Don Johnson Motors, Inc. v. United States (532 F. Supp. 2d 844, 2007)

United States District Court for the Southern District of Texas 2007-12-21

Internal Revenue Code

Citations

Full opinion text

MEMORANDUM OPINION AND ORDER

ANDREW S. HANEN, District Judge. I. Background

1. Don Johnson Motors, Inc. (“Plaintiff”) is a car dealership operating in the Brownsville, Texas area. (Testimony of Don Johnson, Sr. (“Johnson”), Day l). The corporation formed in 1974. (Id.)

2. Plaintiff added Jeep vehicles to its dealership, which resulted in an increase in sales volume and required Plaintiff to hire more employees. (Johnson, Day 1).

3. Sometime prior to 1999, because of the increase in employees, the Internal Revenue Service required Plaintiff to begin filing its taxes by Electronic Funds Transfer (“EFT”). (Johnson, Day 1). From that date forward, Plaintiff had to file its Form 940 annual federal unemployment taxes (“Form 940 taxes”) and Form 941 quarterly employment taxes (“Form 941 taxes”) electronically through the Electronic Federal Tax Payment System (“EFTPS”). (See A. Carlos Barrera (“Barrera”), Day 1).

4. In prior years, Plaintiff completed its tax returns and filings by hand. (Johnson, Day 1). Johnson testified that he had signed all the tax returns and made sure the payments were deposited. (Id.) Johnson testified that he felt like he “lost control when they took [Plaintiffs tax obligations] out of his hands.” (Id.)

A. The IRS Assessed Penalties Against Plaintiff for Failure to Timely File Returns and Pay its Taxes for Periods from 1999 to 2002

5. From 1999 through 2002, Plaintiff delegated payroll tax functions to an in-house accountant, Michael Ezequiel (“Ezequiel”). Ezequiel performed his role under the supervision of Plaintiffs office manager. (Pl.Ex. 6); (see Johnson, Day 1).

6. Plaintiffs office manager was responsible for oversight of the employment taxes and for signing Plaintiffs employment tax returns. (Pl.Ex. 6).

7. Plaintiff hired Ezequiel to handle, among other responsibilities, the actual electronic filing of its employment taxes. (Johnson, Day 1). Ezequiel prepared Plaintiffs employment tax returns and was also in charge of monitoring the payroll accounts and the information included in the Forms 940 and 941. (See Pl.Ex. 6). Johnson testified that Ezequiel was given “quite a bit of responsibility.” (Id.)

8. At some point in 1999, for reasons not explained, Ezequiel stopped paying portions of Plaintiffs payroll taxes to the IRS. (See Johnson, Day 1); (Internal Revenue Service Revenue Officer Ricardo Sobrevilla (“Sobrevilla”), Day 2); (Pl.Ex. 3). As a result, Plaintiff made incomplete deposits to the IRS from 1999-2002. (Sobrevilla, Day 2); (Pl.Ex.3). Ezequiel also failed to make payments to Plaintiffs 401K plan. (Johnson, Day 1).

9. Plaintiffs incomplete deposits apparently masked the fact that Plaintiff was not fully complying with its tax obligations. (Sobrevilla, Day 2).

10. The executives of Plaintiff were unaware of any problems with its payroll accounts for the years 1999 through 2002 until Johnson began an internal review of Plaintiffs financial reports in December of 2002. (Pl.Ex. 6). In December of 2002, Johnson began his yearly analysis of Plaintiffs November financial statement to determine what Plaintiff might be able to “write off.” (Johnson, Day 1). Johnson noticed that the November financial statement reflected a “lot more cash than [he] usually had.” (Id.)

11. Plaintiffs cash management savings account had gone from $200,000 to nearly $800,000. (Johnson, Day 1). This excess cash worried Johnson because Plaintiff “was not making that much money” and Plaintiffs “inventories weren’t going down.” (Id.)

12. Also approximately around this time, Plaintiff was notified that it had not paid its employees’ portion of the 401K participation in several months. (Johnson, Day 1).

13. Johnson initially believed the imbalances were the result of a change in computer software Plaintiff underwent in August of 2002. (See Johnson, Day 1); (PI. Ex. 6).

14. Nevertheless, because of the extent of the irregularities, Johnson called his accountant, A. Carlos Barrera (“Barrera”), a partner at Long & Chilton, L.L.P., to investigate the situation. (Johnson, Day 1); (see Pl.Ex. 6).

15. Barrera and another Long & Chilton employee, Sandra Hargis (“Hargis”), initially thought an employee might be stealing money from Plaintiff and began checking Plaintiffs bank accounts. (Johnson, Day 1).

16. During the pendency of this action and throughout trial, Plaintiff has never alleged or presented any evidence demonstrating that Ezequiel or any other employee embezzled funds from Plaintiff.

17. In March 2003, Plaintiff received a notice from the IRS stating that Plaintiff had not sent in a Form 941 return for a quarter in 2002 and had not paid its payroll tax for that quarter. (Johnson, Day 1); (see Pl.Ex. 3).

18. Barrera and Hargis then recreated the Form 941 returns for each quarter in 2002. (Johnson, Day 1). Through this process, Barrera and Hargis discovered that, for some time, Ezequiel had not been paying portions of the payroll taxes and had been failing to make payments to Plaintiffs 401K plan for its employees. (Johnson, Day 1).

19. Barrera then consulted the IRS Taxpayer Hotline regarding the situation. (Barrera, Day 1). These consultations revealed that Plaintiffs failure to file Form 941 employment tax returns and pay Plaintiffs employment taxes extended beyond 2002 to periods in 1999, 2000 and 2001. (Id.)

20. Plaintiff filed late returns for tax periods in 1999-2002 in January, March and July of 2003. (See Def. Ex. 1 at pp. 10, 26, 35, 47, 60, 71, 82, 91, 101, 111, 119, 128, 135, 141). Plaintiff also paid at least some of the outstanding tax liabilities for those tax periods. (Id.)

21. The IRS assessed penalties against Plaintiff for its failure to file returns and timely pay taxes for periods in 1999 through 2002. (See Def. Ex. 1 at pp. 11, 28, 38, 52, 64, 75, 86, 94, 104, 112, 119, 128, 135, 141). Plaintiff received penalty notices for these tax periods beginning in 2003. (See, e.g., Def. Ex. 1 at pp. 15, 32); (see also PI. Proposed Findings of Fact and Conclusions of Law [hereinafter PI. Findings] at p. 19). Johnson also testified that Plaintiff received penalty notices. (Johnson, Day 2).

22. Plaintiff requested an abatement of all penalties assessed for periods in 1999-2002 for reasonable cause. (See Barrera, Day 1); (Pl.Ex.6). The IRS denied this request. (Pl.Ex. 32). The denial stated in part:

Your request to abate ... does not conform to reasonable cause.... A prudent businessman would exercise caution in the training of specific responsibilities of each new employee. You mentioned the failure by both the in-house accountant and the supervising manager to perform these responsibilities and the concealment of those failures for those years is what caused the delinquency.

[0]verall, reasonable cause requirements state, “Relying on another person to perform a required act is generally not sufficient for establishing reasonable cause”, [sic]

This is your written notification that I have determined that your request for reasonable cause abatement was not met and I am denying abatement of all the penalties. (Id.)

23. Plaintiff appealed this denial of abatement. (Pl.Ex. 51). Plaintiffs appeal was also denied. (Id.)

24. Plaintiff has not paid the penalties and some accrued interest owed for the periods in 1999-2002. (See Johnson, Day 2); (Pl.Ex.78).

