MEMORANDUM-DECISION AND ORDERI. INTRODUCTION Plaintiff pro se Robert L. Schulz brings this action against Defendant United States (the “Government”) under 26 U.S.C. §6703(c)(2), alleging that the Internal Revenue Service (the “IRS”): (i) erroneously assessed a penalty of $225,000 against him for promoting an abusive tax shelter; and (ii) seeking to bar the Government from retaliating against him. (Dkt. No. 8). On May 20, 2016, the Government asserted a counterclaim against Schulz, seeking a judgment for the unpaid $224,000 balance of the penalty the IRS assessed. (Dkt. No. 29, at 11). On March 7, 2017, the Court granted partial summary judgment to the Government, finding Schulz liable for promoting an abusive tax shelter under 26 U.S.C. §6700, “leaving only the issue of the penalty due…which Schulz may challenge on the basis that he received no income from the abusive tax shelter.” (Dkt. No. 88, at 10). Currently pending before the Court are: (i) the Government’s motion for summary judgment, (Dkt. No. 196), which Schulz opposes, (Dkt. No. 213); and (ii) Schulz’s motion for summary judgment, (Dkt. No. 197), which the Government opposes, (Dkt. No. 211). On June 11, 2018, the Court directed the parties to submit additional briefing as to whether We the People (“WTP”), “derived more than $225,000 in gross income in 2003 from the ‘activity’ at issue in this case, that is, organizing, selling, or participating in the organization of abusive tax shelters.” (Dkt. No. 216). The Government and Schulz submitted their letter briefs on the issue on June 22, 2018 and June 25, 2018, respectively.1 (Dkt. Nos. 219, 220). For the following reasons, the Government’s motion for summary judgment is granted in part and denied in part; Schulz’s motion for summary judgment is denied.II. BACKGROUND2A. WTP’s OperationsSchulz is the founder of two not-for-profit entities known as We The People for Constitutional Education and We The People Congress, together known as “WTP.” (Dkt. No. 197-2,2). Schulz claims that he, through the activities of WTP, has devoted “his life to helping people understand the history, meaning, effect and significance of the provisions of the Declaration of Independence and their State and Federal constitutions and how to hold their public officials accountable to the rule of law pursuant to the First Amendment’s Petition Clause.” (Id.,4). Schulz has served as WTP’s Chairman, President, and Chief Executive Officer since he founded the organization in 1997. (Dkt. No. 196-5, at 2; Dkt. No. 196-12, at 3). Schulz personally performed the administrative tasks required to establish and maintain WTP. (Dkt. No. 197-2,
9-11, 13-17, 20-21). WTP’s corporate address has always been the same as Schulz’s home address, and its offices have always been located in Schulz’s home. (Dkt. No. 196-5, at 3-5). Schulz, however, has never received rent in exchange for providing the space, nor has he taken a deduction on his tax returns for donating the space to WTP. (Id., at 3-4). Other than Schulz’s wife, only Schulz has an office at WTP. (Dkt. No. 196-12, at 6).Schulz used WTP funds to defend himself in IRS actions and litigation, regardless of whether WTP was a named defendant.3 (Dkt. No. 196-5, at 73). Schulz paid corporate expenses with personal credit cards, after which “WTP sent payments to American Express [and Chase] to reimburse Schulz for his WTP related expenses if WTP had the funds to do so.” (Dkt. No. 196-4, at 48-49). “Otherwise[,] the amount was considered as an unsecured loan from Schulz to WTP.” (Id.). Schulz estimates that he made more than $100,000 in unsecured loans, in the form of “unreimbursed expenses,” to WTP. (Dkt. No. 196-12, at 13).Although Schulz claims that WTP had no employees,4 (Dkt. No. 196-5, at 5), he acknowledges that WTP was his “full-time” occupation. (Dkt. No. 213-1,14; Dkt. No. 196-3, at 160). Schulz himself carried out WTP’s activities: he personally “Petitioned the federal government” and “distributed copies of that Petition,” (Dkt. No. 8,13-14), including by mailing 225 copies of the petition materials to requesting individuals across the country, (Dkt. No. 196-15, at8). At deposition, Schulz described his role at WTP as “the voice of the organization.” (Dkt. No. 196-12, at 11). WTP’s 2003 “Chairman’s Reports,” which are simply posts authored by Schulz and posted to WTP’s website, indicate that Schulz alone determined WTP’s mission, message, and strategy. (See, e.g., Dkt. No. 197-3, at 12-160; Dkt. No. 197-4, at 1-113). Although the WTP organizations had various board members and officers since its founding, (Dkt. No. 196-5, at 26, 54, 58; Dkt. No. 197-9, at 9, 69, 89), Schulz was the only person constantly affiliated with WTP in an official capacity throughout its existence.In 2003, the board accepted Schulz’s strategy to reform the WTP board with a national focus and granted Schulz “the power to remove and add members to the Board based solely upon his discretion.” (Dkt. No. 196-5, at 55-61). In October 2003, explaining that he had “settled on a reorganization plan for” WTP, Schulz used this power to remove all but two members of WTP’s board — himself and Burr Deitz, who also served as Secretary and Treasurer. (Dkt. No. 196-4, at 113). In January 2004, Schulz and Deitz — the only remaining board members — authorized Schulz “to have WTP continue to pay out-of-pocket expenses related to” the IRS’s investigation into WTP and Schulz’s violations of §6700. (Dkt. No. 196-5, at 73).5 In March 2006, Schulz and Deitz authorized WTP to “continue paying” for the litigation costs associated with several cases without regard to whether WTP was itself a litigant, but “provided those activities are directly related to and further the objectives” of WTP’s mission. (Dkt. No. 196-7, at 68).B. The Blue FolderOne of WTP’s goals was to “claim[] and exercis[e]” what Schulz has described as his “ First Amendment Right to Petition the Government for Redress of Grievances” for the purpose of “obtaining the answers to important questions by Petitioning the leaders of the federal government.” (Dkt. No. 8,
