Assessment Page 1

Trust Fund Handbook page1
Trust Fund Handbook page2
Trust Fund Handbook page3
Tax Fraud
Willfulness - knowledge of non-payment
Statute of Limitations
Assessment p1
Assessment p2
Assessment p3
GCM 33653

Thomas A. Gutherie, Sr., Plaintiff v. United States of America , Defendant.

U.S. District Court, East. Dist. Tenn. ; 1:03-CV-46, January 26, 2005 .

Related DC Tenn. case at 2004-1 USTC ¶50,257.

[ Code Sec. 6672]

Trust fund recovery penalty: Responsible person: Assessment: Employer's payments: IRS obligations. --

The former president of a bankrupt employer was not entitled to a refund of amounts he had paid on a trust fund recovery penalty that was assessed against him personally. Since the taxpayer did not show that the assessment of the penalty was invalid or erroneous, the IRS was entitled to judgment as a matter of law. Moreover, delinquent employment taxes that the employer had paid during its bankruptcy did not relieve the taxpayer of the penalty because the penalty was assessed with respect to employment taxes that remained unpaid after the bankruptcy was concluded. Finally, the taxpayer's claim that the IRS failed to try to collect the taxes from the employer during the bankruptcy was irrelevant because the IRS is not required to attempt to collect from an employer before imposing the penalty on a responsible person.

ORDER

COLLIER, District Judge: In accordance with the accompanying Memorandum, the Court hereby GRANTS Defendant's Motion for Summary Judgment (Court File No. 15), and DENIES Plaintiff's Cross Motion for Summary Judgment (Court File No. 17).

SO ORDERED.

MEMORANDUM

Plaintiff, pro se, Thomas A. Gutherie, Sr. brings this action under 26 U.S.C. §7422 for recovery of sums paid toward civil tax penalties (Court File No. 1). This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §1346(a)(1) and venue lies in this district pursuant to 28 U.S.C. §1402(a)(1).

Before the Court are a Motion for Summary Judgment filed by Defendant United States of America ("Defendant") (Court File No. 15) and a Cross Motion for Summary Judgment filed by Plaintiff Thomas A. Gutherie, Sr. ("Plaintiff") (Court File No. 17). In resolving these motions, the Court considered Defendant's supporting memorandum and response (Court File No. 15, Exh. 4; Court File No. 20) and Plaintiff's supporting memorandum and response (Court File No. 18). For the following reasons, the Court will GRANT Defendant's Motion for Summary Judgment and DENY Plaintiff's Cross Motion for Summary Judgment.



I. STANDARD OF REVIEW

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Initially, the burden is on the moving party to conclusively show no genuine issue of material fact exists, Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003), and the Court must view the evidence and draw all reasonable inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). However, the nonmoving party is not entitled to a trial merely on the basis of allegations, but must come forward with some significant probative evidence to support its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Id. at 323, 106 S.Ct. at 2552.

The Court determines whether sufficient evidence has been presented to make the issue of fact a proper jury question, but does not weigh the evidence, judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Weaver v. Shadoan, 340 F.3d 398, 405 (6th Cir. 2003). The standard for summary judgment mirrors the standard for directed verdict. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. The Court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2512. There must be some probative evidence from which the jury could reasonably find for the nonmoving party. If the Court concludes a fair-minded jury could not return a verdict in favor of the nonmoving party based on the evidence presented, it may enter a summary judgment. Id. ; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).



II. RELEVANT FACTS

The United States Bankruptcy Code requires most employers to withhold Social Security, Medicare, and federal income taxes from their employees' wages. See 26 U.S.C. §§3102, 3402. This money is held in trust by the employer for the United States until it is paid to the Internal Revenue Service (" IRS ") on a quarterly basis; these monies often are called "trust fund taxes." 26 U.S.C. §7501(a); Bell v. United States [ 2004-1 USTC ¶50,118], 355 F.3d 387, 392 (6th Cir. 2004). Employers who willfully fail to remit the withheld trust fund taxes are personally liable for 100 percent of those taxes, as a civil tax penalty under 26 U.S.C. §6672 ("Section 6672").

Greensboro Lumber Company (" GLC "), of which Plaintiff was president, failed to pay the trust fund taxes it owed for the first and third quarters of 1990, the taxable periods ending March 31, 1990 and September 30, 1990, respectively. GLC filed a bankruptcy petition for Chapter 11 reorganization on November 5, 1990 (Court File No. 1, Exh. A). In GLC 's bankruptcy proceedings, the IRS asserted a secured claim of $41,925.10 in unpaid trust fund taxes for the first quarter of 1990 and an unsecured claim of $18,477.80 in unpaid trust fund taxes for the third quarter of 1990 (Court File No. 15, Exh. 2). On November 12, 1993, GLC settled the IRS 's secured claim for trust fund taxes for the first quarter of 1990 by paying $64,191.08 in taxes, penalties, and pre- and post-petition interest (Court File No. 15, Exh. 2; see also In re Greensboro Lumber Co. [ 95-1 USTC ¶50,259], 183 B.R. 316, 317 (Bankr. M.D. Ga. 1995)).

After the GLC bankruptcy was complete, on February 20, 1995, Plaintiff personally was assessed a penalty (referred to by parties as the "trust fund recovery penalty") of $26,164.10 under Section 6672 for his failure as president of GLC to pay GLC 's trust fund taxes for the third quarter of 1990 (Court File No. 15, Exh. 1). Plaintiff paid various amounts towards this penalty between 1993 and 2001, totaling $8,039.92 (Court File No. 1). On June 30, 2000, Plaintiff filed a Claim for Refund and Request for Abatement with the IRS , seeking a refund of payments he had made between November 1, 1993 and April 15, 2000 (Court File No. 1, Exh. A). The IRS disallowed Plaintiff's claim for refund on February 12, 2001, and on February 7, 2003, Plaintiff filed this action seeking recovery of the amounts he paid between 1993 and 2001. In response to Defendant's motion to dismiss (Court File No. 4), this Court held Plaintiff had met jurisdictional prerequisites only for payments he made on August 4, 1998 ($816.36) and April 15, 2000 ($273.94), and dismissed his claims for all other payments ( See Court File Nos. 8, 9). Accordingly, Plaintiff proceeds only in his claims for recovery of those two payments, totaling $1,090.30, plus interest, and costs and other relief allowed by law.

Defendant filed an answer and counterclaim against Plaintiff on May 26, 2004, asserting Plaintiff owes $43,292.10 on the trust fund recovery penalty assessed against him, plus statutory interest, penalties, and additions accruing on this amount since March 1, 2004. Defendant seeks this amount, the costs of prosecuting this action, and such other relief as the Court deems just and proper (Court File No. 10).



III . DISCUSSION

A. Plaintiff's Claims

Tax assessments are presumed correct, so a plaintiff filing suit for refund of an assessment he has paid in part has the burden of showing the assessment is inaccurate or erroneous. Collins v. United States [ 88-1 USTC ¶9386], 848 F.2d 740, 742 (6th Cir. 1988), citing Avco Delta Corp. v. United States [ 76-2 USTC ¶9570], 540 F.2d 258, 262 (7th Cir. 1976), cert. denied sub nom. Canadian Parkhill Pipe Stringing Ltd., 429 U.S. 1040, 50 L.Ed.2d 752, 97 S.Ct. 739 (1977). The statute under which Plaintiff was assessed the trust fund recovery penalty states:

Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

26 U.S.C. §6672. Plaintiff may show the assessment under Section 6672 was inaccurate or erroneous by proving by a preponderance of the evidence he was not a responsible person who willfully failed to pay the trust fund taxes. Bell [ 2004-1 USTC ¶50,118], 355 F.3d at 393.

In his complaint, Plaintiff contests neither his responsibility for paying the trust fund taxes nor his willful failure to pay them (Court File No. 1), and in his cross motion for summary judgment and response, Plaintiff concedes the IRS was proper in assessing this penalty under the statute (Court File No. 18, p. 1). Plaintiff instead focuses on two collateral issues as the reasons the IRS erroneously asserted the trust fund penalty against him, which the Court will address in turn. Because the parties do not contest the propriety of Defendant's assessment of the trust fund recovery penalty against Plaintiff under the statute, the Court only will address Plaintiff's claims the assessment was erroneous for non-statutory reasons.

The Court notes at the outset Plaintiff in his cross motion for summary judgment and response relies on Defendant's statement of undisputed facts in its motion for summary judgment ( see Court File No. 17, p. 1), thus the parties agree there are no genuine disputes of any material facts.

1. Trust Fund Taxes Already Had Been Paid by GLC

Plaintiff in his first claim asserts any trust fund taxes GLC owed were paid in full during GLC 's bankruptcy by GLC 's $64,191.08 payment to the IRS , thus the assessment against him under Section 6672 was improper (Court File No. 1 ¶11). Because the IRS is entitled to only one satisfaction of the trust fund tax liability, once it has obtained that satisfaction from the employer, it must abate all assessments against responsible individuals under Section 6672. Calderone v. United States , 799 F.2d 254, 258 (6th Cir. 1986). Accordingly, Plaintiff may show his assessment was erroneous by proving the IRS already had obtained satisfaction of the trust fund tax liability from GLC .

Although Plaintiff argued in his complaint the parties involved in GLC 's bankruptcy intended GLC 's $64,191.08 payment to satisfy the unpaid tax liability for the third quarter of 1990 that was later assessed against him under Section 6672 (Court File No. 1, ¶¶12-15), Plaintiff made no such argument and put forth no proof of any such agreement in his cross motion for summary judgment and response ( See Court File Nos. 17, 18). Plaintiff has not put forth any evidence, much less the significant probative evidence required in a response to a motion for summary judgment, to support his claim this payment satisfied the tax liability for the third quarter of 1990, therefore Plaintiff has not shown the trust fund taxes for which he was assessed already had been paid by GLC . Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.

Additionally, Defendant submitted two pieces of evidence refuting Plaintiff's claim of prior satisfaction, the proof of claim it filed during GLC 's bankruptcy showing a secured claim in the amount of $41,925.10 for the first quarter of 1990 and an unsecured claim for $18,477.80 for the third quarter of 1990 (Court File No. 15, Exh. 2), and an opinion issued in GLC 's bankruptcy proceeding showing the $64,191.08 payment applied only to the secured claim for the first quarter of 1990:

The IRS 's secured claim includes $49,500.31 for prepetition taxes, penalties, and interest... [and] $14,690.77 in postpetition interest. In order to stop the accrual of postpetition interest, [ GLC ] issued a check dated November 12, 1993 , in the amount of $64,191.08. The check was payment in full of the amount demanded by the IRS .

In re Greensboro Lumber Co. [ 95-1 USTC ¶50,259], 183 B.R. 316, 317 (Bankr. M.D. Ga. 1995) (emphasis added). This evidence shows the third quarter tax liability was not paid by GLC in its $64,191.08 payment, thus it had not been satisfied when the IRS assessed its penalty for this tax liability against Plaintiff under Section 6672.

Because tax assessments are presumed correct, and Plaintiff has not met his burden of showing GLC 's prior satisfaction of the tax liability rendered this assessment inaccurate or erroneous, Defendant must prevail as a matter of law, and the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on this claim. See Collins [ 88-1 USTC ¶9386], 848 F.2d at 742.

2. Defendant Permitted GLC 's Assets to be Dissipated and Lost Instead of Applied to the Tax Burden

Plaintiff argues, as an alternative to his first argument, Defendant should be prohibited from pursuing GLC 's unpaid trust fund taxes from him because it failed to make a good faith effort to collect these taxes from GLC 's assets ¹ during its bankruptcy (Court File No. 1, ¶19). Defendant correctly notes the personal liability Section 6672 creates is separate and distinct from the trust fund tax liability imposed on the employer, and the IRS has no obligation to attempt to collect trust fund taxes from the employer before assessing a penalty against an individual under Section 6672. Calderone, 799 F.2d at 257; see also Frank v. D'Ambrosi [ 93-2 USTC ¶50,625], 4 F.3d 1378, 1386 (6th Cir. 1993). Defendant's argument is supported by the plain language of Section 6672, which does not require any effort by the IRS to collect these taxes from the employer before the IRS may assess the penalty against a responsible person. See generally 26 U.S.C. §6672. Therefore, the IRS 's failure, if any, to collect GLC 's assets and apply them to the trust fund tax liability has no bearing on Defendant's ability to assess a penalty against Plaintiff under Section 6672, and Defendant must prevail on this claim as a matter of law.

Plaintiff has not pointed to any statute or relevant caselaw to refute Defendant's argument. The majority of the cases Plaintiff cites in support of his argument are unconvincing on three counts, in that they are not binding precedent on the Court, do not require the rule for which Plaintiff argues, and did not arise in similar factual situations to the one at hand. See In re Greenberg, 105 B.R. 691 (M.D. Fla. 1989) (individuals in bankruptcy sought order requiring IRS to apply tax payments by employer to trust fund liability for which individuals could be held liable; court required IRS to seek payment in manner furthering interest of the government in maximizing revenue and treating taxpayers equitably and fairly, remanded for evidentiary hearing); Kelly v. Lethert [ 66-2 USTC ¶9509], 362 F.2d 629, 635 (8th Cir. 1966) (court denied injunction to individual assessed penalty under Section 6672 because that section makes responsible individuals and employer "equally liable as co-debtors to the Government, and the Government may proceed against either in the order best suited in its judgment to collect the unpaid tax," although, as a matter of fairness, IRS should seek payment of trust fund taxes from employer first); Tozier v. United States [ 65-2 USTC ¶9621], 1965 U.S. Dist. LEXIS 9801 at *26 (W.D. Wash. April 13, 1965) (court held Section 6672 penalty void where, after expressly agreeing to apply employer's tax payments only to trust fund tax liability for which individuals could be held liable under Section 6672, IRS applied employer's tax payments to other liabilities, then assessed Section 6672 penalty against individuals).

Plaintiff cites one case that stands for a proposition that would support his argument, McCarty v. United States [ 71-1 USTC ¶9232], 437 F.2d 961 (Ct.Cl. 1971) ( IRS abused its discretion in collecting tax from individual under Section 6672 rather than from employer where it could have foreclosed on tax liens on employer's property to collect tax liability). However, in a fact situation very similar to the one before the Court, the United States Court of Appeals for the Sixth Circuit expressly refused to extend the McCarty holding to void a Section 6672 penalty and limited McCarty to its facts, those unusual circumstances where the government itself prevented the employer from paying the trust fund taxes. See Calderone, 799 F.2d at 257 ( McCarty did not apply where financially distressed employer simply failed to pay trust fund taxes and IRS assessed a penalty under Section 6672 against its president). Plaintiff does not allege the government itself or any of its agencies prevented GLC from paying the trust fund taxes at issue here, thus McCarty does not apply to require the IRS to seek payment from GLC before assessing a Section 6672 penalty against him. Id.