B. The IRS Also Assessed Penalties Against Plaintiff for Failure to Timely Pay and Deposit Its Taxes for Periods in 2003 and 2004

25. Since Plaintiff was required to use EFTPS to file its employment taxes, Plaintiff utilized the Automated Clearing House (“ACH”) system to transmit payment of payroll taxes to the IRS through the EFTPS-Through a Financial Institution System during a period which included 2003 and 2004. (See Hargis, Day 2); Dept. OF TREASURY, FINANCIAL INSTITUTION HANDBOOK for EFTPS, Internet Version [hereinafter HANDBOOK for EFTPS] 5 (2002), available at, http://www.fms.treas.gov/ eftps/eftpshandbook.pdf.

26. A taxpayer using the EFTPSThrough a Financial Institution system authorizes a financial institution, such as the taxpayer’s bank, to initiate an ACH credit transaction to pay the IRS. Handbook for EFTPS at p. 5. Plaintiff designated Texas State Bank (the “Bank”) as its financial institution for purposes of making payments of employment taxes to the IRS through EFTPS. (See Barrera, Day 1); HANDBOOK FOR EFTPS at p. 5.

27. The Bank provided Plaintiff with specific software to use when initiating EFTPS transactions. (Barrera, Day 1). Plaintiffs employee would use the software to instruct the Bank to transfer money from Plaintiffs account to an IRS account to cover Plaintiffs employment tax liability for a specified tax period. (Id.); (Hargis, Day 2).

28. In June 2003, the Bank implemented a new software program for Plaintiff to use when electronically filing its employment taxes. (Pl.Ex. 9). The Bank was supposed to send two people to train Plaintiffs employees on the new Bank software, however the Bank only sent one trainer. (Johnson, Day 1). It was later determined that this trainer had only worked for the Bank for two days. (Id.)

29. Two of Plaintiffs employees received this training from the Bank on the new Bank software. (Johnson, Day 1).

30. When utilizing the new Bank software, Plaintiffs employee would see a screen telling the employee to input the Plaintiffs tax identification information, Plaintiffs bank account number, and the amount the Plaintiff wanted to pay over to the IRS. (Hargis, Day 2).

31. The new software also required Plaintiffs employee to mark the tax period of the filing twice (e.g., First Quarter— 2004) in two separate fields before submitting its payment. (Barrera, Day 1); (Hargis, Day 1). The tax periods marked had to match or the new software would not make the deposit. (Barrera, Day 1).

32. Plaintiffs employees did not realize there were two fields that needed to be marked and that the two fields also needed to be identical. (Barrera, Day 1); (Hargis, Day 1). The trainer never told Plaintiffs employees about the need to mark the tax period in the second field during the Bank’s training. (Barrera, Day 1).

33. Plaintiffs employees failed to mark and match these two fields when attempting to submit payments of Plaintiffs employment taxes. (See Barrera, Day 1); (Hargis, Day 1). Consequently, the Bank did not immediately make deposits on behalf of Plaintiff into the IRS accounts. (See id.) Several of Plaintiffs employment tax payments were therefore received late by the IRS. (See, e.g., Def. Ex. 1 at pp. 152-153,163,172).

34. Since Plaintiff failed to timely deposit and pay its employment taxes for these periods in 2003-2004, the IRS assessed penalties against Plaintiff for these tax periods. (Def. Ex. 1 at pp. 153, 163, 172). The IRS sent notices of these assessments to Plaintiff. (See Def. Ex. 2 at p. 24); (Def. Ex. 1 at pp. 167, 176, 182); (see also PI. Findings at p. 19).

35. IRS Revenue Officer Alice M. Rios (“Rios”) conducted an investigation into the situation involving the Bank software and Plaintiffs late payments. (See Pl.Ex. 32).

36. The Bank sent Plaintiff a letter on February 6, 2004 admitting that its training of Plaintiffs employees on the new Bank software had been inadequate. (PI. Ex. 9). The Bank had not made Plaintiffs employees aware that certain “manual updates” were required for each transaction. (Id.) These manual updates appear to include marking the tax period twice on the screen before electronically submitting tax payments. (Id.) The Bank admitted that its failure to adequately train Plaintiffs employees was the cause of Plaintiffs failure to make timely payments and deposits to the IRS through EFTPS in 2003-2004. (Id.)

37. Plaintiffs representatives testified that Barrera faxed the February 6, 2004 letter from the Bank to Rios on or around February 10, 2004. (Barrera, Day 1); (Hargis, Day 1); (see Johnson, Day 1).

38. It is unclear whether Rios ever received the fax of the Bank’s February 6, 2004 letter admitting its fault in failing to properly train Plaintiffs employees. Rios stated in an October 14, 2004 letter that during her investigation, Plaintiffs employees told her the Bank did not agree that there were errors in its software or training and that the Bank would not submit written documentation to support the error. (Pl.Ex. 32). Rios made no mention of receiving the Bank’s February 10, 2004 letter and, in fact, states that the Bank denied committing any error. (See id.)

39. Plaintiff claims that Rios never actually spoke to any of Plaintiffs employees as she stated in her October 14, 2004 letter. (Pl.Ex. 33). Johnson testified during trial, however, that he could not recall whether Rios spoke with Plaintiffs employees, but identified an employee that Rios may have spoken with. (Johnson, Day 1). It remains unclear whether Rios actually spoke to Plaintiffs employees and, if she did, who and how many employees she spoke with during her investigation.

40. Plaintiff requested an abatement of all penalties imposed for periods in 2003-2004 for reasonable cause. (See PI. Exs. 9, 10). The IRS denied this request, at least in part on the findings of Rios’s investigation. (See PLEx. 32).

41. Plaintiff has not paid the penalties and some accrued interest owed for the periods in 2003-2004. (See Johnson, Day 2); (Pl.Ex. 78).

C. Liens Are Filed Against the Plaintiff

42. In April 2005, the IRS sent Plaintiff notices that it was filing liens against Plaintiff for outstanding tax liabilities. (See, e.g., Def. Ex. 1 at pp. 164, 173).

43. The IRS filed two liens against Plaintiff in May 2005. (See Hargis, Day 1); (Johnson, Day 2).

44. The first lien, filed May 9, 2005, covered liabilities for periods in 2003-2004 (the “2003-2004 lien”). (Sobrevilla, Day 3); (see Trial Tr., Day 3). The liabilities on this lien totaled $101,279.92. (See PI. Ex. 58).

45. The second lien, filed May 20, 2005, covered outstanding liabilities for periods in 1999-2002 (the “1999-2002 lien”). (Sobrevida, Day 3); (see Trial Tr., Day 3). The liabilities on this lien totaled $277,078.40. (See Pl.Ex. 52).

D. Plaintiff Alleges It Fullg Paid the Liabilities on the 2003-2004 Lien on May 10, 2005

46. On May 10, 2005, IRS Revenue Officer Sobrevida met with Plaintiffs representatives regarding taxes and penalties owed for periods in 2003-2004. (Barrera, Day 1); (Hargis, Day 1); (see Johnson, Day 1).

47. Plaintiffs representatives demonstrated to Sobrevdla how Plaintiff had attempted to pay ad the liabilities owed for 2003-2004 on time. (See Hargis, Day 1); (see Barrera, Day 1); (Johnson, Day 1); (Sobrevdla, Day 2).

48. After a thorough analysis of Plaintiffs tax accounts, Sobrevdla determined that if the IRS reallocated Plaintiffs late tax payments for periods in 2003-2004 so that they would be properly filed, Plaintiff would only be left with an outstanding liability of $1,716.47 for periods in 2003-2004. (See Hargis, Day 1); (see Barrera, Day 1); (Johnson, Day 1); (Sobrevdla, Day 2).

