually persuaded  others, directly or indirectly, to violate the  tax laws" or if their "words and actions were  directed toward such persuasion in a situation  where the unlawful conduct was imminently likely  to occur." 827 F.2d at 1151-52. With this  interpretation, the first paragraph of the  injunction poses no constitutional difficulties.


36
The second paragraph of the injunction pertains  to advertising, marketing or selling documents  that provide false income tax advice. Following  our reading of the Kaun injunction, we interpret  the second paragraph to prohibit only false,  deceptive or misleading commercial speech that is  related to the provision of tax advice. 827 F.2d  at 1152. It is permissible for the government to  prevent the dissemination of false or misleading  commercial speech. See Zauderer v. Office of  Disciplinary Counsel, 471 U.S. 626, 638 (1985)  ("The States and the Federal Government are free  to prevent the dissemination of commercial speech  that is false, deceptive, or misleading.");  Central Hudson Gas & Elec. Corp. v. Public Serv.  Comm'n, 447 U.S. 557, 561-62 (1980). Therefore,  the second paragraph, as we now construe it, does  not exceed the government's power to  constitutionally regulate speech.


37
The third paragraph relates to the provision of  materials or assistance for the filing of false  IRS forms. As with the first paragraph, we read  the third paragraph to prevent only speech used  to further the imminent illegal activity of  preparing false tax forms. See Kaun, 827 F.2d at  1152. As noted above, speech intended to incite  imminent unlawful activity is not  constitutionally protected. Therefore, this  paragraph, as we read it, does not present First  Amendment concerns.


38
The fourth paragraph prohibits the filing of  frivolous FOIA requests with the IRS. In Kaun, we  held that frivolous FOIA requests, like frivolous  litigation, are not constitutionally protected.  Id. at 1153. Therefore, we conclude that the  fourth paragraph of the injunction also poses no  constitutional difficulties.


39
The fifth paragraph of the injunction is simply  a flat prohibition on activity that violates 26  U.S.C. sec. 6700. As noted above, courts may  enjoin illegal activity without running afoul of  the constitution.


40
As with the injunction in Kaun, we have  narrowly construed the provisions of the district  court's injunction in order to preserve it from  the constitutional difficulties that a broader  reading would present. However, we caution  district courts, wherever possible, to craft  injunctions that are not in need of narrowing  constructions by this Court. Although we did not  strike down the injunction in Kaun, we expressed  our serious concerns regarding the potential  breadth with which the language used by that  district court could be read. Kaun, 827 F.2d at  1150, 1151. Rather than simply repeating that  language and depending on this Court's  restrictive reading to avoid constitutional  complications, the district court should have  drafted in the first instance an injunction that  was narrowly tailored to prohibit only those  activities that can be restrained consistent with  the First Amendment. However, as in Kaun, we have  construed this district court's injunction  narrowly and conclude that under this restrictive  reading, the injunction does not violate  appellants' First Amendment rights.

III.  CONCLUSION

41
For the foregoing reasons, the district court's  entry of a permanent injunction preventing the  defendants from engaging in various activities  related to the sale of the "De-Taxing America  Program" and the incitement to violate federal  tax laws is


42
Affirmed.



Notes:


1
 Criminal charges were not pursued against the  appellants because the Government determined that  the amount of loss suffered by the United States  did not warrant criminal penalties and because  the Government was concerned that a criminal  prosecution of the appellants would implicate the  appellants' rights under the First Amendment.