Although in his complaint Plaintiff seems to make an equitable estoppel claim (Court File No. 1 ¶19), he failed to elaborate or even raise any such argument in his brief on summary judgment ( See Court File No. 18). Since tax assessments are presumed correct, and Plaintiff has not met his burden of showing Defendant's failure to collect the tax from GLC rendered this assessment erroneous, Defendant must prevail as a matter of law and the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on this claim. See Collins [ 88-1 USTC ¶9386], 848 F.2d at 742.

B. Defendant's Counterclaim

Because a tax assessment is presumed correct, the taxpayer has the burden even on Defendant's counterclaim of proving the assessment is inaccurate or erroneous. Collins [ 88-1 USTC ¶9386], 848 F.2d at 742. Since Plaintiff has conceded both that the IRS had a claim against GLC in the amount of $18,477.80 for unpaid trust fund taxes for the third quarter of 1990 and that the IRS has the right to assess a penalty under Section 6672 against him as a principal officer of GLC , and Plaintiff's collateral arguments fail as analyzed supra, Plaintiff has made no showing the assessment was inaccurate or erroneous. Id. As Plaintiff has not overcome the presumption of correctness Defendant enjoys in all its assessments, Defendant must prevail as a matter of law as to its claim for this assessment. Id. Therefore, since no genuine dispute of material fact exists as to whether the assessment of the trust fund recovery penalty against him was proper and Defendant must prevail as a matter of law, the Court will GRANT Defendant's motion and DENY Plaintiff's cross motion for summary judgment on Defendant's counterclaim for the amount due on this penalty.



IV. CONCLUSION

For the reasons stated above, the Court will GRANT Defendant's Motion for Summary Judgment (Court File No. 15), and the Court will DENY Plaintiff's Cross Motion for Summary Judgment. (Court File No. 17).

An Order shall enter.

¹ The Court would note Plaintiff's brief (Court File No. 18) focuses on Rayle Electric capital credits Plaintiff asserts were an asset of GLC 's bankruptcy estate, and Defendant's failure to support the objection Plaintiff filed in GLC 's bankruptcy proceedings regarding these capital credits. Because the Court finds Defendant had no obligation whatsoever to pursue assets from the employer ( GLC ) before assessing the Section 6672 penalty against Plaintiff, the Court need not address Defendant's actions or omissions during GLC 's bankruptcy proceedings.

Michelle Dallin, as Personal Representative of the Estate of Donald Young, Deceased, Plaintiff v. United States , Defendant.

U.S. Court of Federal Claims; 00-767T, October 29, 2004.

[ Code Secs. 6203 and 6672]

Trust fund: Penalty: Assessment: Procedural requirements: Notice. --

The IRS properly assessed a Code Sec. 6672 penalty against an individual for unpaid unemployment taxes. Even though there were irregularities in the assessment notice and proceedings, the assessment was in the proper amount, against the proper reponsible individual, and the individual had adequate notice of all the information he sought prior to enforcement procedures being initiated. Moreover, the IRS 's use of a quick assessment, instead of a computer assessment, even though there was no immediate danger of the statute of limitations expiring, did not prejudice the plaintiff, was not dispositive and did not invalidate the assessment..

Hugh Janow, Janow & Meyer, LLC, for plaintiff. Eileen J. O'Connor, Assistant Attorney General, Mildred L. Seidman, Chief, David Gustafson, Assistant Chief, Sheryl B. Flum, for defendant.

OPINION

HORN, Judge: This case originally was captioned Donald Young v. United States. After Mr. Young died, proceedings in this case were stayed until probate was initiated, an executrix of the estate was appointed, and counsel was employed to continue representing the estate. Michelle Dallin was ultimately appointed as the executrix of Mr. Young's estate and Mr. Janow was hired to continue his representation in the case. Therefore, the case is proceeding under the above caption.

This case arises from a penalty assessed by the IRS against Donald Young, as a responsible officer of Southern Jersey Airways, Inc. (SJA). Pursuant to 26 U.S.C. §3102(a), 3402(a), and 7501(a), ¹ employers are required to withhold federal social security and income taxes from their employees' wages and hold these taxes in trust for the government. The withheld taxes (trust fund taxes) must be paid to the United States on a quarterly basis. See 26 C.F.R. §31.6011(a)-4 (1990); Michaud v. United States [ 97-2 USTC ¶50,972], 40 Fed.Cl. 1, 14 (1997), dismissed on other grounds, 152 F.3d 945 (Fed. Cir. 1998). Since the Internal Revenue Service credits employees for the trust fund taxes regardless of whether they are paid by the employer, Congress provided that officers, and specified employees, of such employers can be held personally liable for the trust fund taxes if they are not paid when due. See 26 U.S.C. §6672 ("Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax ... shall ... be liable to a penalty equal to the total amount of the tax... ."); Shultz v. United States [ 90-2 USTC ¶50,563], 918 F.2d 164, 165 n.1 (Fed. Cir. 1990), cert. denied, 500 U.S. 906 (1991) ("To assure collection when a corporate employer does not pay its employment taxes, section 6672(a) imposes personal liability on persons responsible for seeing that the taxes were paid... ."); Godfrey v. United States [ 84-2 USTC ¶9974], 748 F.2d 1568, 1574 (Fed. Cir. 1984). Thus, any person required to collect, truthfully account for and pay the trust fund taxes imposed by the Internal Revenue Code, and who willfully fails to do so, is liable for a penalty in an amount equal to the tax.

On June 18, 1992, the IRS assessed a penalty pursuant to I.R.C. §6672 in the amount of $122,287.88 against Mr. Young, who was the President and General Manager of SJA during the time period at issue in this case. The IRS issued the assessment based on two grounds: (1) SJA's failure to pay its trust fund taxes relating to a 1988 quarterly federal excise tax ($233.28) and (2) SJA's failure to turn over federal employment taxes withheld from its employees during the first three quarters of tax year 1990 ($122,054.60). In 1994, the IRS abated the penalty relating to tax year 1988 due to existing credits. As a result, the dispute in this case solely concerns the section 6672 penalties associated with SJA's unpaid employment taxes for the first three quarters of 1990. Plaintiff seeks a refund of these penalties in the amount of $118,171.15, plus interest. ²

Plaintiff does not dispute that SJA did not pay all of the trust fund employment taxes for the first three quarters of 1990. In addition, plaintiff does not dispute that, for the purpose of I.R.C. §6672 liability, Mr. Young was a responsible person for SJA during the first three quarters of 1990. Plaintiff alleges, however, that the IRS did not properly assess the section 6672 tax against Mr. Young. Therefore, the issue in this case is only whether the IRS properly assessed an I.R.C. §6672 penalty against the plaintiff for SJA's unpaid employment taxes for the first three quarters of 1990.

FINDINGS OF FACT

In 1992 and 1993, IRS Revenue Officer Barbara Alzner surveyed the administrative records of SJA and concluded that the corporation had failed to pay withheld trust fund taxes relating to its 1988 federal excise tax and federal employment taxes during the first three quarters of 1990. In mid-June, 1992, Ms. Alzner determined that the statutory period for assessing a section 6672 penalty against SJA's responsible persons for failing to pay withheld excise taxes for the period ending December 31, 1988, would expire on June 19, 1992. ³ On June 15, 1992, Revenue Officer Alzner signed a Form 4183, "Recommendation re 100-Percent Penalty Assessment." The form was then signed by a Group Manager on June 18, 1992. The form indicated that a section 6672 penalty assessment was being considered against Donald Young, the responsible officer, in the amount of $122,287.88. Although the document did not list the months and years at which the assessment was directed, the parties agree that the intended amount under consideration for assessment included the excise taxes for the period ending December 31, 1988 and the trust fund taxes for the first three quarters of 1990, despite the fact that the time for assessing a penalty was imminently expiring only for the period ending December 31, 1988. ⁴ Revenue Officer Alzner wrote the following on the Form 4183: "Young is indicated as a potentially responsible person.... Assessment is being made to protect ASED [Assessment Statutory Expiration Date]. Further documentation to establish responsibility and willfulness under I.R.C. 6672 will be gathered and an amended 4183 will be submitted when my investigation has been completed."

"Assessment" refers to a prescribed procedure for officially recording the amount of a taxpayer's administratively determined tax liability. The IRS makes assessments by having an assessment officer fill out and sign a "Summary Record of Assessment," also known as the Form 23-C. The Form 23-C shows all of the assessments for all taxpayers by a particular district, in a particular period, on a particular date, but does not contain information on individual taxpayers. On June 17, 1992, a Form 23-C was generated by the IRS 's Brookhaven Service Center for the assessment date of June 18, 1992. The Form 23-C shows that for June 18, 1992, a total of thirty-two assessments were made. The Form 23-C also states that there were no "Principal Taxpayers" and no amounts "Related to Jeopardy Assessments" for June 18, 1992.

The June 18, 1992 assessment was made against Mr. Young when the IRS 's Brookhaven Service Center 's assessing officer signed the Form 23-C. The June 18, 1992, section 6672 penalty against the Mr. Young was then recorded on the IRS computer system. Therefore, on June 18, 1992, the IRS made a section 6672 penalty assessment against the plaintiff in the amount of $122,287.88. This amount included the section 6672 penalty of $233.28, which related to the trust fund portion of SJA's unpaid federal excise tax for the period ending December 31, 1988, and a $122,054.60 penalty associated with the trust fund portion of SJA's unpaid employment taxes for the first three quarters of 1990. ⁵

A Form 3552, Notice of Tax Due on Federal Tax Return, dated June 18, 1992, was prepared by the defendant and received by Mr. Young. The form notified Donald Young that a civil penalty of $122,287.88 for the tax period ending "12/31/88" had been assessed against him and demanded that plaintiff pay that amount. Because the IRS had not determined Mr. Young's willfulness or responsibility, it could not yet enforce payment of the assessment against him. However, pursuant to I.R.C. §6303, the IRS was required to notify Mr. Young, within sixty days, that an assessment had been made. ⁶

After completing her investigation, on January 15, 1993, Revenue Officer Alzner signed a second Form 4183, recommending an assessment of a section 6672 penalty of $201,706.04 against Donald Young, concluding that he was a responsible officer for SJA. This assessment represented the unpaid trust fund portion of SJA's withheld excise taxes for the period ending December 31, 1988, and withheld employment taxes for all four quarters of 1990. ⁷

On January 19, 1993, the IRS sent Donald Young a letter informing him of the Proposed Assessment of 100 Percent Penalty, accompanied by a Form 2751. The cover letter stated that the plaintiff had been identified as a person required to collect, account for, and pay over withheld taxes for SJA, and indicated that he had a right to appeal this determination. The accompanying Form 2751 indicated that plaintiff's section 6672 liability was $201,706.04 for willfully failing to pay SJA's withheld excise taxes for the period ending "12/31/88," and unpaid employment taxes for all four quarters of 1990. This amount included $394.92 for the first quarter of 1990, $71,073.11 for the second quarter of 1990, $50,586.57 for the third quarter of 1990, $79,418.16 for the fourth quarter of 1990, and $233.28 for unpaid excise taxes for the period ending December 31, 1988. Thus, the Form 2751 enumerated the amount of tax and the tax periods related to SJA's unpaid tax liability. Following plaintiff's receipt of the January 19, 1993 letter and the Form 2751, the IRS could enforce collection of the section 6672 penalty.

Plaintiff appealed the IRS 's finding of liability for a section 6672 penalty in the amount of $201,706.04. Subsequently, in 1994, the IRS abated the section 6672 assessment related to SJA's unpaid federal excise tax for the period ending December 31, 1988. The IRS Appeals Division, however, upheld the propriety of assessing a section 6672 penalty against plaintiff for failing to pay over employment taxes withheld by SJA during all four quarters of 1990. In its motion for summary judgment, plaintiff admits that the assessment for the fourth quarter of 1990 is not at issue in the present case. Therefore, this case centers solely upon the June 18, 1992, $122,054.60 penalty assessment that corresponds to the trust fund portion of SJA's unpaid employment taxes for the first three quarters of 1990. In the joint stipulation of facts, the plaintiff and defendant state that the IRS 's determination that plaintiff was a responsible person for SJA for the four calendar quarters of 1990 is not at issue in this case.

By letter dated October 12, 1995, the IRS denied plaintiff's request for abatement of the section 6673 penalty for the second and third quarters of 1990. The October 12, 1995 letter also informed Mr. Young that he could file suit to contest the IRS 's disallowance within two years from the mailing date of the letter. On October 11, 1996, Mr. Young filed a Form 843, requesting a refund of $124,985.00 for the period ending December 31, 1988. On this form, Mr. Young stated that the " IRS improperly assessed [a] miscellaneous penalty of $122,054.00 for the period ending 12/31/88. Form 2751 proposed an assessment for period ending 12/3/88 [sic] in the amount of $233.38." According to the joint stipulation of facts, which referred to an Exhibit 2, on September 18, 2000, the IRS denied plaintiff's refund claim. However, the letter indicated as Exhibit 2 in the joint stipulations is dated August 9, 1999, and refers to the claim for refund and request for abatement dated October 11, 1996.

Paragraph ten of the original joint stipulation of facts submitted by the parties read in pertinent part: "On June 18, 1992 18,1992, the IRS made a jeopardy assessment against plaintiff pursuant to §6862 of a §6672 penalty in the amount of $122,054.60." Subsequently, however, the defendant's attorney filed a motion to be relieved, in part, from paragraph ten of the parties' joint stipulation of facts. According to defendant's counsel, after further research on the case, it became apparent to her that a jeopardy assessment had not been made; rather, the defendant now contends that a quick assessment is actually at issue. The plaintiff initially opposed defendant's motion for relief, asserting that a jeopardy assessment had been made.

After oral argument and discussions on defendant's motion to be relieved in part from paragraph 10 of the parties' joint stipulation of facts, the plaintiff agreed to withdraw its opposition to defendant's motion for relief. Therefore, the court granted defendant's motion to be relieved, in part, from paragraph ten of the parties' joint stipulation of facts, thereby deleting the reference to a jeopardy assessment in paragraph ten of the parties' joint stipulation of facts from the record. Paragraph 10 now reads, in pertinent part, "On June 18, 1992, the IRS made an assessment against plaintiff pursuant to §6672 in the amount of $122,054.60." The granting of this motion resulted in the emergence of a material factual dispute between the parties as to the nature of the penalty that had been assessed in this case. However, as discussed below, the characterization of the assessment the IRS used does not affect plaintiff's tax liability.

DISCUSSION

The parties filed cross-motions for summary judgment on the plaintiff's complaint pursuant to RCFC 56. RCFC 56 is patterned on Rule 56 of the Federal Rules of Civil Procedure (Fed. R. Civ. Plaintiff.) and is similar both in language and effect. Both rules provide that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." RCFC 56(c); Fed. R. Civ. Plaintiff. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1323 (Fed. Cir. 2001), reh'g denied and reh'g en banc denied (2001); Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir. 2001); Avenal v. United States , 100 F.3d 933, 936 (Fed. Cir. 1996), reh'g denied (1997); Creppel v. United States , 41 F.3d 627, 630-31 (Fed. Cir. 1994). A fact is material if it will make a difference in the result of a case under the governing law. Irrelevant or unnecessary factual disputes do not preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-48; see also Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Curtis v. United States, 144 Court Cl. 194, 199, 168 F.Supp. 213, 216 (1958), cert. denied, 361 U.S. 843 (1959), reh'g denied, 361 U.S. 941 (1960).