49. Plaintiffs representatives and Sobrevida agreed that Sobrevdla would reallocate the tax payments and that Plaintiff would provide an additional payment of the $1,716.47 so that the liabilities for tax periods in 2003-2004 would be extinguished. (See Barrera, Day 1); (Sobrevilla, Day 2).

50. Don Johnson, Jr. then delivered a check to the meeting and Johnson gave the check to Sobrevilla at the May 10, 2005 meeting in the amount of $1,716.47 to cover the outstanding balance. (See Hargis, Day 1); (Johnson, Day 1); (Barrera, Day 1); (Don Johnson, Jr., Day 3).

1. Sobrevilla Secured an Amended Return for the First Quarter of 2004.

51. During a period including May 2005, Plaintiffs outside accountants at Long & Chilton reviewed all of Plaintiffs tax accounts, including those for periods in 2003-2004. (See Johnson, Day 2).

52. The accountants would bring Johnson tax returns that required revisions. (Johnson, Day 2). Johnson signed and paid these amended returns. (Id.)

53. Among these revised returns was an amended Form 941 return for the first quarter of 2004. (Def. Ex. 14 at p. 6); (Johnson, Day 2). This amended return was filed on May 23, 2005. (Def. Ex. 14 at p. 6). Johnson signed the return as president of Plaintiff. (Id.); (Johnson, Day 2).

54. Sobrevilla was personally involved in securing this return for the IRS and received the return at some point between May 23, 2005 and May 27, 2005. (See Sobrevilla, Day 3).

55. The amended return created an additional liability of $5,734.82 on Plaintiffs first quarter 2004 Form 941 account. (Sobrevilla, Day 3); (Def. Ex. 1 at p. 182). This amount posted to Plaintiffs account on May 27, 2005. (Id.)

2. Sobrevilla Inputs the Adjustments and Reallocations into the IRS System

56. Sobrevilla could not input the real-locations and adjustments during the May 10, 2005 meeting because he could not access the IRS computer system from Plaintiffs office. (Barrera, Day 1); (see Sobrevilla, Day 2).

57. Following the meeting, each day until May 27, 2005, Sobrevilla worked on the adjustments and reallocations to Plaintiffs account that had been agreed to at the May 10, 2005 meeting (Sobrevilla, Day 2).

58. On May 27, 2005, Sobrevilla sent Plaintiff a letter with his analysis of Plaintiffs liabilities for periods including those covered by the 2003-2004 lien. (See Pl.Ex. 54). The letter stated, in part:

As agreed, I have completed the analysis of your account and have made all the necessary adjustments that include transfers of erroneously applied credits, adjustments and abatements of penalties and interest. The purpose of this letter is to provide you [Plaintiff], as close as possible, a breakdown of the remaining liability. (Pl.Ex. 54).

59. The May 27, 2005 letter showed that Plaintiff: (1) had a $0 balance for its first quarter 2003 Form 941; (2) owed $3,805.73 for its second quarter 2003 Form 941; (3) owed $252.05 for its third quarter 2003 Form 941; (4) had a positive account balance (i.e., the IRS owed Plaintiff money) of $1,716.47 for its fourth quarter 2003 Form 941; and (5) had another positive account balance of $3,959.42 for its first quarter 2004 Form 941. (Pl.Ex. 54).

60. Totaling these liabilities and positive balances gave Plaintiff an overall positive balance for tax periods in 2003-2004 of $1,618.11 on May 27, 2005. (See Pl.Ex. 54).

61. Sobrevilla does not recall including the additional liability from the amended return for the first quarter of 2004 as a part of the analysis and adjustments documented in his May 27, 2005 letter to the Plaintiff, even though Sobrevilla personally secured this return prior to the time the letter was sent. (Sobrevilla, Day 3). Sobrevilla testified the additional assessment of $5,734.82 would create liabilities on the 2003-2004 lien not addressed in the May 27, 2005 letter. (See id.)

62. Sobrevilla could not release the lien through the IRS system until all the periods for the 2003-2004 lien registered as “status 12.” (Sobrevilla, Day 2, Day 3). A “status 12” indicator means a tax account is zeroed out or fully paid. (Id. at Day 3).

63. Through an IRS clerical error some of the transfers and adjustments Sobrevilla and Plaintiff agreed upon on May 10, 2005 were never made. (Sobrevilla, Day 3). The adjustments Sobrevilla said had already been made in his May 27, 2005 letter still have not been completed. (Id.)

3. The IRS Conducted a Combined Annual Wage Reconciliation on Plaintiff’s Tax Accounts in June 2005

64. Prior to June 13, 2005, the IRS conducted a combined annual wage reconciliation on Plaintiffs tax accounts, including Plaintiffs fourth quarter 2003 Form 941 account. (Sobrevilla, Day 3).

65. During a combined annual wage reconciliation, the IRS matches Social Security wages, W2 forms and W3 forms submitted to the Social Security Administration with the payroll tax returns submitted by the taxpayer to the IRS. (Sobrevilla, Day 3).

66. If the Social Security records and payroll tax returns do not match, the IRS sends out a notice advising the taxpayer that the figures do not match up. (Sobrevilla, Day 3). The IRS then proposes an adjustment to Plaintiffs tax accounts. (Id.)

67. If the taxpayer does not respond to the proposed IRS adjustment, the IRS makes the adjustment based on its prior reconciliation. (Sobrevilla, Day 3).

68. As a result of the combined annual wage reconciliation procedure stated above, the IRS assessed additional tax and interest of $5,735.62 and penalties of $1,849.54 against Plaintiff on June 13, 2005 for the fourth quarter of 2003 Form 941 account. (Def. Ex. 1 at pp. 175-76); (Sobrevilla, Day 3).

69. Statutory notice went out regarding this assessment on March 6, 2006. (Sobrevilla, Day 3); (see Def. Ex. 1 at pp. 175-76). It is unclear whether this notice informed Plaintiff of the discrepancy between the Social Security records and Plaintiffs payroll records or whether the notice was of the final adjustment to Plaintiffs account based on the reconciliation by the IRS.

4. Plaintiff Filed a Request for Certificate of Release of Lien

70. On June 24, 2005, Plaintiff filed a request for certificate of release of the 2003-2004 lien. (Pl.Ex. 58). The request was submitted to the District Director in Cincinnati, marked for the attention of the “Chief, Special Procedures Function.” (Id.) The name and address of Plaintiff were provided as well as a copy of the Notice of Federal Tax Lien for the 2003-2004 lien. (Id.)

71. The request for certificate of release of lien listed as the grounds for release that: “[on] May 10, 2005, Mr. Don Johnson, Sr., President of the taxpayer, hand delivered a check to Ricardo Sobrevilla in the approximate amount of $1,716.47 in complete payment of ALL outstanding Form 940 and Form 941 taxes owed by the taxpayer[ ] for the years and all quarters within 2008 and 2004.” (PI. Ex. 58) (emphasis in original).

72. Plaintiff did not include proof of its payment of $1,716.47 with its request for certificate of release of lien. (See Pl.Ex. 58).

5. Plaintiff Files its CDP Appeal

73. Plaintiff filed a request for a Collection Due Process (“CDP”) hearing pursuant to 26 U.S.C. § 6320 and Tres. Reg. § 301.6320-1 on June 9, 2005 claiming that Plaintiff was not given proper notice prior to the filing of liens for the 1999-2002 and 2003-2004 periods and that the liabilities on the liens were invalid. (See Pl.Ex. 56).