2
 The injunction entered against the appellants  orders that the appellants
"are hereby ENJOINED, directly or indirectly from  engaging or undertaking to engage in any and all  of the following activities
1. Inciting other individuals and entities to  understate their federal tax liabilities, avoid  the filing of federal tax returns, or avoid  paying federal taxes based upon (a) the false  representation that wages, salaries, or other  compensation for labor or services are exempt  from federal income taxation, or (b) any other  such frivolous claim with respect to the scope of  federal income taxation, or (c) any false or  fraudulent claim regarding the allowability of  any deduction or credit, the excludability of any  income, or the securing of any other tax benefit  for federal income tax purposes;
2. Advertising, marketing, or selling any  documents or other information advising taxpayers  that wages, salaries, or other income not  specifically excluded from taxation under Title  26 of the United States Code are not taxable  income;
3. Providing forms for or assisting any individual  in the preparation of false Internal Revenue  Forms W-4, W4E, 1040X, and any other form,  return, or declaration claiming that the taxpayer  is exempt from federal income taxation or  entitled to excessive withholding allowances;
4. Filing, providing forms for, or otherwise  aiding and abetting the filing of frivolous  Freedom of Information requests with the Internal  Revenue Service; and
5. Engaging in any other conduct subject to  penalty under Section 6700 of the Internal  Revenue Code, Title 26 of the United States Code.


3
 Section 7408 provides in relevant part
(a)  Authority to seek injunction--A civil action  in the name of the United States to enjoin any  person from further engaging in conduct subject  to penalty under section 6700 . . . may be  commenced at the request of the Secretary [of the  Treasury]. . . . The court may exercise its  jurisdiction over such action (as provided in  section 7402(a)) separate and apart from any  other action brought by the United States against  such person.


4
 Section 7402(a) provides in pertinent part
The district courts of the United States at the  instance of the United States shall have such  jurisdiction to make and issue in civil actions,  writs and orders of injunction . . . and to  render such judgments and decrees as may be  necessary or appropriate for the enforcement of  the internal revenue laws. The remedies hereby  provided are in addition to and not exclusive of  any and all other remedies of the United States  in such courts or otherwise to enforce such laws.


5
 The appellants have submitted a Motion to Strike  Portions of Appellee's Brief, and Motion for an  Order to Show Cause Why Government Counsel Should  Not Be Sanctioned. These motions are based on the  Government's inclusion in the appendix to its  brief of two documents that were not included in  the record before the district court below. The  Government referred to these documents in a  footnote to its brief and pointed out that the  documents were not part of the record below.
We agree with the appellants that the inclusion  of these documents in the Government's appendix  was improper, and we have not relied on these  documents in our consideration of this case. See  Berwick Grain Co., Inc. v. Illinois Dep't of  Agric., 116 F.3d 231, 234 (7th Cir. 1997) ("The  appellate stage of the litigation process is not  the place to introduce new evidentiary  materials."); Holmberg v. Baxter Healthcare  Corp., 901 F.2d 1387, 1392 n.4 (7th Cir. 1990)  (noting that references to facts outside the  record are properly stricken). Therefore, we will  grant the appellants' motion to strike these  documents from the Government's appendix and  references to these documents in the Government's  brief.
However, we cannot conclude that the  Government's conduct here merits sanctions.  Therefore, we deny the appellants' motion for an  order to show cause why the government should not  be sanctioned.


6
 Section 6700 of Title 26 of the United States  Code provides monetary penalties for
(a) . . .--Any person who--
(1)(A) organizes (or assists in the organization  of)--
(i) a partnership or other entity,
(ii) any investment plan or arrangement, or
(iii) any other plan or arrangement, or
(B) participates (directly or indirectly) in the  sale of any interest in an entity or plan or  arrangement referred to in subparagraph
(A), and
(2) makes or furnishes or causes another person  to make or furnish (in connection with such  organization or sale)--
(A) a statement with respect to the allowability  of 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 which the person knows or has reason  to know is false or fraudulent as to any material  matter . . . .


7
 The injunctions are identical with the following  exceptions
In the first paragraph the words "Organizing,  selling, or assisting in the organization of an  entity or otherwise promoting any plan or  arrangement based upon . . ." in the Kaun  injunction, see 827 F.2d at 1146 n.1, have been  replaced by the words "Inciting other individuals  and entities to understate their federal tax  liability, avoid the filing of federal tax  return, or avoid paying federal taxes based upon  . . . ."
The fifth paragraph of the Kaun injunction  regarding the filing of frivolous lawsuits has  been omitted and the sixth paragraph of the Kaun  injunction is re-numbered as the fifth paragraph  of the instant injunction.