When reaching a summary judgment determination, the judge's function is not to weigh the evidence and determine the truth of the case presented, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 249; see, e.g., Ford Motor Co. v. United States, 157 F.3d 849, 854 (Fed. Cir. 1998) (the nature of a summary judgment proceeding is such that the trial judge does not make findings of fact); Johnson v. United States, 49 Fed.Cl. 648, 651 (2001), aff'd, 317 F.3d 1331 (Fed. Cir. 2003); Becho, Inc. v. United States , 47 Fed.Cl. 595, 599 (2000). The judge must determine whether the evidence presents a disagreement sufficient to require submission to fact finding, or whether the issues presented are so one-sided that one party must prevail as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 250-52; Jay v. Sec'y of Dep't of Health and Human Servs., 998 F.2d 979, 982 (Fed. Cir. 1993), reh'g denied and en banc suggestion declined (1993). When the record could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial, and the motion must be granted. See, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1553 n.3 (Fed. Cir. 1996). In such a case, there is no need for the parties to undertake the time and expense of a trial, and the moving party should prevail without further proceedings. Summary judgment:

[S]aves the expense and time of a full trial when it is unnecessary. When the material facts are adequately developed in the motion papers, a full trial is useless. "Useless" in this context means that more evidence than is already available in connection with the motion for summary judgment could not reasonably be expected to change the result.

Dehne v. United States , 23 Cl. Court . 606, 614-15 (1991) (citing Pure Gold, Inc. v. Syntex, Inc., 739 F.2d 624, 626 (Fed. Cir. 1984)), vacated on other grounds, 970 F.2d 890 (Fed. Cir. 1992); United States Steel Corp. v. Vasco Metals Corp., 394 F.2d 1009, 1011 (C.C.P.A. 1968).

Summary judgment, however, will not be granted if "the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 971 (Fed. Cir. 2001), cert. denied, 534 U.S. 1109 (2002); Gen. Elec. Co. v. Nintendo Co., 179 F.3d 1350, 1353 (Fed. Cir. 1999). In other words, if the nonmoving party produces sufficient evidence to raise a question as to the outcome of the case, then the motion for summary judgment should be denied. Any doubt over factual issues must be resolved in favor of the party opposing summary judgment, to whom the benefit of all presumptions and inferences runs. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. at 587-88; Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d at 1257; Wanlass v. Fedders Corp., 145 F.3d 1461, 1463 (Fed. Cir. 1998), reh'g denied and en banc suggestion declined (1998).

The initial burden on the party moving for summary judgment to produce evidence showing the absence of a genuine issue of material fact may be discharged if the moving party can demonstrate that there is an absence of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Trilogy Communications, Inc. v. Times Fiber Communications, Inc., 109 F.3d 739, 741 (Fed. Cir. 1997) (quoting Conroy v. Reebok Int'l, Ltd., 14 F.3d 1570, 1575 (Fed. Cir. 1994), reh'g denied and en banc suggestion declined (1995)), reh'g denied and en banc suggestion declined (1997); Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1569 (Fed. Cir. 1997). If the moving party makes such a showing, the burden shifts to the nonmoving party to demonstrate that a genuine dispute regarding a material fact exists by presenting evidence which establishes the existence of an element essential to its case upon which it bears the burden of proof. See Celotex Corp. v. Catrett, 477 U.S. at 322; Am. Airlines v. United States [ 2000-1 USTC ¶50,236], 204 F.3d 1103, 1108 (Fed. Cir. 2000); see also Schoell v. Regal Marine Indus., Inc., 247 F.3d 1202, 1207 (Fed. Cir. 2001).

Pursuant to RCFC 56, a motion for summary judgment may succeed whether or not accompanied by affidavits and/or other documentary evidence in addition to the pleadings already on file. See Celotex CorD Corp. v. Catrett, 477 U.S. at 324. Generally, however, in order to prevail by demonstrating that a genuine issue for trial exists, the nonmoving party must go beyond the pleadings by use of evidence such as affidavits, depositions, answers to interrogatories and admissions. Id.

Even if both parties argue in favor of summary judgment and allege an absence of genuine issues of material fact, however, the court is not relieved of its responsibility to determine the appropriateness of summary disposition in a particular case. See Chevron USA, Inc. v. Cayetano, 224 F.3d 1030, 1037 n.5 (9th Cir. 2000), cert. denied, 532 U.S. 942 (2001); Prineville Sawmill Co. v. United States, 859 F.2d 905, 911 (Fed. Cir. 1988) (citing Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)). "[S]imply because both parties moved for summary judgment, it does not follow that summary judgment should be granted one or the other." LewRon Television, Inc. v. D.H. Overmyer Leasing Co., 401 F.2d 689, 692 (4th Cir. 1968), cert. denied, 393 U.S. 1083 (1969); see also B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 593 (6th Cir. 2001); Massey v. Del Labs., Inc., 118 F.3d 1568, 1573 (Fed. Cir. 1997).

Cross-motions are no more than a claim by each party that it alone is entitled to summary judgment. The making of such inherently contradictory claims, however, does not establish that if one is rejected the other necessarily is justified. See B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d at 593; Atl. Richfield Co. v. Farm Form Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000); Allstate Ins. Co. v. Occidental Int'l., Inc., 140 F.3d 1, 2 (1st Cir. 1998); Reading & Bates Corp. v. United States [ 98-1 USTC ¶50,290], 40 Fed.Cl. 737, 748 (1998). The court must evaluate each party's motion on its own merits, taking care to draw all reasonable inferences against the party whose motion is under consideration. See DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d 1314, 1322 (Fed. Cir. 2001); Gart v. Logitech, Inc., 254 F.3d 1334, 1338-39 (Fed. Cir. 2001), reh'g and reh'g en banc denied (2001), cert. denied, 534 U.S. 1114 (2002).

The issue in this case is whether the IRS properly assessed a section 6672 penalty against the plaintiff for SJA's unpaid employment taxes for the first, second, and third quarters of 1990. The plaintiff argues that the IRS did not follow proper procedures when assessing this penalty and, thus, summary judgment should be granted in favor of the plaintiff and the plaintiff should be refunded the penalty amounts. The defendant disagrees and asks for summary judgment in its favor. The parties have stipulated that "the propriety of the June 18, 1992 jeopardy assessment made against plaintiff is not at issue in this case." ⁸ In addition, the parties have stipulated that: "For purposes of 26 U.S.C. §6672 liability, plaintiff was a responsible person for Southern Jersey Airways, Inc. for the three quarters of 1990 at issue in this case," and have not argued that the taxes at issue were due.

The plaintiff asserts that there is no evidence in the existing supporting IRS documents showing that an assessment was made for the first three quarters of 1990. The summary record of assessments, the Form 23-C, states that no jeopardy assessments were made on the assessment date of June 18, 1992, while the plaintiff's Form 4340 states that a jeopardy assessment was completed, and places the entire assessment under the period ending December 31, 1988. The plaintiff also argues that, even if the penalty assessment for the period ending December 31, 1988 was valid, the assessment and the supporting documents failed to comply with I.R.C. §6203 and its implementing regulation, 26 C.F.R. §301.6203-1(1990), such that the defendant was not permitted to include the section 6672 penalties for the subsequent quarters, the first three quarters of 1990, in that assessment.

The IRS Properly Assessed a Section 6623 Tax Against the Plaintiff.

Plaintiff alleges, based on the available IRS documents, that a penalty assessment was never made against Mr. Young for the first three quarters of 1990. This court determined that this argument could not be decided on summary judgment because there was a genuine issue of material fact raised as to whether a penalty was assessed, and the nature of that penalty. As noted above, in their July 10, 2003, Joint Stipulation of Facts, the parties initially stipulated that the IRS had made a jeopardy assessment against the plaintiff on June 18, 1992. Only after further research, and after the case had proceeded for some time, did the defendant's counsel request to be, and was, relieved of that stipulation. In arguing its position, defendant described the Form 4340 for Donald Young as "erroneous." Defendant claimed that a jeopardy assessment had not been made against the plaintiff, and that the June 18, 1992 assessment, in fact, was a quick assessment.

To support its argument that no assessment was made for the first three quarters of 1990, plaintiff identifies a number of issues presented by the IRS documents in the record. First, plaintiff points out that the Form 23-C indicates that no jeopardy assessments were made on the assessment date of June 18, 1992, however, the plaintiff points out that the Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, identifies the June 18, 1992 assessment as a jeopardy assessment. Therefore, according to the plaintiff, because the assessment on the Form 4340 was identified as a jeopardy assessment, and no jeopardy assessment was identified on the Form 23-C, no assessment actually was made against the plaintiff on June 18, 1992. Additionally, plaintiff argues that because the entire $122,054.60 assessment was referenced to the period ending December 31, 1988, no assessment was made for any of the first three quarters of 1990. Finally, plaintiff asserts that if a quick assessment was used to assess the first three quarters of 1990, that assessment was inappropriate because the statute of limitations for the those quarters was not scheduled to expire until April 15, 1994.

According to the defendant, the Form 23-C indicates that no jeopardy assessments were conducted on June 18, 1992, because the penalty assessment at issue was a quick assessment. The defendant argues that quick assessments are not statutorily prescribed, but are instead wholly creatures of the IRS 's internal policy and procedure, and that any technical flaw made by the IRS during its assessment did not prejudice the plaintiff. To support its argument, the defendant proclaims that the steps that would have been necessary to conduct a jeopardy assessment were not completed, including obtaining approval from the District Director. The defendant further asserts that the assessment was incorrectly identified on the Form 4340 as a jeopardy assessment and that the assessment was mislabeled by the Brookhaven Service Center as a jeopardy assessment.

To resolve the factual disputes in this case, the court held a hearing at which witnesses could present relevant testimony. The purpose of the hearing was to establish what kind of assessment, if any, the IRS had made against the plaintiff on June 18, 1992, and what supporting documents existed when the IRS made its assessment. At the hearing, the defendant provided testimonial evidence by IRS Revenue Officer Barbara Alzner and IRS employee Robert Green. The plaintiff chose to present no witnesses in support of its burden of proof.

At the hearing, Revenue Officer Barbara Alzner testified that she had requested a quick assessment. However, during her testimony, Ms. Alzner referred to the assessment as a "prompt assessment," stating that "any assessment that we wanted to be done manually by the Service Center was a prompt assessment to us in the field. We don't know what the Service Center did with them." Ms. Alzner then testified that she later learned that the assessment actually was treated as a quick assessment by the Service Center , even though she testified that "I did not make a quick assessment. I did not request a quick assessment. I don't know whether it was made or not." When asked directly, however, whether she recommended that a jeopardy assessment be made against Mr. Young, Ms. Alzner replied "No, I didn't." Finally, when questioned and cross examined about the documents available and prepared by her to make a recommendation for assessment, Ms. Alzner testified that she remembered completing certain documents, including a Form 2749 and Form 2859, but that she did not know the whereabouts of those completed forms.

At the hearing, the government also elicited testimony from IRS employee Robert Green. Mr. Green stated that he was employed as a tax examiner at the Brookhaven Service Center in New York and that, among his various duties, he was one of the IRS 's "Court witnesses for the Service Center . I testify on behalf of the IRS in Court." The defendant called Mr. Green to discuss the procedures used at the Brookhaven Service Center , and to identify the Document Locator Numbers (DLN), which are codes assigned by the IRS to identify the type of assessments made, and show that, in the plaintiff's case, a quick assessment was conducted. Mr. Green indicated that he had no personal knowledge of the events in Mr. Young's case. During his testimony, Mr. Green testified that "the Service Center uses the term prompt and quick assessment interchangeably," and that based on the DLNs identified on the Form 4340, a quick assessment was conducted, even though "jeopardy assessment" is spelled out on the same Form 4340. Thus, Mr. Green stated that the DLN used for the assessment against Mr. Young indicated that a quick assessment was actually used.

Before imposing liability under section 6672, the IRS must properly assess the penalty and notify the responsible party. See 26 U.S.C. §§6203, 6303, and 6671. Section 6672 provides that when a corporate official who is required to withhold and pay over trust fund taxes willfully fails to do so, he or she is liable for a penalty equal to the total amount of the unpaid taxes. ⁹ See 26 U.S.C. §6672(a); Godfrey v. United States [ 84-2 USTC ¶9974], 748 F.2d at 1574 ("The purpose of the 100 percent penalty provision 'is to permit the taxing authority to reach those [persons] responsible for the corporation's failure to pay the taxes which are owing.'") (quoting White v. United States [ 67-1 USTC ¶9250], 178 Ct.Cl. 765, 771, 372 F.2d 513, 516 (1967)). Section 6672 liability is separate and distinct from the underlying liability imposed on the employer for failing to pay the trust fund taxes. See Cash v. United States [ 92-1 USTC ¶50,298], 961 F.2d 562, 565 (5th Cir. 1992) ("At the same time, however, it is well established that the liability imposed upon a responsible person under §6672 is separate and distinct from that imposed on the employer under §§3102 and 3402 of the Internal Revenue Code. The Service need not attempt to collect first from the corporate employer or its assets before assessing penalties and pursuing collection from responsible persons under §6672.") (citations omitted), cert. denied, 506 U.S. 985 (1993) ; see also Shultz v. United States [ 90-2 USTC ¶50,563], 918 F.2d at 165 n.1 ("To assure collection when a corporate employer does not pay its employment taxes, section 6672(a) imposes personal liability on persons responsible for seeing that the taxes were paid... ."); Kelly v. Lethert [ 66-2 USTC ¶9509], 362 F.2d 629, 635 (8th Cir. 1966) ("The result of Section 6672 is thus to make the responsible officers of the corporation, as well as the corporation itself, equally liable as co-debtors to the Government, and the Government may proceed against either in the order best suited in its judgment to collect the unpaid tax.").

Penalties incurred under section 6672 are to be "assessed and collected in the same manner as taxes." 26 U.S.C. §6671. ¹⁰ The statute, I.R.C. §6203, ¹¹ and its implementing Treasury Regulation, 26 C.F.R. §301.6203-1, provide the method for assessing section 6672 penalties. See Teets v. United States [ 93-2 USTC ¶50,576], 29 Fed.Cl. 697, 703-04, reconsideration granted in part (1993), affd, 39 F.3d 1196 (Fed. Cir. 1994). I.R.C. §6203 states that assessments are made by recording the liability in accordance with the regulations promulgated by the Secretary. Treasury Regulation 26 C.F.R. §301.6203-1 states that the "assessment shall be made by an assessment officer signing the summary record of assessment [Form 23-C]." 26 CFR §301.6203-1.