74. Pursuant to IRS procedures, filing a CDP appeal had the internal effect of removing Sobrevilla’s jurisdiction over Plaintiffs tax accounts. (Pl.Ex. 57)

75. On February 28, 2006, IRS Appeals Officer Christopher Darling (“Darling”) issued his CDP determination, sustaining the filing of both the 1999-2002 lien and the 2003-2004 hen. (Pl.Ex. 75). He found that there were outstanding liabilities for periods covered by each lien and that the IRS gave Plaintiff proper statutory notice pursuant to 26 U.S.C. § 6321 prior to filing each lien. (Id.)

76. The IRS has not released either the 2003-2004 lien or the 1999-2002 lien. (Johnson, Day 1); (Hargis, Day 1).

II. ProceduRAl History op this Litigation

77. Plaintiff filed a Complaint against Defendant United States of America (“Defendant”) on March 21, 2006. (Docket No. 1).

78. The Complaint stated claims for:

(i)the refund of internal revenue taxes for periods in 1999-2002;

(ii) judicial review of the CDP determination on the 1999-2002 hen and 2003-2004 hen;

(hi) civil damages for failure to release the 1999-2002 lien and 2003-2004 hen pursuant to 26 U.S.C. § 7432; and

(iv) civil damages for unauthorized collection actions under 26 U.S.C. § 7433. (Docket No. 1).

79. Plaintiff and Defendant filed motions for summary judgment on January 28, 2007 and January 29, 2007, respectively. (Docket Nos. 13, 14). Magistrate Judge Black issued a Report and Recommendation with regard to both motions for summary judgment on April 26, 2007. (Docket No. 23).

80. This Court issued an order on July 25, 2007 adopting the Report and Recommendation of the Magistrate Judge, denying Plaintiffs Motion for Summary Judgment and granting in part and denying in part Defendant’s Motion for Summary Judgment. (Docket No. 54); (see Docket No. 23).

81. The Court granted summary judgment to Defendant on Plaintiffs claims for:

(i) refunds of internal revenue taxes for periods in 1999-2002;

(h) judicial review of the CDP determination for tax years 1999-2002; and

(iii) damages based on improper tax collection activities regarding the filing of the 1999-2002 lien and 2003-2004 hen pursuant to 26 U.S.C. § 7433. (Docket No. 54); (see Docket No. 23).

82. Plaintiffs refund claim was denied because Plaintiff failed to show reasonable cause for the abatement of penalties assessed for periods from 1999 to 2002. Penalties were assessed against the Plaintiff because it failed to file its employment tax reports and deposit tax payments. Plaintiff failed to timely file and deposit its taxes because Ezequiel failed to properly do his job and the office manager failed to properly supervise Ezequiel. Courts have consistently held that the failure of a taxpayer’s employee to file or pay taxes does not establish reasonable cause. (Docket Nos. 54, 62); (see Docket No. 28); see McMahan v. Commissioner; 114 F.3d 366, 371 (2d Cir.1997); Conklin Bros. of Santa Rosa, Inc. v. United States, 986 F.2d 315, 318 (9th Cir.1993); Dogwood Forest Rest Home, Inc. v. United States, 181 F.Supp.2d 554, 560-61 (E.D.N.C.2001).

83. The Court also denied Plaintiffs CDP appeal for 1999-2002, which claimed that the IRS did not follow proper statutory procedures prior to the filing of the 1999-2002 lien against the Plaintiff. On summary judgment, this Court held it was not an abuse of discretion for IRS Appeals Officer Darling to sustain the filing of the lien against Plaintiff covering periods in 1999-2002. (Docket No. 54). The IRS properly assessed tax liabilities and penalties against Plaintiff for those periods. Plaintiff received notices for those assessments and failed to pay the penalties within the required time. Under 26 U.S.C. § 6321, this was all that was required for the IRS to file a lien. Plaintiff also received notice of the filing of the liens as required by 26 U.S.C. § 6320. (Docket No. 54); (see Docket No. 23); (Pl.Ex. 75).

84. This Court also granted summary judgment on Plaintiffs 26 U.S.C. § 7433 claim. Plaintiff attempted to file an administrative claim pursuant to 26 U.S.C. § 7433 claiming that the filings of the 1999-2002 and 2003-2004 hens were unauthorized collection actions. This Court granted summary judgment to the Defendant on that claim because Plaintiff failed to exhaust all administrative remedies as required by 26 U.S.C. § 7433(d)(1). Plaintiff failed to file its claim with the proper authority and failed to include a specific dollar amount for the claim as required by Treas. Reg. § 301.7433-1 (as amended in 1998). (Docket No. 54); see Amwest Sur. Ins. Co. v. United States, 28 F.3d 690, 696 (7th Cir.1994) (holding the procedural requirements for filing an administrative claim under the Treasury Regulations are to be strictly construed); Venen v. United States, 38 F.3d 100, 103 (3d Cir.1994).

85. The only claims remaining after summary judgment were:

(i) Plaintiffs claim for civil damages under 26 U.S.C. § 7432 for failure to release the 1999-2002 lien and 2003-2004 lien; and

(ii) judicial review of the CDP determination on the 2003-2004 hen. (Docket No. 54).

86. To prove a claim for failure to release a federal tax lien pursuant to 26 U.S.C. § 7432, Plaintiff must establish that an officer or employee of the IRS knowingly or negligently failed to release a lien even though (1) the liability on the lien had been satisfied; (2) the lien was unenforceable; or (3) the Plaintiff furnished a bond that was accepted by the IRS conditioned upon the payment of the amount covered by the liens. See 26 U.S.C. §§ 6325 (1998), 7432 (1988). To recover damages under 26 U.S.C. § 7432, Plaintiff must prove actual, direct economic damages “which, but for the actions of the defendant” in negligently fading to release the lien, would not have been sustained. 26 U.S.C. § 7432.

87. This Court has de novo judicial review of a CDP determination made by an IRS Appeals Officer where the validity of the underlying tax liability is properly at issue. Sego. v. Commissioner, 114 T.C. 604, 610, 2000 WL 889754 (2000); Goza v. Commissioner, 114 T.C. 176, 181-82, 2000 WL 283864 (2000). This Court must consider: “ (1) whether the IRS met the requirements of any applicable law or administrative procedure prior to filing the notice of federal tax lien; (2) any issues appropriately raised by the taxpayer relating to the unpaid tax; (3) challenges to the existence or amount of the tax liability; (4) offers of collection alternatives; and (5) whether the continued existence of the filed notice of federal tax lien represents a balance between the need for the efficient collection of taxes and the legitimate concern of the taxpayer that any collection be no more intrusive than necessary.” Treas. Reg. §§ 301.6320 — 1(e); 301.6320-l(e), Q & A (El) (as amended in 1999).

88. This Court held a three-day bench trial on those two sets of claims beginning September 11, 2007.

89. Plaintiff now also requests reconsideration this Court’s denial of its claim for unauthorized collection action pursuant to 26 U.S.C. § 7433 as well as this Court’s denial of Plaintiffs refund claim for the periods covered by the 1999-2002 lien. (PI. Findings at pp. 18, 25).

III. Plaintiff’s § 7432 Claim for Failure to Release the 1999-2002 Lien

90. The IRS must release a lien if: (1) the liability has been satisfied; (2) the lien is unenforceable; or (3) the taxpayer furnishes a bond to the IRS and the bond is accepted by the IRS. 26 U.S.C. § 6325.