In a tax refund case, there is a strong presumption of the correctness of the findings of the Commissioner of Internal Revenue. See United States v. Fior D'Italia, Inc. [ 2002-1 USTC ¶50,459], 536 U.S. 238, 243 (2002) ("An "assessment" amounts to an IRS determination that a taxpayer owes the Federal Government a certain amount of unpaid taxes. It is well established in the tax law that an assessment is entitled to a legal presumption of correctness --a presumption that can help the Government prove its case against a taxpayer in court."); Conway v. United States [ 2003-1 USTC ¶50,412], 326 F.3d 1268, 1278 (Fed. Cir.), reh'g denied (2003) ("The ruling of the Commissioner of Internal Revenue enjoys a presumption of correctness and a taxpayer bears the burden of proving it to be wrong.") (quoting Transamerica Corp. v. United States [ 90-1 USTC ¶50,255], 902 F.2d 1540, 1543 (Fed. Cir. 1990)); Lima Surgical Assocs., Inc. v. United States [ 91-2 USTC ¶50,473], 944 F.2d 885, 888 (Fed. Cir. 1991) ("[D]eterminations of the Commissioner of Internal Revenue are presumptively correct.").

The taxpayer not only has the burden of rebutting the presumption of correctness, but also of establishing entitlement to the specific amount of the deduction claimed. See United States v. Janis [ 76-2 USTC ¶16,229], 428 U.S. 433, 440-441 (1976) ("In a refund suit the taxpayer bears the burden of proving the amount he is entitled to recover.") (citing Lewis v. Reynolds [ 3 USTC ¶856], 284 U.S. 281 (1932), modified, 284 U.S. 599 (1932)); Helvering v. Taylor [ 35-1 USTC ¶9044], 293 U.S. 507, 515 (1935) ("Unquestionably the burden of proof is on the taxpayer to show that the Commissioner's determination is invalid."); Welch v. Helvering [ 3 USTC ¶1164], 290 U.S. 111, 115 (1933) ("The Commissioner of Internal Revenue['s] ... ruling has the support of a presumption of correctness, and the petitioner has the burden of proving it to be wrong.") (citing Wickwire v. Reinecke [ 1 USTC ¶265], 275 U.S. 101 (1927)); Charron v. United States [ 2000-1 USTC ¶50,129], 200 F.3d 785, 792 (Fed. Cir. 1999) ("Since the [plaintiffs] were seeking refunds of taxes they had paid, they have the burden of proving they are entitled to the amount sought."); Danville Plywood Corp. v. United States [ 90-1 USTC ¶50,161], 899 F.2d 3, 7-8 (Fed. Cir. 1990); Barenholtz v. United States [ 86-1 USTC ¶9238], 784 F.2d 375, 381 (Fed. Cir. 1986); Young & Rubicam, Inc. v. United States [ 69-1 USTC ¶9404], 187 Ct.Cl. 635, 654-55, 410 F.2d 1233, 1244-45 (1969); L.W. Hardy Co. v. United States [ 82-2 USTC ¶9648], 1 Cl.Ct. 465, 470 (1982).

To overcome the presumption, the taxpayer has the burden of presenting "substantial evidence as to the wrongfulness of the Commissioner's determination." KFOX, Inc. v. United States [ 75-1 USTC ¶9253], 206 Ct.Cl. 143, 151-152, 510 F.2d 1365, 1369 (1975); Arrington v. United States [ 95-2 USTC ¶60,212], 34 Fed.Cl. 144, 147 (1995), aff'd [ 97-1 USTC ¶60,260], 108 F.3d 1393 (Fed. Cir. 1997). The burden imposed on a plaintiff is both the burden of going forward and the burden of persuasion. Thus, a plaintiff first must come forward with enough evidence to support a finding contrary to the Commissioner's determination. See Transamerica Corp. v. United States [ 90-1 USTC ¶50,255], 902 F.2d at 1543; Danville Plywood Corp. v. United States [ 90-1 USTC ¶50,161], 899 F.2d at 7-8; Arrington v. United States [ 95-2 USTC ¶60,212], 34 Fed.Cl. at 147. Even after satisfying the burden of going forward, a plaintiff must still carry the ultimate burden of proof. See Transamerica Corp. v. United States [ 90-1 USTC ¶50,255], 902 F.2d at 1543; Danville Plywood Corp. v. United States [ 90-1 USTC ¶50,161], 899 F.2d at 8.

The government may establish a prima facie case as to a taxpayer's liability for the penalty under I.R.C. §6672 by presenting the assessment of liability against him or her as a responsible person for the willful failure to collect, account for, or pay over withheld taxes from employees. See Ruth v. United States [ 87-2 USTC ¶9408], 823 F.2d 1091, 1092-93 (7th Cir. 1987) ("[T]he taxpayer bears the risk of nonpersuasion with regard to claims brought under section 6672."). Courts generally do not "look behind an assessment to evaluate the procedure and evidence used in making the assessment," but instead "conduct a de novo review of the correctness of the assessment, imposing the risk of nonpersuasion on the taxpayer." Id. at 1094. In limited circumstances, however, when the decision of the IRS is shown to be without rational foundation or that it is arbitrary and erroneous, the assessment will not be accorded a rebuttable presumption of correctness. Id. ; see also United States v. Janis [ 76-2 USTC ¶16,229], 428 U.S. at 441 (1976) (holding that an assessment could be found invalid if it was based on a "'naked' assessment without [a]ny foundation whatsoever" because illegally seized information could not be used). Once a proper assessment has been offered, however, the burden shifts to the plaintiff to prove "by a preponderance of the evidence that the assessment made against him was erroneous, i.e., that he was either not a 'responsible person,' or that he did not act 'willfully' in failing to discharge his duties as a 'responsible person.'" Dougherty v. United States [ 89-2 USTC ¶9581], 18 Cl.Ct. 335, 350 (1989), aff'd, 914 F.2d 271 (Fed. Cir. 1990); see also Carson v. United States [ 78-1 USTC ¶16,280], 560 F.2d 693, 696 (5th Cir. 1977) ("The tax collector's presumption of correctness has a herculean muscularity of Goliathlike reach, but we strike an Achilles' heel when we find no muscles, no tendons, no ligaments of fact."); Cook v. United States [ 2000-1 USTC ¶50,269], 46 Fed.Cl. 110, 114 (2000).

It is well established that a certified copy of the taxpayer's Form 4340 triggers the presumption of correctness in favor of the government, and is "routinely used to prove that a tax assessment has in fact been made." Rocovich v. United States [ 91-1 USTC ¶60,072], 933 F.2d 991, 994 (Fed. Cir. 1991) (citing United States v. Chila [ 89-1 USTC ¶9299], 871 F.2d 1015, 1017-18 (11th Cir. 1989), cert. denied, 493 U.S. 975 (1989)); see also Gentry v. United States [ 92-1 USTC ¶50,225], 962 F.2d 555, 557 (6th Cir. 1992) (holding that the Form 4340 Certificate of Assessments and Payments, also known as the Form 4340, is "generally regarded as being sufficient proof, in the absence of evidence to the contrary, of the adequacy and propriety of notices and assessments that have been made."); Long v. United States [ 92-2 USTC ¶50,431], 972 F.2d 1174, 1181 (10th Cir. 1992) ("For purposes of granting summary judgment, a Certificate of Assessments and Payments is sufficient evidence that an assessment was made in the manner prescribed by §6203 and Treas. Reg. 301.6203-1."), reh'g denied (1993); Hughes v. United States [ 92-1 USTC ¶50,086], 953 F.2d 531, 535 (9th Cir. 1992); Teets v. United States [ 93-2 USTC ¶50,576], 29 Fed.Cl. at 702; Int'l Fid. Ins. Co. v. United States , 27 Fed.Cl. 107, 111 (1992) (holding that "the IRS Form 4340 is admissible evidence in support of [a] motion for summary judgment" and that the "Form 4340 also creates a presumption of a valid assessment."); Pototzky v. United States [ 85-1 USTC ¶9438], 8 Cl.Ct. 308, 315 (1985). Therefore, once the Form 4340 is introduced, the taxpayer bears the burden of showing that the information presented is incorrect. See Stallard v. United States [ 94-1 USTC ¶50,056], 12 F.3d 489, 493 (5th Cir. 1994) ("If the summary record is properly supported through a Form 4340, the assessment contained in that summary record is considered presumptively valid; the taxpayer must produce evidence to the contrary to rebut this presumption."), reh'g denied (1994); Fidelity Bank v. United States [ 80-1 USTC ¶9275], 616 F.2d 1181, 1186 (10th Cir. 1980) ("the [plaintiff] bears the risk of nonpersuasion in refund suits if the government offers into evidence the tax assessment.").

In the case currently before the court, the Form 4340, "Certificate of Assessments, Payments, and Other Specified Matters" clearly identifies that an assessment was made against Donald Young on June 18, 1992 in the amount of $122,054.60. The government argues that the identification or type of assessment, as a jeopardy assessment, on the Form 4340 is incorrect, but that it is clear on the face of the IRS documents that there was an assessment made, and that the amount of the tax and identification of the responsible person is correct. Despite having been given opportunities administratively and in this court to do so, except for referring to the Form 4340's notation of a jeopardy assessment, proclaiming that the Form 23-C is not sufficiently specific, and arguing that because the supporting documents are not available, they therefore did not exist, plaintiff has provided no evidence that an assessment was not made against Mr. Young, that the supporting documents did not exist when the assessment was made, or that the amount assessed was incorrect. Furthermore, plaintiff has conceded that Mr. Young was a responsible party, liable for the amount which was due. The plaintiff also has brought forth no evidence that the jeopardy assessment labeling on the Form 4340, which the government argues was a mistake, prejudiced the plaintiff, based on the concession of being a responsible party and in the absence of any allegations by the plaintiff in the record that the amount assessed was incorrect.

Although the Form 4340 in this case states that the assessment was a jeopardy assessment, the testimony evinced at the hearing in this court establishes that Revenue Officer Alzner did not intend to pursue a jeopardy assessment, but was trying to accomplish a prompt or quick assessment. Additionally, the testimony offered by Robert Green provides evidence that the DLN on the Form 4340 identifies the assessment as a manual, or quick, assessment. Courts have repeatedly held that "the government may support a tax assessment based on any admissible evidence, including that first disclosed in discovery, and, conversely, need not rely solely, or at all, on the evidence reviewed administratively by the Service." Cook v. United States [ 2000-1 USTC ¶50,269], 46 Fed.Cl. at 114-15 (citing Tucker v. United States [ 85-1 USTC ¶9394], 8 Cl.Ct. 180, 187-88 (1985), modified on other grounds [ 85-2 USTC ¶9631], 8 Cl.Ct. 575 (1985)).

The court recognizes that the procedures employed by the IRS , unfortunately, demonstrate less than the highest standard of care. The record before the court, including the testimony offered by the defendant, however, provides sufficient basis on which to conclude that, despite transcription errors, the assessment recommened by Ms. Alzner, and made by the IRS was a quick assessment.

Plaintiff's argument that a quick assessment is inappropriate for the first three quarters of 1990 because the statute of limitations would not expire before April 15, 1994 also is not persuasive. This exact argument was presented in Koss v. United States [ 98-1 USTC ¶50,428], No. Civ.A. 97-440, 1998 WL 254042, *3 (E.D. Pa. May 8, 1998), reconsideration denied, 1998 WL 398246 (E.D. Pa. June 23, 1998). In Koss, as in this case, an IRS agent testified and interpreted DLNs in the plaintiff's Certificate of Assessments and Payments (Form 4340), claiming the DLNs indicated that a "prompt" or "quick" assessment was conducted. Id. at *2. The plaintiffs in Koss argued that a quick assessment was inappropriate because the statute of limitations was not set to expire for more than sixty days. The Koss court observed that the IRS makes quick assessments "'when the statutory period for assessment will expire before assessment action can be completed under the regular procedures.'" Id. at *3 (citing Internal Revenue Manual 5314.1(1)(a)). The court found that the plaintiff's situation did not warrant a departure from a regular assessment, and that the government provided no explanation for why the plaintiffs qualified for either a quick or prompt assessment. Id. The court, however, did not invalidate the IRS 's assessment on these grounds. While the Koss court found the IRS 's actions to contravene standard procedures, the court invalidated the assessment only because notice was ineffective. Id. at *4.

In Mr. Young's case, the plaintiff argues that the assessment for the first three quarters of 1990 was not valid because it was included in the quick assessment for the 1988 excise taxes and completed well before the statute of limitations was expected to expire for the first three quarters of 1990. While, once again, the procedures of the IRS were inexact, the fact that the IRS conducted a manual or quick assessment, instead of a regular, computer assessment, did not prejudice the plaintiff, is not dispositive, and does not invalidate the assessment.

Finally, plaintiff argues that there could be no valid assessment for the first three quarters of 1992 because the Form 4340 stated "Period Ending: Dec. 1988." Once again, although the IRS 's proceedings were less than careful, plaintiff's argument is unpersuasive. In Purcell v. United States, the United States Court of Appeals for the Ninth Circuit addressed a similar argument. See Purcell v. United States [ 93-2 USTC ¶50,460], 1 F.3d 932, 940-41 (9th Cir. 1993). In Purcell, the plaintiff was assessed a section 6672 liability for several quarters of 1981 and 1982. The plaintiff argued in Purcell that because the Form 4340 placed the entire assessment under the taxable period ending September 30, 1982, there was no record evidence that the other three, previous quarters were taxed. The Purcell court rejected plaintiff's argument, finding that it was customary for the IRS to refer to the last period in a lump-sum assessment, and that "it is undisputed that the amount of the assessment accurately reflects the total amount of the taxes withheld that the Company failed to pay over." Id. at 941. Although a more difficult conclusion than the one adopted in Purcell, because, in this case, the IRS listed an earlier period rather than the last period as the end date, this court adopts the Purcell court's reasoning. The fact that the Forms 4340 and 3552 for Mr. Young denominate the assessment period as ending December 31, 1988, does not signify that no assessment was made for the first three quarters of 1990. As in Purcell, in the present case, the amount reflected on the forms accurately reflects the total assessment for all the quarters in which taxes were due, and was assesed against the proper party. Moreover, there is evidence in the record, in the Form 2751, Proposed Assessment of 100 Percent Penalty, attached to the January 19, 1993 letter from the IRS to Mr. Young, in which the IRS , albeit after the assessment date, identifies the amounts of taxes due for each individual time periods.

The fact that the plaintiff has not presented any contrary evidence indicating that the assessment was not for the proper amount or against the proper party is critically important to the court's conclusion that this plaintiff should not be able to escape paying taxes due and owing as assessed on June 18, 1992, albeit with demonstrably inefficient IRS attention to bookkeeping, against Mr. Young as the responsible party. Although based on an imperfect record and demonstrably inefficient IRS procedures, this court finds insufficient evidence in the record to reject the presumption of accuracy attributed to the assessment made by the IRS on June 18, 1992 against Mr. Young as a correct, responsible party.

The IRS 's June 18, 1992 Assessment Complied with 26 U.S.C. §6203.

The plaintiff does not deny that he is liable for the section 6672 penalty as a responsible person for SJA for the first three quarters of 1990. Plaintiff also does not deny receiving notice of the assessment pursuant to I.R.C. §6303, or that he knew which tax periods formed the basis of the June 18, 1992 assessment. Nor does the plaintiff's counsel argue that the plaintiff suffered any harm from the way in which the tax was assessed. The plaintiff asserts, however, that the assessment at issue does not comply with the requirements of 26 U.S.C. §6203 and the implementing Treasury Regulation, 26 C.F.R. §301.6203-1.

Plaintiff argues that the available supporting records to the Form 23-C fail to itemize the amounts of the assessment for each period underlying the section 6672 penalty assessment, as required by 26 C.F.R. §301.6203-1. The existing records from the time of the assessment cite the alleged total amount of the penalty for the December, 1988 tax period as well as for the first three quarters of 1990 ( i.e., $122,287.88), but identify only December, 1988, not the first three quarters of 1990, as the end date to which the penalty corresponds.

The defendant asserts that the original, contemporaneous records, containing this information, were filled out at the time, but have been lost, and that, in any event, there was no need to include a taxable period in the supporting records for the June 18, 1992, section 6672 penalty assessment. The defendant claims that the Form 4183, which does not reference any taxable period, serves as an adequate supporting record for the Form 23-C and complies with Treasury Regulation §301.6203-1. According to the defendant, the other forms that reference only the December, 1988 tax period for the section 6672 penalty do so only because the IRS computer system requires that a tax period be entered in that field. In other words, according to the defendant, the reference to the December, 1988 period on those forms is of no legal import and appears on them solely for administrative convenience.

The government also argues that the Form 2751 attached to the January 19, 1993 letter to Donald Young, itemized the relevant periods and provided adequate notice to the plaintiff. The government further suggests, based on Ms. Alzner's testimony, that at the time the assessment was made, she necessarily would have filled out a Form 2749, which, although no longer locatable, would have included the itemized information.

Section 6203 directs that the assessment shall be made in accordance with the rules or regulations prescribed by the Secretary. Treasury Regulation §301.6203-1, states that:

The assessment shall be made by an assessment officer signing the summary record of assessment. The summary record, through supporting records, shall provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment. The amount of the assessment shall, in the case of tax shown on a return by the taxpayer, be the amount so shown, and in all other cases the amount of the assessment shall be the amount shown on the supporting list or record. The date of the assessment is the date the summary record is signed by an assessment officer. If the taxpayer requests a copy of the record of assessment, he shall be furnished a copy of the pertinent parts of the assessment which set forth the name of the taxpayer, the date of the assessment, the character of the liability assessed, the taxable period if applicable, and the amounts assessed.

26 C.F.R. §301.6203-1.

As previously noted, the Form 23-C is a summary record that shows all of the assessments for all taxpayers, by a particular district, in a particular period, on a particular date. See Howell v. United States [ 96-2 USTC ¶50,548], Civ. No. 93-C-952J, 1996 WL 652714, at *1 (D. Utah Aug. 9, 1996) ("The first step of the assessment process is the creation of a summary record [Form 23-C] which summarizes all the assessments made in a particular district on a particular date."), rev'd on other grounds [ 99-1 USTC ¶50,144], 164 F.3d 523 (10th Cir. 1998); see also Fulgoni v. United States [ 91-1 USTC ¶50,256], 23 Cl.Ct. 119, 122 (1991) ("[T]he 23C does not contain information on individual taxpayers") (citing M. Saltzman, IRS Practice and Procedure ¶10.02, at 10-4 (1981)); United States v. Hesse [ 90-1 USTC ¶50,049], No. 87 CIV . 1499, 1990 WL 6562, at *2 (S.D. N.Y. Jan. 23, 1990).

It is only through the supporting records that transactions related to an individual taxpayer can be examined. However, the Form 23-C contains a signed "Certification" as follows: "I certify that the taxes, penalty, and interest of the above classifications, hereby assessed, are specified in supporting records, subject to such corrections as subsequent inquiries and determinations in respect thereto may indicate to be proper." In this case, a signed certification on the Form 23-C relevant to this case appears at the bottom of the page in the record.

As discussed above, the Certificate of Assessments and Payments, also known as the Form 4340, is considered sufficient proof, in the absence of contrary evidence, of the adequacy of an assessment in conformance with statute and regulation. In this case, the Form 4340 identified Donald Young as the taxpayer and the date of the assessment as "06/18/1992." The liability was characterized as a "Civil Penalty," and an "I.R.C. 6672-100% Penalty." The Form 4340 further identified the tax period pertaining to the assessment as "Period Ending: Dec. 1988." The amount of plaintiff's assessment also appeared on the Form 4340 as two separate assessments, totaling $122,287.88, which corresponds to the amount assessed for the tax period ending in December of 1988, as well as for the first three quarters of 1990. The first assessment amount is listed as $122,054.60, which is the penalty that was assessed for the first three quarters of 1990, although the Form 4340 itself does not indicate the individual tax periods corresponding to this assessment. The second assessment amount was listed as $233.28, which was the penalty assessed for the tax period ending December, 1988, but again the Form 4340 does not specifically designate the date. Similarly, the IRS transcript of plaintiff's account only refers to the December, 1988 tax period, but identifies a penalty in the amount of $122,287.88 (the sum of $122 ,054.60 plus $233.28).

Based on the available documentation in the record, and on Ms. Alzner's and Mr. Green's testimony at the hearing, the defendant argues that the IRS intended to make a section 6672 penalty assessment on June 18, 1992 for the first three quarters of 1990, as well as for the tax period ending December 31, 1988. The defendant underscores that Treasury Regulation §301.6203-1 indicates that supporting records should state the "taxable period, if applicable." According to the defendant, "an individual taxpayer has no taxable period with respect to a §6672 penalty," because a single section 6672 penalty can be assessed for an aggregate, lump-sum amount covering unpaid trust fund taxes that have accrued over several periods. Defendant argues that the December, 1988 date was merely the nominal, tax period cited as a "bookkeping" entry, which does not invest the tax period that is placed in that blank on the various IRS forms with legal significance.

The defendant and plaintiff agree that the IRS may make a lump-sum assessment. See Taylor v. I.R.S. [ 95-2 USTC ¶50,578], 69 F.3d 411, 419 (10th Cir. 1995) ("[A] lump sum assessment of §6672 penalties by the IRS is permissible."); Stallard v. United States [ 94-1 USTC ¶50,056], 12 F.3d at 495; Purcell v. Taylor [ 93-2 USTC ¶50,460], 1 F.3d at 940-41 (rejecting plaintiff's argument that a multi-quarter assessment cannot be assigned to a single time period). It appears, however, that the IRS 's usual practice in such cases is to reference the last period in the lump sum assessment. See Stallard v. United States [ 94-1 USTC ¶50,056], 12 F.3d at 494-95 (imposing a "temporal requirement for §6672," while stating that "[n]ontheless, an assessment based on the last period for which that taxpayer is a responsible party would be sufficient... ."). Even the defendant concedes that "[g]enerally, the latest tax period underlying unpaid taxes is filled in as the tax period of a 6672 assessment."

Under this practice, the relevant tax forms in this case normally would have referenced the third quarter of 1990, ending September 30, 1990, because it is the last tax period in the lump sum assessment against Donald Young. In the case currently under review, however, December, 1988, the first tax period of the aggregate assessment, was the period actually referenced on the Form 4340, the Form 3552, and the transcript of Donald Young's account. The plaintiff, therefore, argues that a lump sum penalty assessment that states it ends on December, 1988, cannot also include the penalty assessments for subsequent tax periods ( i.e., the first three quarters of 1990). While the plaintiff may be correct that logic and convention dictate that the last period of a multi-period, penalty assessment should be referenced, the failure to do so is not enough to invalidate an assessment for an obviously larger amount of taxes due, which equals the exact amount due for the period ending December 31, 1988 and the first three quarters of 1990.

Adequate notice of penalty assessments is mandated by statute and regulation. Section 6303 and its implementing regulation govern the notice that must be given to a taxpayer who is liable for a section 6672 penalty. The notice need contain only a statement of the amount due and a demand for payment. See Planned Invs. Inc. v. United States [ 89-2 USTC ¶9470], 881 F.2d 340, 344 (6th Cir. 1989) ("Section 6303 does not prescribe any particular form of notice. Treasury Regulations promulgated under the authority of §6303 merely parrot the statutory language that the notice shall state the amount of the tax and demand payment thereof. 26 C.F.R. §301.6303-1(a)."). Inadequate notice, however, will not invalidate an otherwise valid penalty assessment. See Howell v. United States [ 99-1 USTC ¶50,144], 164 F.3d 523, 526 (10th Cir. 1998) ("We hold that any failure by the IRS to comply with its duty to provide the information set out in section 301.6203-1 did not render the assessment in this case invalid."). Even a notice that contains technical defects is valid as long as the taxpayer has not been prejudiced or misled by the error and is afforded a meaningful opportunity to contest the assessment. See Purcell v. United States [ 93-2 USTC ¶50,460], 1 F.3d at 941-942 (recognizing that a failure to send notice does not invalidate the assessment); Sage v. United States [ 90-2 USTC ¶50,453], 908 F.2d 18, 22 (5th Cir. 1990) (holding that where a technical mistake on a notice of assessment and demand for payment did not mislead a taxpayer who had actual knowledge of the correct time period, the assessment was valid); Planned Invs. v. United States [ 89-2 USTC ¶9470], 881 F.2d at 344 (holding that: "Notices containing technical defects [including absence of the tax periods involved] are valid where the taxpayer has not been prejudiced or misled by the error and is afforded a meaningful opportunity to litigate his claims."); Wood Harmon Corp. v. United States [ 62-2 USTC ¶9514], 206 F.Supp. 773, 777 (S.D. N.Y. 1962), aff'd [ 63-1 USTC ¶9182], 311 F.2d 918 (2nd Cir. 1963) ("There is no evidence that in paying the amount of the assessment the plaintiff was in any way misled by the description of the taxable period and therefore the variance in dates, if any, may be disregarded.") (citing Scofield's Estate v. Comm'r [ 59-1 USTC ¶9363], 266 F.2d 154, 167 (6th Cir. 1959)).

The IRS asserts that it gave the plaintiff more information than it was required to give him pursuant to section 6303 and its implementing regulation. On June 18, 1992, the IRS issued plaintiff a Form 3552, Notice of Tax Due on Federal Tax Return, which notified plaintiff that a $122,287.88 civil penalty for the tax period ending "12/31/88" had been assessed against him and demanding that plaintiff pay that amount. Additionally, defendant states that despite the Notice of Tax Due, the IRS was not permitted to enforce the collection of the penalty until a final determination on plaintiff's responsibility and willfulness was completed and the plaintiff was afforded the ability to exercise his appeal rights, citing the Internal Revenue Manual (albeit the 2001 version) §§5.1.4.9(a); 5.1.4.11; 104.6.10.9.1(e).

On January 19, 1993, after Revenue Officer Alzner completed her investigation and determined that sufficient evidence existed to assess a section 6672 penalty against plaintiff, the IRS sent plaintiff a Form 2751, Proposed Assessment of 100 Percent Penalty, accompanied by a cover letter. The Form 2751 indicated that plaintiff's section 6672 liability was $201,706.04 for willfully failing to pay SJA's withheld excise taxes for the period ending 12/31/88, and withheld employment taxes for all four quarters of 1990. The Form 2751 enumerated the specific tax periods that formed the basis for plaintiff's section 6672 liability, as well as the amount of the penalty that corresponded to each tax period. Under section 6303, the IRS was not required to provide this detailed information to the plaintiff, but it did so anyway. In short, the Form 2751 contained the information that the plaintiff insists should be available to the plaintiff in other supporting documents.

In this case, the plaintiff concedes that a copy of the record of assessment was not requested. Absent a request from the taxpayer, the IRS was not obliged to provide this information, however, the IRS ultimately did provide the plaintiff with the information via the Form 2751, although seven months after the June 18, 1992, Form 3552 was sent to Mr. Young notifying him of his $122,287.88 total tax obligation. ¹² In other words, the plaintiff received all the information required by 26 C.F.R. §301.6203, including an itemized breakdown of the tax periods underlying the penalty assessment and the amounts assessed for each tax period. Once again, the plaintiff has failed to show that he was prejudiced in any way by when he received notice of the breakdown of specific periods for which his taxes were due.

The plaintiff agrees that the information required by statute and regulation to support an assessment need not be included on a particular form or forms, but argues that the supporting documents must be "prepared prior to the assessment date." The plaintiff, however, argues that if the defendant cannot produce the backup records for the Form 23-C to show that they existed at the time of the assessment, there was no valid assessment. In this case, the government asserts, relying on the testimony of Ms. Alzner, and the certification on the Form 23-C, that, although not available today, proper documentation for the June 18, 1992 assessment against Mr. Young existed at the time or the assessment would not have been made. Therefore, the defendant argues that the summary record of assessment (the Form 23-C) was "sufficiently backed by supporting documents providing adequate notice." Furthermore, according to the defendant, the plaintiff has presented no evidence that appropriate supporting documents did not exist when the IRS made its June 18, 1992 assessment.

The issue of how to handle lost documents, or documents destroyed in the regular course of business, has been addressed with reference to the presumption in favor of the IRS accorded to the Certificate of Assessments and Payments, as follows:

Accordingly, this Court accepts the document "Certificate of Assessments and Payments" submitted by the Government as presumptive proof of a valid assessment. Given that the defendant has produced no evidence to counter this presumption, the Court is satisfied that the Government has established that the claimed tax liability was properly assessed against the defendant.

United States v. Dixon [ 87-2 USTC ¶9485], 672 F.Supp. 503, 506 (M.D. Ala. 1987), aff'd, 849 F.2d 1478 (11th Cir. 1988). Similarly, the United States Court of Appeals for the Ninth Circuit stated that:

The IRS , by established routine, had destroyed all copies of the notices of deficiency and demands for payment that had been mailed to Zolla. The government submitted postal form 3877 [the IRS manual recommending procedure for recording the statutory notices of deficiency] certifying that the notices of deficiency had been mailed and an IRS form certifying that the taxes and the section 6651(a)(3) failure-to-pay penalties had been assessed. Zolla offered no contrary evidence.

We adopt the view of the Eighth Circuit and the Tax Court that these official certificates are highly probative, and are sufficient, in the absence of contrary evidence, to establish that the notices and assessments were properly made. See United States v. Ahrens [ 76-1 USTC ¶9241], 530 F.2d 781, 784-86 (8th Cir. 1976); Cataldo v. Commissioner [ CCH Dec. 32,032], 60 T.C. 522, 524 (1973).