91. “If any officer or employee of the Internal Revenue Service, knowingly, or by reason of negligence, fails to release a lien under [26 U.S.C. § 6325] on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States.” 26 U.S.C. § 7432.

A. Burden of Proof

92. The taxpayer has the burden of proof on claims under 26 U.S.C. § 7432. Bilzerian v. United States, 86 F.3d 1067, 1070 (11th Cir.1996); Miller v. United States, 813 F.Supp. 715, 726 (N.D.Cal.1992).

93. Plaintiff nonetheless claims that the burden of proof with respect to all factual issues regarding liability under 26 U.S.C. § 7432 shifts to the Defendant because of 26 U.S.C. § 7491. (PI. Findings at p. 5).

94. The burden shifts to the United States in any court proceeding if the taxpayer “introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer for any tax imposed by subtitle A or B.” 26 U.S.C. § 7491 (1998).

95. Subtitle A of the Internal Revenue Code governs income taxes. 26 U.S.C. §§ 1, et seq. (2000). Subtitle B of the Internal Revenue Code governs estate and gift taxes. 26 U.S.C. §§ 2001, et seq. (2001). Subtitle C of the Internal Revenue Code governs employment taxes. 26 U.S.C. §§ 3101, et. seq. (1983).

96. Since the burden shifting provision of 26 U.S.C. § 7491 only applies to Subtitles A and B of the Internal Revenue Code, the provision does not apply to cases involving employment taxes. See Charlotte’s Office Boutique v. C.I.B., 121 T.C. 89, 102, 2003 WL 21783383 (2003); Joseph M. Grey Public Accountant, P.C. v. C.I.R., 119 T.C. 121, 123, n. 2, 2002 WL 31052061 (2002). Cases involving penalties assessed for failure to pay employment taxes and whether Plaintiff established reasonable cause for those penalties are also outside the scope of the burden shifting provision of 26 U.S.C. § 7491. See Bell v. United States, No. 2:99-cv-1995, 2000 WL 1682983, at *2, 2000 U.S. Dist. LEXIS 15108, at *6 (E.D.Cal. Sept. 13, 2000).

97. All of the taxes, interest and penalties at issue in this ease relate to employment taxes governed by Subtitle C. (See Complaint, Docket No. 1). This Court therefore finds that the burden shifting provision of. 26 U.S.C. § 7491 does not apply to Plaintiffs claims.

98. The burden remains on Plaintiff to prove that the IRS “knowingly, or by reason of negligence” failed to release the 1999-2002 lien in violation of 26 U.S.C. § 7432. See 26 U.S.C. §§ 6235, 7432; see also 26 U.S.C. § 7491.

B. Satisfaction of the Liabilities on the 1999-2002 Lien

1. Abatement of Penalties to Satisfy the Liabilities in the 1999-2002 Lien

99. During trial and throughout Plaintiffs Proposed Findings of Fact and Conclusions of Law (Docket No. 64), Plaintiff appears to try to re-litigate the issue of whether the penalties imposed for the period 1999-2002 should have abated for reasonable cause.

100. As a part of its order on summary judgment, this Court denied Plaintiffs refund claim for periods covered by the 1999-2002 lien (essentially a request for an abatement of penalties) for failure to show reasonable cause. (Docket Nos. 54, 62); see supra Section II. Plaintiff could not demonstrate reasonable cause when its employee, Ezequiel, simply failed to file Plaintiffs returns and pay Plaintiffs taxes and no supervisor caught Ezequiel’s failure. (Id.)

101. Plaintiff requests this Court overturn this previous holding and appears to claim that if these penalties are abated, the liabilities on the 1999-2002 lien would be satisfied and the lien must be released. (See PI. Findings at pp. 1-3).

102. The taxpayer has a heavy burden when establishing it had reasonable cause not to file, pay or deposit payroll taxes. Staff IT, Inc. v. United States, 482 F.3d 792, 801-02 (5th Cir.2007).

103. There is no reasonable cause when the failure to pay or file returns is the result of inaction by one of Plaintiffs own employees. See McMahan v. Commissioner, 114 F.3d 366, 371 (2d Cir.1997) (“a taxpayer has an affirmative non-delegable duty to ensure that the appropriate forms ... are actually filed by the statutory deadline”); Conklin Bros. of Santa Rosa, Inc. v. United States, 986 F.2d 315, 318 (9th Cir.1993); In re American Biomaterials Corp., 954 F.2d 919, 927 (3rd Cir. 1992); Bell v. United States, No. 2:99-cv-1995, 2000 WL 1682983, *2, 2000 U.S. Dist. LEXIS 15108, *6 (E.D.Cal. Sept. 11, 2000); Dogwood Forest Rest Home, Inc. v. United States, 181 F.Supp.2d 554, 560-61 (E.D.N.C.2001); (see also Docket Nos. 54, 62).

104. Plaintiffs cite In re American Biomaterials Corp., 954 F.2d 919, 927 (3rd Cir.1992) in support of its argument that reasonable cause exists to abate the penalties assessed against Plaintiff for periods in 1999-2002. The American Biomaterials court held that “when the officers of a corporation commit criminal acts [e.g., embezzlement] against the corporation” and these crimes are “prove[n] to be the cause of the corporation’s failures to fulfill its duties under the tax code[,]” the corporation may be able to establish reasonable cause. 954 F.2d at 927.

105. In American Biomaterials, two employees, MacKay, the president, Chief Executive Officer and chairman of the board of directors, and Russell, Chief Financial Officer and treasurer of the corporation, embezzled funds from the corporation. 954 F.2d at 922. These were the only officers responsible for filing tax returns and ensuring payment of those taxes. Id. Their embezzlement scheme, combined with their positions within the company, “incapacitated the corporation,” rendering the corporation unable to file its tax returns and pay its taxes. Id. at 921.

106. While holding that the criminal actions of MacKay and Russell enabled the corporation to establish reasonable cause, the American Biomaterials court also noted that “[i]f a corporation has lax internal controls or fails to secure competent external auditors to ensure the filing of timely tax returns and deposit and payment of taxes, it fails to show reasonable cause or absence of willful neglect and is itself liable for statutory penalties ...” 954 F.2d at 927 & 927, n. 8.

107. Plaintiff asserts that its particular situation is more compelling than the situation from American Biomaterials and requests this Court to reconsider its decision to deny Plaintiffs refund claim (i.e., abate the penalties for 1999-2002).

108. During trial, Plaintiff never alleged nor presented any evidence to show that Ezequiel, or any other employee of Plaintiff, engaged in any criminal action. In fact, Plaintiff provided no explanation or testimony at all as to why Ezequiel was not properly filing and paying Plaintiffs employment taxes.

109. Ezequiel simply neglected to perform the duties assigned to him as Plaintiffs employee to file returns and pay Plaintiffs employment taxes. See supra Section I at ¶¶ 5-9. Plaintiffs office manager should have been supervising Ezequiel’s filing of the employment tax returns and deposits, but failed to recognize and correct Ezequiel’s failure. See supra Section I at ¶¶ 6-9; (Pl.Ex. 6).

110. Plaintiff does not allege or provide any evidence that Ezequiel’s failure to file or pay was part of some a criminal scheme to defraud the Plaintiff as was the case in American Biomaterials. See 954 F.2d at 921-22.

111. Plaintiff did not provide any evidence that Ezequiel’s failure to pay involved a plot with his supervisor in a manner that might “incapacitate” Plaintiff from adequately supervising Ezequiel’s actions as was the case in American Biomaterials. See In re American Biomaterials Corp., 954 F.2d at 921-22.