United States v. Zolla [ 84-1 USTC ¶9175], 724 F.2d 808, 810 (9th Cir.) (footnotes omitted), cert. denied, 469 U.S. 830, reh'g denied, 469 U.S. 1067 (1984).

The court in Cook v. United States also addressed the issue of unavailable administrative records:

In the instant case, the loss of the administrative file gives rise to the possibility that the penalty assessment in question lacks foundation. As described in Janis and its progeny, however, an assessment is not "naked" simply because the administrative file supporting its entry is lost --what is critical, given the de novo nature of the proceedings before this court, is that admissible evidence exists to support the assessment. See Estate of Magnin v. Commissioner [ 99-2 USTC ¶60,347], 184 F.3d 1074, 1081 (9th Cir. 1999); Karme v. Commissioner [ 82-1 USTC ¶9316], 673 F.2d 1062, 1065 (9th Cir. 1982). If such evidence exists, and is admitted by the court, it is irrelevant whether it is the same evidence that the Service relied upon in originally making its assessment. See Coleman v. United States [ 83-1 USTC ¶9288], 704 F.2d 326, 329 (6th Cir. 1983) (holding that assessment was "naked," but noting that "secondhand" records or "any demonstrably reasonable methodology of estimation" may be used to establish presumption of correctness). Indeed, consistent with the "no-look" doctrine, courts have repeatedly held that the government may support a tax assessment based on any admissible evidence, including that first disclosed in discovery, and, conversely, need not rely solely, or at all, on the evidence reviewed administratively by the Service. See Tucker v. United States [ 85-1 USTC ¶9394], 8 Cl.Ct. 180, 187-88 (1985), modified on other grounds [ 85-2 USTC ¶9631], 8 Cl.Ct. 575 (1985).

Cook v. United States [ 2000-1 USTC ¶50,269], 46 Fed.Cl. at 114-15 (footnote omitted).

In the case currently before the court, unlike in Cook, a hearing has been held. At the hearing, and in her declaration, Ms. Alzner testified that she routinely prepared the requested supporting records, so they must have existed at the time of the assessment, and that she could not have obtained an assessment from her supervisor after issuing her Form 4183, the Recommendation for the Penalty Assessment, without having completed supporting documents. Additionally, at the hearing, the following colloquy occurred between defendant's counsel and Revenue Officer Alzner:

Q: Thank you. So, just going back to the question I had asked you about your normal procedure in 1992 for recommending an assessment to protect the assessment period, you said you would have completed three forms?

A: This 4183 form, which is the recommendation, and then there's a Form 2749 which is an actual request for the assessment, and then in order to make a prompt or a quick assessment there was a third form, a Form 2859.

Q: Did you complete all three forms?

A: Yes.

THE COURT: All right, tell me those numbers again?

[Ms. Alzner]: 4183 is the recommendation. 2749 is the request for the assessment. And a 2859 is the prompt or quick assessment request form.

BY MS. FLUM:

Q: And you're confident that you completed all three forms?

A: Yes.

Q: Why are you confident.

A: I wouldn't have had an assessment made if I hadn't.

Q: Do you know the whereabouts of the originals of those three forms?

A: No.

In her testimony, and in her declaration submitted to the court, Ms. Alzner acknowledged that although only the first page of the Form 4183 is in the record, and testified that she does not know the location of the other pages of the Form 4183. She also indicated that page four of the Form 4183 is a worksheet on which the Revenue Officer lists each taxable period for which the corporation failed to pay trust-fund taxes, the type of the unpaid tax, the total unpaid tax for each period, the amount of that tax, and any interest of penalty assessed. Ms. Alzner also stated that she "always complete[s] the worksheet on page 4 of the Form 4183," and that the IRS Group Manager "will not approve the recommendation of a 100-percent penalty assessment unless page 4 of the Form 4183 has been completed." She also stated that she was "confident that [she] completed page 4 of the Form 4183 that [she] signed on June 15, 1992 , recommending the assessment of a 100 percent penalty against the plaintiff." Ms. Alzner further indicated:

It is and has always been my practice to complete a Form 2749, Request for 100-Percent Penalty Assessment. I am confident that I completed a Form 2749 requesting that an assessment of $122,287.88 be made against the plaintiff. The Form 2749 has a section titled "Description of Liability." In this section, I would have identified the tax form, period ending, unpaid balance, and trust fund portion of outstanding balance, totaling the trust fund portion outstanding to be assessed. The Form 2749 I completed requesting that a 100-percent penalty be assessed against the plaintiff in the amount of $122,287.88 is no longer in existence, and I have no knowledge of its whereabouts.

Finally, Ms. Alzner testified that if she had not completed page four of the Form 4183: "I would have had no basis to prepare make [sic] any-prepare any of the other forms. I wouldn't have been able to calculate the amount." She concluded that the assessment would not have been made if she had not prepared the supporting 2749. Furthermore, the Form 23-C contains a signed certification that the "supporting records" existed to support entering the assessment on the Summary Record of Assessments. After having an opportunity to observe Ms. Alzner during her testimony, the court finds her to have been a credible witness and accepts her account that she prepared the, now missing, supporting documents as required.

In the instant case, there is no evidence in the record that the supporting records at issue were wilfully destroyed. Moreover, plaintiff has brought forth no evidence to rebut Ms. Alzner's testimony that the supporting records, including an itemization for the first three quarters of 1990, existed when the assessment was made. Furthermore, although sent approximately seven months after Ms. Alzner issued her formal recommendation and the tax was assessed, the Form 2751 sent to Mr. Young informed him of the sought after tax period information. The plaintiff does not deny having received notice of the tax quarter information. Plaintiff also has not demonstrated that he was harmed in any way by the defendant's failures.

CONCLUSION

Even given the sum of defendant's irregular proceedings, the assessment in this case against Donald Young should not be rejected or invalidated. It was in the proper amount, against the proper responsible individual, and before enforcement procedures were intitiated, Mr. Young had adequate notice of all the information he sought. The court finds that a quick assessment in the proper amount was made against Donald Young for the first three quarters of 1990 and that no refund is due. For the forgoing reasons, after supplementation of the administrative record with the declarations and the testimony offered by the parties, the plaintiff's motion for summary judgment is DENIED and defendant's motion for summary judgment is GRANTED. The clerk's office shall DISMISS the plaintiff's complaint, with prejudice, and enter judgment for the defendant, consistent with this opinion.

IT IS SO ORDERED.

¹ All statutory references are to the Internal Revenue Code of 1988, in effect for the relevant period.

² Plaintiff paid a total of $123,664.61 in section 6672 penalties and related statutory interest. On August 26, 1996, the IRS concluded that plaintiff had overpaid the civil penalty by $5,493.46 and refunded that amount to the plaintiff. Therefore, although the amended complaint filed by the plaintiff requests a refund in the amount of $123,664.61, in addition to the appropriate statutory interest, the parties have stipulated that the amount at issue is $118,171.15, plus interest.

³ The statutory period allowed for assessing an I.R.C. §6672 penalty is governed by I.R.C. §6501, which states that "[e]xcept as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed)... ." 26 U.S.C. §6501.

⁴ Both parties acknowledge that the statute of limitations for the first three quarters of 1990 was not scheduled to expire earlier than April 15, 1994. In an affidavit, Ms. Alzner stated that she intentionally included plaintiff's section 6672 liability for the first three quarters of 1990 as part of the June 18, 1992 assessment.

⁵ The $122,054.60 section 6672 penalty assessment related to the trust fund portion of SJA's unpaid employment taxes covered the first three quarters of 1990 as follows: the penalty for the tax period ending March 31, 1990 was $394.92, the penalty for the tax period ending June 30, 1990 was $71,073.11, and the penalty for the tax period ending September 30, 1990 was $50,586.70.

⁶ 26 U.S.C. §6303(a) provides:

Where it is not otherwise provided by this title, the Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof. Such notice shall be left at the dwelling or usual place of business of such person, or shall be sent by mail to such person's last known address.

⁷ The penalty for the last quarter of 1990 was not included in the original June, 1992 assessment because SJA had not filed the Form 941 for that quarter as of that date. The amount of a section 6672 penalty cannot be determined until a tax return for the underlying tax is filed, either by a taxpayer or prepared by the IRS pursuant to I.R.C. §6020. The Form 941 was filed on October 30, 1992, indicating that the unpaid trust fund portion of SJA's employment taxes for the fourth quarter of 1990 was $79,418.16. Therefore, on January 15, 1993, Ms. Alzner added this amount to the original assessment, resulting in a total penalty of $201,706.40.

⁸ Section 7429 of the Internal Revenue Code governs the review of jeopardy levy or assessment procedures. Section 7429(b)(2)(A) states that: "Except as provided in subparagraph (B), the district courts of the United States shall have exclusive jurisdiction over any civil action for a determination under this subsection." Subparagraph (B) of section 7429(b)(2) provides limited jurisdiction to the Tax Court to review jeopardy levy or assessment procedures. This court is not reviewing whether a jeopardy assessment should have been assessed in this case. The purpose of the stipulation by the parties was to indicate that the plaintiff is contesting the section 6672 penalty assessment, regardless of the nature of the assessment.

⁹ I.R.C. §6672(a) states in full:

(a) Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 or part II of subchapter A of chapter 68 for any offense to which this section is applicable.

¹⁰ I.R.C. §6671 is titled: "Rules for Application of Assessable Penalties." Subsection (a), titled "Penalty Assessed As Tax," states:

(a) The penalties and liabilities provided by this subchapter shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as taxes. Except as otherwise provided, any reference in this title to "tax" imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter.

¹¹ I.R.C. §6203 states: "The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment."

¹² Although the Form 2751 does not appear to identify the date of the noticed assessment, that date is included on the Form 3552. Therefore, both Form 2751 and Form 3552, in conjunction, contain all the information that the IRS must provide the taxpayer upon request, pursuant to Treasury Regulation §301-6203-1.

[2002-2 USTC ¶50,484] Ragnar Pettersson, Plaintiff v. United States of America , Defendant

U.S. District Court, No. Dist. Tex. , Dallas Div., 3:01-CV-2046-M, 6/12/2002, 2002 U.S. Dist. LEXIS 10561.

[Code Sec. 6672 ]

Trust fund recovery penalty: Responsible person: Accuracy of assessment: Period covered.--Taxpayer was a responsible person liable for the trust fund recovery penalty. His contention that the penalty assessment against him was invalid for failure to identify the period for which he was liable for the corporation's outstanding employment taxes was rejected. IRS supporting documentation broke down the assessment by calendar quarter over a 19-month period and correctly identified the tax quarters for which he was liable. Further, the IRS 's post-assessment correspondence with him also identified the assessment period and he acknowledged the correct assessment period in an earlier refund claim.

Marion "Van" T. Vanbebber, Hughes & Luce, Dallas, Tex., Darrell D. Hallett, Larry N. Johnson, Chicoine & Hallett, Seattle, Wash., for plaintiff. Jon E. Fisher, Department of Justice, Dallas , Tex. , for defendant.

MEMORANDUM OPINION AND ORDER

LYNN, District Judge:

Before the Court is the Plaintiff's Motion for Summary Judgment filed November 14, 2001. The Court also considers sua sponte a partial summary judgment in favor of the Defendant, after providing notice to both parties of its intention to do so. The Court finds there is no material question of fact regarding the validity of the assessment made by the Defendant against Plaintiff pursuant to §6672 of the Internal Revenue Code. Finding the assessment valid, the Court DENIES the Plaintiff's Motion for Summary Judgment and GRANTS partial summary judgment in favor of the Defendant on this issue. This disposition does not resolve the issue of whether Plaintiff was a responsible person for the underlying taxes.

FACTUAL SUMMARY

Ragnar Pettersson ("Plaintiff") was an investor in International Aviation Services, Ltd. ("IAS"), and served as the Chairman of the Board of Directors for the corporate general partner of IAS. The company's financial position began to deteriorate in 1996. When the company filed for bankruptcy in October 1997, more than a million dollars in outstanding employment taxes were apparently owed.

The Internal Revenue Service (" IRS ") determined that Plaintiff was a responsible person under §6672 and therefore liable for a penalty for nonpayment of the outstanding taxes. By certified letter dated April 17, 2000, the IRS attempted to notify Plaintiff of a Proposed Assessment of Trust Fund Recovery Penalty for the outstanding employment taxes due for IAS in the amount of $1,392,455. The notice included Form 2751, which provides a breakdown of the tax periods from December 1996 to June 1998, including the amount of tax outstanding for each period. Plaintiff never claimed the letter and it was returned to the IRS . On June 20, 2000, a Trust Fund Recovery Penalty was assessed against Plaintiff for $1,392,455. This penalty is the same amount as the total tax liability for employment taxes owed by IAS.

The IRS prepared several documents in connection with the penalty assessment. On April 17, 2000, a Recommendation for Trust Fund Recovery Penalty Assessment (Form 4183) was prepared, which describes the applicable tax periods, by quarter, from December 1996 through June 1998. On June 20, 2000, the IRS prepared a Request for Trust Fund Recovery Penalty Assessment (Form 2749), which also shows the tax periods by quarter, and the amounts owed for each. Three other documents, the Request for Quick or Prompt Assessment (Form 2859), the Certificate of Assessments and Payments (Form 4340), and the Notice of Tax Due on Federal Tax Return (Form 3552), were prepared in conjunction with the penalty assessment, but the amount due is not broken down by quarter on such forms. Instead, June 1998 is the period shown on each form, and the full amount of $1,392,455 is listed for that period instead of by the various quarters that preceded it. The Summary Record of Assessments (Form 23C) does not include a reference to the applicable tax period.

On February 21, 2001, Plaintiff paid $1000 to the IRS and simultaneously filed a Claim for Refund and Request for Abatement (Form 843). In the Request, Plaintiff cited December 1996 to June 1998 as the applicable tax period and argued he was not liable because he did not meet the statutory definition of a "responsible person." On March 5, 2001, the Plaintiff's Claim and Request was denied by the IRS .

On May 2, 2001, Plaintiff filed a second Claim for Refund and Request for Abatement. In that claim, Plaintiff cited Form 3552 and Form 2859 as establishing that June 1998 was the tax period for which Plaintiff was assessed, and challenged the assessment as invalid because no outstanding employment taxes were due for the tax quarter ending June 1998. On June 18, 2001, the Plaintiff's second Claim and Request was denied by the IRS . On October 11, 2001, Plaintiff filed this action.

ANALYSIS

The Plaintiff claims the assessment against him is invalid for failure to identify a period for which he is liable for outstanding taxes. In Stallard v. United States, the Fifth Circuit held an assessment invalid for failure to identify an appropriate tax period because "the predicate for that assessment--a reference to a tax period for which [plaintiff] was liable--[was] missing." [94-1 USTC ¶50,056] , 12 F.3d 489, 495 (5th Cir. 1994). According to Plaintiff, the Stallard decision is dispositive on the validity issue before the Court. The Court cannot concur. The facts of the present case are distinguishable from Stallard.