112. Plaintiff, rather than present a more compelling situation than American Biomaterials, instead falls squarely into the category of having “lax internal controls or failfing] to secure competent external auditors” that even the court in American Biomaterials stated was insufficient to establish reasonable cause. See 954 F.2d at 927; see also McMahan v. Commissioner, 114 F.3d 366, 371 (2d Cir.1997); Conklin Bros., 986 F.2d 315, 318 (9th Cir.1993); Bell v. United States, No. 2:99-cv-1995, 2000 WL 1682983, at *2, 2000 U.S. Dist. LEXIS 15108, at *6; Dogwood Forest Rest Home, Inc. v. United States, 181 F.Supp.2d 554, 560-61 (E.D.N.C.2001).

113. Plaintiff failed to establish reasonable cause for the abatement of penalties assessed for periods in 1999-2002. This Court re-affirms its decision from summary judgment denying Plaintiffs refund claims and request for the abatement of penalties for 1999-2002.

114. Plaintiff has not paid the penalties and some accrued interest covered by the 1999-2002 lien. (See Johnson, Day 2); (PI. Ex. 78). By re-affirming the decision to deny Plaintiffs claim for abatement, these penalties and interest still remain outstanding liabilities covered by the 1999— 2002 lien.

2. Failure to Receive Notice of its Delinquency from the IRS

115. Plaintiff also presented testimony to support its claim that Plaintiff is entitled to abatement for reasonable cause because the IRS did not notify Plaintiff of Plaintiffs failures to file employment tax returns, timely pay its taxes, and deposit its taxes. {See Hargis, Day 1); (Johnson, Day, 1, Day 2). In other words, Plaintiff asserts that the IRS was under some ongoing duty to inform Plaintiff that the Plaintiff was not filing tax returns or paying its taxes.

116. “When a return of tax is required ... the [taxpayer] required to make such return, shall, without assessment or notice and demand from the Secretary, pay such tax .26 U.S.C. § 6151. Plaintiff was responsible for filing its returns and paying its taxes on time and remained responsible to file those return and taxes after it missed the proper return deadline. The IRS does not have to provide the Plaintiff with any notice that Plaintiff failed to file its return or pay its taxes.

117. The lack of notification from the IRS that Plaintiff was failing to comply with its tax obligations therefore does not create reasonable cause to abate the penalties assessed for periods in 1999-2002.

3. Conclusion

118. Plaintiff did not provide any evidence or case law to persuade this Court to reconsider its finding on summary judgment that no reasonable cause existed to abate the penalties for 1999-2002.

119. There are still outstanding liabilities on the 1999-2002 lien. {See Johnson, Day 2). Plaintiff thus failed to demonstrate that the liabilities on the 1999-2002 lien have been satisfied and cannot support a 26 U.S.C. § 7432 claim on this ground.

C. Plaintiff’s Claim the 1999-2002 Lien is Unenforceable

1. Procedural Considerations under 26 U.S.C. §§ 6320, 6321

120. IRS Appeals Officer Darling determined during Plaintiffs CDP appeal that the procedures set out in 26 U.S.C. § 6321 were met prior to the filing of the 1999-2002 lien. (Pl.Ex. 75). This Court held that Darling’s finding was not an abuse of discretion and upheld the determination of the IRS Appeals Office on summary judgment. (Docket No. 54); (see Docket No. 23).

121. Nevertheless, Plaintiff appears to re-litigate the issue of whether it received the required notice and demand for the amounts on the 1999-2002 lien as required by 26 U.S.C. § 6321. (See Sobrevilla, Day 2). Failure to follow statutory procedures prior to the filing of the 1999-2002 lien may make the lien unenforceable. See 26 U.S.C. §§ 6321 (1954), 6325.

122. Section 6321 requires that, prior to filing a lien, the IRS must: (1) make an assessment of the tax, including interest, additional amounts, and penalties owed by the taxpayer; (2) notify the taxpayer of the assessment; and (3) give the taxpayer time to pay the amount assessed. 26 U.S.C. § 6321. No other requirements must be met prior to the filing of a lien by the IRS. See id.

123. The IRS must also send notice of the filing of a lien within five business days after the filing of notice of the lien. 26 U.S.C. § 6320(a)(2)(C) (1998). Plaintiff admits to receiving this notice. (Pl.Ex. 56).

124. Despite this Court’s finding on summary judgment to the contrary, Plaintiff claims the Defendant cannot demonstrate Plaintiff ever received notice pursuant to 26 U.S.C. § 6821 because the IRS Certificate of Assessments and Payments (the “IRS transcripts”) are inaccurate and Plaintiffs appeal of the IRS denial of penalty abatement required the Defendant to resend notice and demand under 26 U.S.C. § 6321 prior to the filing of a lien.

2. Providing Notice Pursuant to 26 U.S.C. § 6321

125. The IRS Certificate of Assessments and Payments attest to all the transactions that have posted to a taxpayer’s account for a particular period. (See Sobrevilla, Day 2). These transcripts are the official records of the IRS. (Id.).

126. It is well-established that the IRS transcripts are presumptive proof that the IRS gave notice of the assessments and made demand for payment pursuant to 26 U.S.C. § 6321. See, e.g., Geiselman v. United States, 961 F.2d 1, 6 (1st Cir.1992).

127. The IRS transcripts clearly show that taxes, including interest and penalties, were assessed against Plaintiff for the periods covered on the 1999-2002 lien and that Plaintiff was sent notices of assessments for these periods. (See, e.g., Def. Ex. 1 at pp. 15, 32). Plaintiffs representative admits that assessments were made. (Barrera, Day 1). Plaintiff also requests this Court make a finding of fact that “[i]n 2003 Plaintiff began receiving penalty notices ...” (PLFindings, p. 19). Johnson also testified that Plaintiff received penalty notices. (Johnson, Day 2).

128. Plaintiff, nevertheless, states that the testimony of IRS Revenue Officer Sobrevilla “destroyed” the integrity of the IRS transcripts regarding the IRS’s notice and demand to Plaintiff for assessments made for periods in 1999-2002. (Pl.Findings, p. 12).

a. Plaintiff’s Impeachment of the IRS Transcripts

129. Plaintiff presented testimony in an attempt to demonstrate that various indicators on the IRS transcripts signify events that did not actually occur or did not occur on the date designated in the IRS transcripts, thereby destroying the integrity of the transcripts. (See, e.g., Trial Tr., Day 2). Plaintiff attacked the transcripts generally, frequently jumping between periods covered by the 1999-2002 lien and 2003-2004 lien. It appears Plaintiff sought to impeach the IRS transcripts generally, so that this Court would find the entire transcript was false, and that the transcripts could not be relied on as presumptive proof of IRS compliance with the statutory requirements of 26 U.S.C. § 6321.

i. The “Federal Tax Lien” Indicator

130. The IRS transcript for Plaintiffs third quarter 2003 Form 941 tax account lists the indicator “Federal Tax Lien” on April 29, 2005. (Def. Ex. 1 at pp. 164, 173). Among the many parts of the IRS transcript attacked, Plaintiff maintained that this indicator was incorrect because the 2003-2004 lien was not filed until May 9, 2005. (Trial Tr., Day 2, Day 3).

131. The IRS transcript for Plaintiffs third quarter 2001 and fourth quarter 2001 Form 941 tax accounts list the indicator “Federal Tax Lien” on May 6, 2005. (Def. Ex. 1 at pp. 106,114). Plaintiff maintained these indicators were also incorrect because the 1999-2002 lien was not filed until May 20, 2005. (Trial Tr., Day 2, Day 3).

132. Plaintiff stated that these alleged inaccuracies “confirmed the transcripts are incorrect” and that the transcripts should not be “entitled to any prima facie evidentiary value.” (Trial Tr., Day 2).

133. IRS Revenue Officer Sobrevilla repeatedly explained that the date listed on the transcript next to the “Federal Tax Lien” indicator is the approximate date that the lien was requested. (Sobrevilla, Day 2, Day 3). The “Federal Tax Lien” indicator does not state the date the federal tax lien was actually filed. (Id. at Day 3).

134. Sobrevilla testified that the date he requests a lien is different from the date the lien is filed with the Texas Secretary of State. (Sobrevilla, Day 2). Liens requests are batched by the IRS system and then sent to the Texas Secretary of State when there are enough liens to justify sending a check to cover the lien filing fees. (Id.) The IRS transcript does not show the date the lien was filed with the Texas Secretary of State. (Id. at Day 3).

135. Sobrevilla requested that the 2003-2004 lien be filed on April 28, 2005. (Sobrevilla, Day 2). A lien indicator on April 29, 2005 fits within Sobrevilla’s explanation of that the indicator represents the approximate date a request for filing of a lien was made.

136. Plaintiff provided no evidence to show why Sobrevilla’s explanation was false or was not a reasonable explanation for the presence of the indicator.

137. As presented, Plaintiffs evidence regarding the “Federal Tax Lien” indicator does not damage the integrity of the IRS transcripts.

ii. Plaintiff Counsel’s Failure to Receive Notice of the Filing of the Lien

138. Plaintiff asserts that any transcript indicator showing that Plaintiff was sent notice of the filing of the lien pursuant to 26 U.S.C. § 6320 was incorrect because Plaintiffs counsel never received notice of the filing of the lien pursuant. (See Trial Tr., Day 3).

139. The only person entitled to receive notice pursuant to 26 U.S.C. § 6320 of the filing of a lien is the taxpayer named on the Notice of Federal Tax Lien. Treas. Reg. § 301.6320-l(a)(2), Q & A (Al) (as amended in 1999). “Person” is defined as the person liable to pay the tax due after notice and demand who refuses or neglects to pay the tax due (i.e., the taxpayer). Id. The taxpayer, and only the taxpayer, is entitled to notice. See id. at § 301.6320-1(a)(2), Q & A (A7) (as amended in 1999). Therefore, only the Plaintiff and not Plaintiffs counsel was entitled to notice under 26 U.S.C. § 6320.

140. While sending notice to counsel may have been appropriate, and perhaps even more professional, Plaintiffs counsel was not entitled to notice pursuant to 26 U.S.C. § 6320 and Plaintiffs evidence that it received notice and that its counsel did not, therefore, does not diminish the integrity of the IRS transcripts.

iii. The “Statutory Notice of Intent to Levy” Indicator

141. Several of the IRS transcripts involved in this case list the indicator “Statutory Notice of Intent to Levy.” (See Trial Tr., Day 3).

142. Plaintiff avers that such notices of intent to levy were never sent. (Id.)

143. Sobrevilla could not testify by-looking at the transcript as to what the references to statutory notices of intent to levy referred. (Sobrevilla, Day 3).

144. Plaintiffs concerns regarding this indicator focused on the fact that notices of intent to levy were sent out while Sobrevilla was in charge of the case, but Sobrevilla never requested those notices and had no knowledge of those notices. (Trial Tr., Day 3).

145. Sobrevilla testified that Revenue Officers are not the only IRS agents authorized to send out a statutory notice of intent to levy. (Sobrevilla, Day 3). The IRS Automated Collection System is also authorized to send out statutory notices of intent to levy and could have sent out these notices independent of Sobrevilla’s work on Plaintiffs accounts. (Id.)

146. Plaintiff did not present any evidence to show why Sobrevilla’s alternate explanation for the presence of these indicators was false.

147. As presented, Plaintiffs argument regarding the “Statutory Notice of Intent to Levy” indicator does not overcome the well-established presumption of the integrity of the IRS transcripts.

iv. The “Legal Suit” Indicator

148. Plaintiff also contends that the IRS transcripts were inaccurate for listing a “Legal Suit” on June 13, 2005. (Trial. Tr., Day 3); (see Def. Ex. 2 at p. 3).

149. As entered on the IRS transcripts, a “Legal Suit” does not necessarily mean a lawsuit as it is understood in the context of litigation. (See Sobrevilla, Day 3). The “Legal Suit” indicator could represent an account in bankruptcy, pending litigation, or a CDP appeal. (See id.)

150. Plaintiff stated that even if “Legal Suit” could represent a CDP appeal, Plaintiff filed its CDP appeal on May 27, 2005, not June 13, 2005 as listed by the indicator. (Trial Tr., Day 3).

151. Sobrevilla testified that the “Legal Suit” indicator demonstrates when the CDP appeal posts to the IRS system, which is usually not the date the CDP request was filed. (See Sobrevilla, Day 3). Plaintiffs CDP appeal did not post on May 27, 2005, the day it was filed or sent to the IRS. (See id.)

152. Plaintiff did not produce any evidence to demonstrate why Sobrevilla’s explanation for the indicator appearing on June 13, 2005 instead of May 27, 2005 was false.

153. As presented, Plaintiffs argument regarding the “Legal Suit” indicator does not damage the integrity of the IRS transcripts.

v. Conclusion

154. This Court disagrees with Plaintiffs contention that it “destroyed” the integrity of the IRS transcripts. None of Plaintiffs attempts to impeach the IRS transcripts were particularly effective and most were countered by a reasonable explanation from IRS Revenue Officer Sobrevilla.

155. Most notably, Plaintiff did not present any evidence in reference to the integrity of the indicators actually applicable to the live issues in this case: the indicators that assessment was made and notice sent pursuant 26 U.S.C. § 6321.

These are the only indicators actually relevant to Plaintiffs 26 U.S.C. § 7432 claim.

156. Plaintiff has not overcome the well-established presumption that a transcript notation that statutory notice was sent to the Plaintiff satisfies the statutory requirements of 26 U.S.C. § 6321. See Geiselman v. United States, 961 F.2d 1, 6 (1st Cir.1992).

157. Since the IRS transcripts clearly indicate that Plaintiff received statutory notice for the periods covered by the 1999-2002 lien, this Court reaffirms its holding from summary judgment that Defendant complied with the statutory requirements of 26 U.S.C. § 6321 prior to filing the 1999-2002 lien.

b. Filing Liens During Plaintiff’s Appeal of the Denial of Penalty Abatement

158. Plaintiff also asserts that its appeal of the IRS denial of Plaintiffs request for the abatement of penalties required the IRS to reissue statutory notice pursuant to 26 U.S.C. § 6321. (Pl.Findings, p. 13).

159. On January 14, 2004, Plaintiff filed a Form 843 request for the abatement of penalties, including periods from 1999 to 2002. (Pl.Ex. 6).

160. Plaintiffs request for abatement of penalties was denied by IRS Revenue Officer Alice Rios (“Rios”) on October 14, 2004 for failure to demonstrate reasonable case. (Pl.Ex. 32). Rios’ determination was forwarded to the Appeals Division for review. (Id.)

161. The IRS Appeals Division formally denied the appeal on May 9, 2005. (PI. Ex. 51).

162. Plaintiff asserts that the IRS had to resend notice of Plaintiffs tax liability after this final ruling May 9, 2005 because the amounts Plaintiff owed were not known until the IRS completed its analysis of Plaintiffs appeal. (PLFindings, p. 13). Plaintiff claims that the letter from Sobrevilla dated May 27, 2005 was the first notice and demand for payment. (See PI. Ex. 54). Plaintiffs argument follows that any lien filed prior to June 6, 2005 (which would include all hens at issue in this case) would be invalid and unenforceable for failure to provide notice and demand prior to the filing of the lien. See 26 U.S.C. § 6321.