Before imposing liability under §6672, the IRS must properly assess the penalty against a party, and the assessment must correctly identify the tax period for which the assessment is made. Stallard [94-1 USTC ¶50,056] , 12 F.3d at 493-95. None of the assessment documents in Stallard did that. In this case, the assessment against Plaintiff was created on June 20, 2000, when the IRS issued a Summary Record of Assessment (Form 23C). The requirement of the Internal Revenue Code is that "the summary record, through supporting records . . . provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment . . ." Treas. Reg. §301.6203-1 (emphasis added). Although the Treasury Regulations are silent on the issue of what documents may be considered supporting records, judicial gloss guides the Court's analysis.

In United States v. McCallum, the Fifth Circuit held that if the summary record is properly supported by Form 4340, then the assessment is presumptively valid. [92-2 USTC ¶50,448] , 970 F.2d 66, 71 (5th Cir. 1992). The Form 4340 prepared in connection with the assessment in this case identifies the applicable assessment period as the period ending June 30, 1998 , a period during which no new tax liability accrued.

However, this does not end the Court's inquiry. In United States v. Watson, the court sanctioned the use of alternative documents as the "supporting records" necessary to validate an assessment. [99-2 USTC ¶50,806] , 102 F.Supp.2d 351, 355 (S.D. Tex. 1999). The Watson court considered the document prepared by the IRS recommending the assessment as proof of the IRS 's intent to assess the taxpayer for five tax quarters, rather than the single tax quarter referenced on Form 4340. Thus, under the reasoning in Watson, Form 4340 alone does not control in this instance. Instead, other supporting documents are relevant in the determination of whether a valid assessment was made.

Here, the Court finds the necessary predicate required by the Stallard decision was established by supporting documentation prepared both contemporaneously with and after the assessment was made. Contemporaneously with the assessment, the IRS prepared Form 2749 (Request for Trust Fund Recovery Penalty Assessment), dated June 20, 2000, which breaks down the assessment by quarter from December 1996 through June 1998, and correctly identifies the tax quarters for which Plaintiff is liable. ¹ Further, by letter dated March 5, 2001, the IRS responded to Plaintiff's first Claim for Refund, and identified December 1996 to June 1998 as the applicable assessment period. ² Thus, post-assessment correspondence with the Plaintiff also identified a period of assessment including tax quarters for which Plaintiff is liable. In combination, this documentation sufficiently identifies the IRS 's intent to assess Plaintiff for tax liability that accrued during multiple tax quarters from December 1996 through September 1997.

In Stallard, the IRS failed to offer any documentation, either prepared contemporaneously with the assessment or following the assessment, that identified a tax period for which the Plaintiff was liable. Stallard [92-2 USTC ¶50,596] , 806 F.Supp. 152, 159. The lack of documentation was particularly troublesome to the court because the plaintiff "did not 'lay behind the log' waiting for the limitations period to expire and then claim no valid assessment had occurred." Id. Instead, the Stallard plaintiff went to great effort to resolve the matter, even agreeing to extend the statute of limitations period for the IRS after revealing to the IRS internal errors favorable to him. Id. In this case, in contrast, the Plaintiff did not even question the applicable time period for the assessment until his second claim for refund, having acknowledged the correct period in his initial claim. Quite simply, the facts before the Court are quite different from those found in Stallard.

CONCLUSION

The Court finds the IRS made a valid assessment against the Plaintiff pursuant to §6672 of the Internal Revenue Code. Although the Certificate of Assessments and Payments (Form 4340) identifies a tax period for which no new tax liability accrued against Plaintiff, supporting documents prepared contemporaneously with the assessment and after the assessment verify an assessment against Plaintiff for the tax quarters ending December 31, 1996 through September 30, 1997 , periods for which Plaintiff is liable. For all of the reasons stated above, the Court DENIES the Plaintiff's Motion for Summary Judgment and GRANTS partial summary judgment in favor of the Defendant that the Trust Fund Recovery Penalty assessment against Plaintiff is valid.

SO ORDERED.

¹ The district court in Stallard refused to consider the information included in Form 2749 as relevant to the determination of the applicable tax period because the document was prepared before the assessment was made against the taxpayer. Stallard v. United States [92-2 USTC ¶50,596] , 806 F.Supp. 152, 159 (W.D. Tex. 1992). The Court of Appeals did not address that issue. Here, Form 2749 and the assessment were both made on June 20, 2000.

² While Plaintiff urges the Court to only consider documentation prepared contemporaneously with the assessment to determine the period for which the assessment is made, the Stallard decision clearly indicates that post-assessment documentation may also be considered. [94-1 USTC ¶50,056] , 12 F.3d at 493-94. In Brafman v. United States [67-2 USTC ¶12,494] , 384 F.2d 863 (5th Cir. 1967), the Fifth Circuit held that the "assessment certificate" must be timely signed by the appropriate official within the limitations period; however, in Stallard, the Fifth Circuit clarified that the "assessment certificate" refers only to the summary record creating the assessment. [94-1 USTC ¶50,056] , 12 F.3d at 493. The Fifth Circuit noted, "to extend Brafman to require that the supporting record must also be prepared within the prescriptive period would place Brafman in direct conflict with the plain language of [the applicable Treasury Regulation]." Id. at 494.

[2002-1 USTC ¶50,360] United States of America , Plaintiff v. Myles Olsen, Jr., et al., Defendants

U.S. District Court, No. Dist. Ill. , East. Div., 98 C 2170, 3/28/2002

[Code Sec. 6672 ]

Assessments: Trust fund recovery penalty: Evidence.--Assessments of the trust fund recovery penalty against an owner of three corporations were sustained. The individual failed to establish that the assessments were erroneously calculated.

[Code Sec. 6321 ]

Lien for taxes: Nominee theory.--A lien was valid and could be foreclosed with respect to a parcel of real estate owned by a taxpayer's wife under the nominee theory. While the wife retained beneficial ownership of the land, it was purchased with the proceeds of a loan undertaken by the husband, the husband exercised clear dominion and control over the land, and held himself out as the owner of the property to tenants, a zoning board and a bank.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

COUNT I

LEINENWEBER, District Judge:

1. In Count I the United States seeks a money judgment against Myles S. Olsen, Jr., based on unpaid federal tax assessments made against him pursuant to 26 U.S.C. §6672 on May 11, 1992 . Those assessments were for trust fund recovery penalties arising from unpaid employment tax withholdings of three companies he controlled: Olsen Woodwork Co., Inc., Town Cabinet Company, and Southern States Construction Company.

2. The defendant first contends that the court should find in his favor because, allegedly, the government never offered the tax assessments into evidence in the case. However, the record shows that at the time the trial commenced the court engaged in a colloquy with the attorneys on how to proceed with the presentation of evidence. The court suggested that the case should start with the government's assessments, as reduced by a concession letter from the Department of Justice, as presumptively accurate and first hear the defendant's evidence as to any inaccuracies, and then allow the government to respond. The defendant argued, on the basis of United States v. Schroeder [90-1 USTC ¶50,250], 900 F.2d 1144 (7th Cir. 1990), that the government's concession caused the assessments to lose their presumption of correctness. However, the government and the court interpreted Schroeder differently; the original assessments due to the government's concession were of course no longer accurate but that did not justify throwing them out. The corrected assessments were a new starting point for defendants to contest. The defendant has never taken the position prior to his brief that the assessments were not admissible or didn't exist; rather he disputed the amount owed due to the failure of the government to credit him with all payments made. For example, his answer to the complaint admitted that the assessments were made but disputed the amount owed. Moreover the defendant himself offered his Exhibit 3, to which there was no objection by the government, which consisted of the certificates of assessment themselves. Consequently the court finds as a fact that the assessments as modified by the government's concession amounted to $2,163,881.46 as of March 8, 2002, which is the amount for which the government seeks judgment in Count I.

3. Defendant sought to discount the government's assessments by offering evidence of alleged payments not accounted for by the government in the assessments. See Defendant's Exhibit 9 and attachments. However, none of the alleged payments and attachments, which constituted the only evidence submitted by defendants of non-credited payments, are admissible under the federal rules of evidence. To the extent that the documents, consisting of check issuance requests, check faces, and deposit slips, are offered to prove actual payments to the IRS , they are hearsay. They are assertions in writing seeking to prove that truth of the matter asserted, i.e., that a payment has in fact been made. Thus, the documents constitute classic hearsay. The court also notes that the defendants have offered no corroborating evidence, such as bank records showing that the defendant's accounts were debited. Consequently, the court finds that none of the documents constituting Exhibit 9 are admissible. Since this was the only evidence offered by defendant, he has failed to demonstrate any errors in the Government's assessment. The court therefore finds that the indebtedness of Myles Olsen, Jr., to the Internal Revenue Service is in the amount of $2,163,081.46, plus interest accruing from March 8, 2002. Judgment is entered in favor of the United States in that amount.

COUNT II

1. In Count II, the government seeks to foreclose on certain real estate, located at 17816 Washington Street , Union , Illinois , in which legal title rests with the Chicago Title and Trust Company as Trustee for Land Trust No. 1072725. Beneficial interest to the land trust as well as the power of direction rests with Joan Olsen, Myles Olsen's wife.

2. The Union property has been in Mr. Olsen's family for more than 50 years. He received title to the Union property from his father and title was conveyed to the land trust in 1978. At that time Myles Olsen held 100% of the beneficial interest to the land trust and held the power of direction. Myles Olsen filed for bankruptcy in 1985. During the bankruptcy proceeding, the IRS filed a claim for more than $1 million in unpaid employment taxes. On June 19, 1991, Myles Olsen, through his attorney, made an offer to purchase the property from the bankruptcy estate. On July 8, 1991, the offer was modified changing the name of the purchaser as Joan Olsen instead of Myles Olsen. Joan Olsen is Myles Olsen's wife. The trustee approved the sale on September 30, 1991. The sale was financed by a mortgage loan from Marengo State Bank which had been negotiated by Myles Olsen. The security was a mortgage on the property conveyed to Marengo State Bank by the land trustee. Myles executed the promissory note and a personal guarantee as additional security for the loan. Joan did not work and had few assets of her own. Myles directed the land trustee to borrow the money and execute the loan documents. On August 19, 1992, Myles assigned the beneficial interest in Land Trust No. 1072725 to Joan Olsen. There is no indication that any consideration was exchanged for this assignment. After the transfer of beneficial interest to Joan, Myles continued to treat the property in the same way as when he owned it alone. It is clear that the motivation for transferring the beneficial interest into Joan's name was to defeat the government's tax lien. The court therefore finds that Joan Olsen was Myles Olsen's nominee for holding the beneficial interest in the Union, Illinois , property.

3. A federal tax lien arises when notice and demand for an assessment of unpaid taxes is made, and attaches to all of the taxpayer's property and rights to property. 26 U.S.C. §§6321 and 6323. A court must initially look to state law to determine what rights a taxpayer has in property that the government seeks to reach, and then look to federal law to determine whether the taxpayer's state-delineated rights qualify as property or rights to property. Morgan v. Commissioner [40-1 USTC ¶9210], 309 U.S. 78, 80 (1940). The determination of what constitutes "property" or "rights to property" is the breath of control of the taxpayer could exercise over the property. Drye v. United States [99-2 USTC ¶51,006; 99-2 USTC ¶60,363], 120 S.Ct. 474, 483 (1999). The tax lien can reach the property held in the name of another if the latter is the former's nominee. Whether a title holder is a nominee depends on all of the facts and circumstances, including (1) the source of funds used to acquire the property, (2) whether the taxpayer exercised dominion and control over the property, (3) whether there is a family or other close relationship between the taxpayer and the owner, and (4) whether the taxpayer held himself as owner of the property. Shades Ridge Holding Co., Inc. v. United States of America, 888 F.2d 725, 729 (11th Cir. 1989); Libutti v. United States of America [97-1 USTC ¶50,235], 107 F.3d 110, 120 (2nd Cir. 1997). Here while neither Miles nor Joan came up with any personal funds to buy the property from the bankruptcy estate, the evidence was clear that it was Myles' credit and not Joan's that caused the mortgage loan to be made. As found above, Myles exercised clear dominion and control over the property and Joan conversely did not exercise dominion or control in any respect. Their relationship was husband and wife. Finally, Myles held himself out as the owner of the property to tenants, the zoning board, and the bank. Consequently, the government's tax lien attaches to the beneficial interest of Joan Olsen in the Union, Illinois property, which she holds as Myles Olsen's nominee.

4. The defendants point to this court's 1999 rulings with respect to the attaching of the tax liens to the real estate. The basis for the court's ruling at that time was the context in which the ruling was made. The property was subject to a foreclosure suit brought by the mortgage holder and a mechanic's lien holder. The court held, in accord with Old Orchard Bank v. Rodriguez, 654 F.Supp. 108, 109 (N.D.,Ill. 1987), that a beneficiary of a land trust "has neither legal nor equitable title to the real estate." But, as the court in Old Orchard pointed out, the beneficiary owns a personal property interest in the real estate to which the lien can attach. It is just not reachable in a real estate mortgage foreclosure suit brought against the land trustee. The lien encumbers the beneficial interest and, if the property is sold, attaches to any proceeds, earnings, and avails to which the beneficiary would be entitled. Id. at 112. Likewise, there is no reason why the beneficial interest in the land trust cannot be sold to satisfy the tax due.

5. Accordingly, the United States is entitled to the appointment of a receiver, pursuant to 26 U.S.C. §§7402(a) and 7403(d), to take custody of the beneficial interest, and to arrange its sale free and clear of any rights, title, claims or interest of any of the parties to this action, with the net proceeds of the receivership and sale to be distributed to the United States and other parties according to law. The United States shall submit an appropriate order appointing such receiver.

[2000-1 USTC ¶50,344] Richard M. Haworth, Plaintiff/Counter-defendant v. United States of America , Defendant/Counter-claimant

U.S. District Court, Dist. Kan., 98-1218, 2/25/2000

[Code Sec. 6672 ]

Penalties, civil: 100% penalty for failure to pay over withheld employment taxes: Calculation of penalty: Agreement with IRS : Oral agreement: Estoppel.--The IRS correctly calculated the amount of the 100% penalty for failure to pay over withheld employment taxes against the principal shareholder of a corporation that had paid other creditors ahead of the IRS . The taxpayer, who qualified as a responsible person required to collect and pay over withheld taxes on behalf of the corporation, contended that the IRS 's assessment total was inaccurate because it applied some of the taxpayer's payments to penalties rather than to taxes in violation of an oral agreement between the IRS and the corporation. However, agreements to compromise tax claims generally must be in writing, and the taxpayer failed to produce any evidence of the alleged oral representations for estoppel purposes.