163. Plaintiff provides this Court no authority to show that appealing the denial of a Form 843 request for abatement of penalties requires the IRS to resend statutory notices pursuant to Section 6321, especially when the appeal does not change the amounts in question.

164. The requirements of 26 U.S.C. § 6321 were met by the initial statutory notice and demand sent to the Plaintiff by the IRS. See 26 U.S.C. § 6321.

165. Plaintiff has given this Court no persuasive reason to reconsider its decision on summary judgment that the IRS met the requirements of 26 U.S.C. § 6321 through assessments and notices sent beginning in 2003.

166. Since the IRS met the requirements of 26 U.S.C. § 6321 prior to filing the 1999-2002 hen, the 1999-2002 lien is enforceable.

D. Release of the 1999-2002 Lien Pursuant to 26 U.S.C. § 7432

167. There are three ways in which a Plaintiff can demonstrate that a hen should be released by the IRS: (1) the liabilities on the hen have been satisfied; (2) the hen is unenforceable; or (3) Plaintiff furnished a bond to the IRS which was accepted by the IRS. 26 U.S.C. § 6325.

168. Plaintiff did not satisfy the liabilities on the 1999-2002 hen nor did it demonstrate that the 1999-2002 hen was unenforceable for failure to provide statutory notice.

169. Plaintiff did not allege or present any evidence to show that it furnished a bond for the 1999-2002 hen that was accepted by the IRS. (See, e.g., Johnson, Day 1); (Barrera, Day 1); see also 26 U.S.C. § 6325.

170. Plaintiff faded to carry its burden of proof on any of the three methods for showing that the 1999-2002 hen should have been released pursuant to 26 U.S.C. § 6325. Because a claim under 26 U.S.C. § 7432 requires a violation of 26 U.S.C. § 6325, Plaintiffs claim regarding the release of the 1999-2002 hen fails. See 26 U.S.C. § 7432.

IV. Plaintiff’s § 7432 Claim for Failure to Release the 2003-2004 Lien

171. Plaintiff also filed a claim under 26 U.S.C. § 7432 regarding the failure of the IRS to release the 2003-2004 hen. Plaintiff raises many of the same legal and factual arguments this Court just discussed regarding the 1999-2002 hen in Section III.

172. Plaintiff states that the 2003-2004 hen should have been released because: (i) Plaintiff allegedly made an offer to furnish a bond that was rejected by the IRS; (ii) the hen was unenforceable due to the failure of the IRS to follow the procedural requirements of 26 U.S.C. §§ 6320 & 6321; or (hi) the liability covered by the 2003-2004 hen was satisfied on May 10, 2005. {See PI. Findings, pp. 13-14).

A. Furnishing a Bond to Cover the Liabilities of the 2003-2004 Lien

173. A lien can be released if the taxpayer furnishes a bond to the IRS and that bond is accepted by the IRS. 26 U.S.C. § 6325.

174. Johnson, on behalf of the Plaintiff, considered offering a bond on May 10, 2005 to prevent the filing of the 2003-2004 hen. (Barrera, Day 1); (Hargis, Day 1); (Johnson, Day 1).

175. Sobrevilla, on behalf of the IRS, could not agree to a bond at the time of the meeting. (Barrera, Day 1); {see Hargis, Day 1); (Johnson, Day 1). The acceptance of any bond or pledge was left to Sobrevilla’s manager. (Barrera, Day 1).

176. The Plaintiff never furnished a bond to the IRS. (Barrera, Day 1); (Johnson, Day 2).

177. While Plaintiff may have considered furnishing a bond to the IRS at one point, Plaintiff never followed through with the bond, and the IRS never accepted a bond from the Plaintiff, as required for a release of hen under 26 U.S.C. § 6325. Plaintiff, therefore, presents no factual basis for asserting the “furnishing of a bond” as a ground for the release of the 2003-2004 hen.

B. Unenforceability of the Lien

178. Plaintiff states that the 2003-2004 hen was unenforceable because the IRS failed to follow the procedural requirements for providing notice in 26 U.S.C. §§ 6320 & 6321 prior to filing the lien. (See PI. Findings, pp. 13-14).

179. Plaintiffs arguments mirror its arguments on not receiving statutory notice for the periods covered by the 1999-2002 lien. (See PL Findings, p. 13); supra Section III. Plaintiff again attacks the accuracy of the IRS transcripts and the effect of Plaintiffs appeal of the IRS’s denial of penalty refunds and abatement. (Pl.Findings, p. 12).

1. Notice and Demand to Plaintiff Pursuant to 26 U.S.C. § 6S21

a. Impeachment of the IRS Transcripts

180. Plaintiff again directs this Court to the testimony of IRS Revenue Officer Sobrevilla, stating that the testimony “destroyed” the integrity of IRS transcripts listing statutory notifications pursuant to 26 U.S.C. § 6321 sent to Plaintiff regarding the tax periods covered by the 2003-2004 lien. (Pl.Findings, p. 12).

181. As stated in Section III of this decision, Plaintiff failed to present evidence, at least to satisfy this factfinder, that would upset the presumptive accuracy of the IRS transcripts. See Geiselman v. United States, 961 F.2d 1, 6 (1st Cir.1992); see also supra Section III. Plaintiffs arguments regarding the integrity of the IRS transcripts do not even address the specific concerns of this case: whether the IRS made assessments and sent notice of those assessments pursuant to 26 U.S.C. § 6321.

b. Proper Notification Pursuant to 26 U.S.C. § 6321

182. Plaintiff asserts that it failed to receive proper statutory notice of assessments as required by 26 U.S.C. § 6321 prior to the filing of the 2003-2004 lien by the IRS. This Court first turns to the events that led to the assessment of penalties against Plaintiff for periods in 2003-2004 and then to the evidence offered by Defendant showing that the IRS sent Plaintiff statutory notice according to 26 U.S.C. § 6321.

183. Plaintiffs employees did not receive adequate training on the Texas State Bank software used by Plaintiff to pay its employment taxes electronically through the IRS EFTPS system. See supra Section I at ¶¶ 25-33. This lack of training led to errors in submitting payments to the IRS. (See id.)

184. Each time errors were made in the submission of data, the IRS received Plaintiffs deposits and payments a few days late. See supra Section I at ¶ 34; (Def. Ex. 1 at pp. 152-153, 163, 172).

185. The IRS assessed penalties against Plaintiff for late payments for these tax periods in 2003-2004. (Def. Ex. 1 at pp. 152-153,163,172).

186. The IRS sent Plaintiff a “Statutory Notice of Balance Due” for each period covered by the 2003-2004 lien satisfying the notice requirement of 26 U.S.C. § 6321. (Def. Ex. 2 at p. 24) (sending notice for Plaintiffs 2003 Form 940 on April 19, 2004); (Def. Ex. 1 at p. 167) (sending notice for third quarter 2003 Form 941 on December 29, 2003); (Id. at p. 176) (sending notice for fourth quarter 2003 Form 941 sent March 15, 2004); (Id. at 182) (sending notice for first quarter 2004 Form 941 sent December 27, 2004); see Geiselman v. United States, 961 F.2d 1, 6 (1st Cir.1992)., 961 F.2d at 6. The IRS sent Plaintiff notices of balance for its second quarter