[Code Sec. 6672 ]

Penalties, civil: 100% penalty for failure to pay over withheld employment taxes: Calculation of penalty.--The IRS correctly calculated the amount of the 100% penalty for failure to pay over withheld employment taxes against the principal shareholder of a corporation that had paid other creditors ahead of the IRS . The taxpayer, who qualified as a responsible person required to collect and pay over withheld taxes on behalf of the corporation, provided no evidence that the IRS erroneously caused penalties and interest to accrue after payment, or that it incorporated a record error into the calculation. Moreover, the disparity between the amount due according to IRS records and the amount alleged due in its motion for summary judgment was the result of a payment credited to the taxpayer's account that did not change the total assessment or its calculation.

Memorandum and Order

BROWN, District Judge:

Plaintiff Richard Haworth filed this action claiming a refund for a portion of a tax penalty assessed against him and collected by the IRS pursuant to 26 U.S.C. §6672. The assessment arose out of a failure by Mercury Electric Inc., a corporation in which plaintiff was the principal shareholder, to pay certain federal withholding taxes. The United States answered and counterclaimed against Haworth , alleging that he was a responsible person who was required to collect, account for, and pay over the taxes, and that he had willfully failed to do so, rendering him liable for an amount equal to the unpaid taxes. See 26 U.S.C. §6672. The matter is now before the court on the United States ' motion for partial summary judgment, in which the government seeks a determination that the amount assessed against Haworth was correctly calculated. The court finds that oral argument would not assist in deciding the issues presented.

I. Facts

From October 1, 1993, through June 1, 1995, Richard Haworth was a 90 percent shareholder in the company known as Mercury Electric, Inc., located in Wichita , Ks.

From October 1, 1993, through May of 1995 (with the exception of the second quarter of 1994), Mercury Electric failed to satisfy its federal employment tax obligations.

During this period, Mercury Electric was using money to pay creditors other than the IRS .

On November 24, 1997 , the United States assessed a trust fund recovery penalty pursuant to 26 U.S.C. §6672 against Richard Haworth for the fourth quarter of 1993; the first, third and fourth quarters of 1994; and the first and second quarters of 1995, based on their contention that Haworth was a responsible person at Mercury Electric who willfully failed to pay the federal employment taxes as due. The assessment totaled $174,473.23 based on the trust fund portion of Mercury Electric's federal employment taxes.

II. Summary Judgment Standards

The standards and procedures for summary judgment are well established and will not be fully repeated here. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). In essence, summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Id.

III . Discussion

Plaintiff's memorandum lists four reasons why he believes there is a legitimate dispute about the accuracy of the government's calculation of the total assessment.

First, plaintiff argues that the IRS erroneously continued to accrue penalties and interest after the taxes for the quarter ended September 1993 were paid in full, resulting in an overpayment of $10,581.91 for that period, which was not credited against any other period. However, nothing in the record contradicts the government's assertion that penalties and interest accrued (a total of $11,568.24 according to Exhibit 1) while the tax was unpaid, and were then properly assessed after the tax had been paid. ¹

Second, plaintiff argues that the government's records show the amount due for the period ending December 1993 is $6,281.11, rather than the $26,011.73 alleged in the government's motion. As the government points out, plaintiff's figure takes into account a $20,298.62 payment made after the assessment, and does not change the fact that the figure of $26,011.73 assessed against plaintiff was correctly calculated, though, as the government concedes, the plaintiff is entitled to have this payment properly credited. Govt. Reply at 5.

Third, plaintiff contends that between the third quarter of 1993 and June of 1995, Mercury Electric negotiated an oral agreement with the IRS under which Mercury was to make payments in addition to their withholding taxes and the IRS would apply those payments to taxes rather than to penalties. He argues the government's assessment total is inaccurate because the IRS applied some of those payments to statutory penalties rather than to taxes. This contention does not create an issue of fact for several reasons. First, under federal law and regulations, agreements to compromise tax claims generally must be in writing in order to bind the government. See Botany Worsted Mills v. United States [1 USTC ¶348], 278 U.S. 282, 288 (1929); Brooks v. United States [87-2 USTC ¶9626], 833 F.2d 1136, 1445-46 (4th Cir. 1987). Second, plaintiff has not alleged or cited any evidence upon which the alleged oral representations of the IRS agent could be enforced by virtue of an estoppel against the government. Cf. Heckler v. Comm. Health Serv., 467 U.S. 51 (1984); Delohery v. Internal Revenue Service [94-1 USTC ¶50,144], 843 F.Supp. 666, 669-70 (D. Colo. 1994). Finally, even assuming the existence of the alleged oral agreement, the deposition testimony cited by plaintiff indicates that Mercury Electric failed to perform its end of the alleged agreement. See Pl. Exh. 2 (Edwin Chaplin's understanding was that there would be no penalty or interest "if we [Mercury Electric] could have lived up to that agreement. . . ."). As such, plaintiff cannot now be heard to complain that Mercury Electric is entitled to the benefit of the bargain from the IRS .

Lastly, plaintiff contests the accuracy of the assessment because the government's "Record of Application of Payments and Additional Assessment to Tax Period 9312" erroneously shows penalty and interest assessments of over $1 million. The government acknowledges that the figure in this record "is too high," which is a bit of an understatement. Nevertheless, there is no evidence the government incorporated this error into its calculation of Mercury Electric's trust fund obligations, which are the basis for the assessments, nor did it incorporate the error in the actual assessments against plaintiff. The certified transcript for this period shows that the IRS assessed penalties and interest of $11,898.99. Plaintiff must cite evidence of a genuine dispute concerning the actual assessments made by the IRS as reflected in the certified transcript. No such evidence appears in the record. Accordingly, the court determines there is no genuine controversy concerning the correctness of the amount of the assessment against Mr. Haworth.

IV. Conclusion

The United States ' Motion for Partial Summary Judgment (Doc. 51) is GRANTED.

IT IS SO ORDERED.

¹ According to the certified transcript for the period ending September 1993, a total of $6,554.02 was assessed for late payment of tax and total interest of $5,014.22 was assessed for that period. The assessments were made between December 13, 1993, and May 8, 1995.

[99-2 USTC ¶50,806] United States of America , Plaintiff v. Joseph L. Watson, Defendant

U.S. District Court, So. Dist. Tex., Houston Div., CIV . H-98-1002, 8/6/99

[Code Sec. 6672 ]

Summary judgment: Collection suit: Trust fund recovery penalty: Accuracy of assessment: Burden of proof: Presumption of correctness: Bankruptcy proof of claim.--Genuine issues of material fact as to the accuracy of an assessment precluded summary judgment in the government's suit to collect the trust fund recovery penalty from an officer of a corporation that failed to pay over its employment taxes. The taxpayer overcame the presumption that the assessment was correct by presenting evidence that the proof of claim for the unpaid taxes filed by the IRS in the corporation's bankruptcy proceeding reflected a substantially lower liability than the IRS now claimed was owed. Moreover, the IRS offered no explanation for the discrepancy, and was unable to produce the returns on which the assessment was based.

[Code Sec. 6323 ]

Summary judgment: Collection suit: Trust fund recovery penalty: Accuracy of assessment: Assessment period: Notice of tax lien.--A taxpayer's contention that an assessment applied only to one tax quarter, rather than the five quarters alleged by the government, was rejected. The date on his notice of federal tax lien did not limit the assessment to that quarter, and the government demonstrated that he was properly assessed for deficiencies in five quarters.

[Code Sec. 6672 ]

Statute of limitations: Collection suit: Trust fund recovery penalty: Assessment: Collection.--An assessment made within the three-year statute of limitations and collection suit filed within the ten-year limitations period were timely.

MEMORANDUM AND ORDER

ATLAS, District Judge:

This tax collection case is before the Court on cross-motions for summary judgment. Defendant James Watson filed a Motion for Partial Summary Judgment and Alternative Motion to Dismiss [Doc. #18] ("Defendant's Motion"), to which Plaintiff United States of America filed a Response in opposition ("Plaintiffs Response") [Doc. #20]. Plaintiff United States of America , Internal Revenue Service (" IRS "), filed a Cross-Motion for Partial Summary Judgment ("Plaintiff's Cross-Motion")[Doc. #19], to which Defendant filed a Response in opposition ("Defendant's Response") [Doc. #21]. The Court has thoroughly reviewed these pleadings, as well as all other matters of record in this case. Based on this review, and the application of relevant legal authorities, the Court concludes that a genuine issue of material fact precludes summary judgment. ¹ The court denies Defendant's Motion and Plaintiff's Cross-Motion.

I. BACKGROUND

The United States filed this tax collection suit seeking to reduce to judgment its prior assessments against Defendant Joseph Watson ("Watson"). In Count I, the United States seeks judgment for Watson's delinquent 1987 federal income taxes (Form 1040) and interest thereon. On May 1, 1999 , the Court entered an Agreed Judgment [Doc. #17] against Watson on Count I.

In Count II of the complaint, the United States seeks a judgment against Watson under 26 U.S.C. §6672 as the "responsible person" for the employment tax liability of J.L. Watson Company, Inc. (the "Company"). ² The cross- motions currently before the Court concern only this remaining claim, the §6672 claim to recover the trust fund penalty, plus interest and additions as provided by law.

A. Factual Background

While in operation, the Company incurred certain employment tax liabilities, including the income taxes and social security contributions for its employees. Although the taxes and the employees' social security contributions were withheld from the employees' paychecks, the tax liabilities were not paid. The Company's failure to remit employee income taxes and social security contributions gave rise to the imposition of a "6672 penalty" against Watson under 26 U.S.C. §6672.

On August 25, 1985 , the Company filed a Chapter 11 petition, Case No. 85-05238-H1-4, in the United States Bankruptcy Court for the Southern District of Texas. On July 28, 1988 , the United States filed an amended "Proof of Claim for Internal Revenue Taxes" ("Proof of Claim"). Proof of Claim, Exh. F to Defendant's Motion. The Proof of Claim stated that the "tax due" for the tax period ending June 30, 1984 was $77,707.52 as of August 29, 1985 , the date the Company filed its Chapter 11 petition.

On October 11, 1985 , Watson filed a Chapter 11 petition, Case No. 85-06402-H3-5, in the Bankruptcy Court for the Southern District of Texas. Watson's Chapter 11 bankruptcy case was later converted to n Chapter 7 liquidation. On March 25, 1987 , Watson received a discharge of dischargeable debts.

On April 11, 1988 , the IRS assessed against Watson a penalty of $854,442.36 pursuant to 26 U.S.C. §6672 for willfully failing to collect, truthfully account for, and pay over to the United States, employment taxes for the second, third, and fourth quarters of 1984, and the second and third quarters of 1985. On June 6, 1988 and July 18, 1988 , two additional assessments of interest were made against Watson on the trust fund recovery penalty, with the total obligation rising to $877,646.66. Notices of the assessments and demands for payment were mailed to Watson on or about the date of these assessments, but Watson has not paid the assessments.

B. Procedural Background and Summary of Arguments

On April 7, 1998 , the IRS filed this lawsuit. At a conference, the parties indicated that a statute of limitations issue was potentially dispositive. Based on the discussions at this conference, the Court suggested that the parties file cross-motions for summary judgment.

The parties each moved for summary judgment on the United States ' claim for the "trust fund recovery penalty," imposed under §6672, in the amount of $1,906,256.99 plus interest and other lawful additions to tax accruing thereafter. Watson alleges that no assessment was made for the first quarter of 1985, and the United States agrees.

Watson argues that the entire assessment pertains to only the September 1985 tax quarter rather than the multiple tax periods alleged in the Complaint. The United States maintains that the assessment amount was based on five tax periods as indicated from the documents submitted as summary judgment evidence. As discussed below, Watson's evidence fails to raise a genuine issue of material fact that the assessments relate only to one tax quarter rather than to five tax quarters (the second, third, and fourth quarters of 1984, and the second and third quarters of 1985).

Watson contends that the statute of limitations bars this tax collection suit. The United States argues that neither the assessments nor this collection suit is time-barred. For the reasons stated herein, the Court concludes that the application of governing legal authority to the undisputed evidence establishes that the assessments and the collection suit were timely filed.

Watson argues that, even if the assessment includes all five quarters and even if the collection suit is not time-barred, the §6672 assessment amount is incorrect. Watson presents evidence that the Proof of Claim filed in the Company's bankruptcy proceeding reflected that the tax due for the second quarter of 1984 was $77,707.52, approximately $110,000 less that the United States now claims for that quarter. Watson also argues that the United States ' inability to locate the supporting documentation for the assessments is fatal to this collection case. The United States maintains that the assessment is accurate. The United States alleges that the Proof of Claim was "significantly understated" and argues that its documentary evidence is adequate to establish the amount due. The Court concludes that Watson has presented sufficient evidence to raise a genuine issue of material fact on his claim that the assessment for the second quarter of 1984 is erroneous, for the reasons discussed below.

The Cross-Motions, which have been fully briefed by the parties, are ripe for decision.

II. THE SUMMARY JUDGMENT STANDARD

In deciding a motion for summary judgment, the Court must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Sanders v. Casa View Baptist Church, 134 F.3d 331,334 (5th Cir.), cert. denied, 119 S. Ct. 161 (1998); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The facts are to be reviewed with all inferences drawn in favor of the party opposing the motion. See Boze v. Branstener, 912 F.2d 801,804 (5th Cir. 1990).

The party moving for summary judgment has the initial burden of demonstrating the absence of a material fact issue with respect to those issues on which the movant bears the burden of proof at trial. If the movant meets this initial burden, the burden shifts to the nonmovant to demonstrate with "significant probative evidence" that there is an issue of material fact so as to warrant a trial. See Texas Manufactured Housing Ass'n v. Nederland, 101 F.3d 1095, 1099 (5th Cir. 1996), cert. denied, 521 U.S. 1112 (1997).

"Summary judgment is a marvelous tool when used correctly. It can cut to the heart of disputed legal issues and resolve them, so long as the underlying material facts are undisputed. However, summary judgment is completely inappropriate when a law suit turns on a disputed question of material fact" Equal Employment Opportunity Comm. v. Brown Learning Centers, Inc., (text illegible) (text illegible, Cir. 1990) (summary judgment inappropriate where genuine issue of material fact exists).

III . DISCUSSION

A. Tax Quarters to Which the Assessment Applies

Watson argues that the IRS 's assessment applies only to the third quarter of 1985, rather than the five tax quarters during 1984 and 1985 referred to by the United States. Watson asserts that the only documents demonstrating that the penalty was assessed for periods other than the third quarter of 1985 are the Complaint in this case, which erroneously includes the first quarter of 1985, and the "Certificate of Assessments and Payments," which is dated after the tax collection suit began. ³ To establish that the entire penalty assessment was based on one tax period, Watson also refers to the "Notices of Federal Tax Liens," which list only "09/30/85."

The Court rejects Watson's argument to the extent it relies on the Notices of Federal Tax Lien. The documents reflect clearly on their face that the "09/30/85" date represents the date on which the "tax period ended." Notices of Federal Tax Lien, Exhs. B and C to Defendant's Motion. The full tax period for which the United States imposed assessments, a period including multiple tax quarters, ended on September 30, 1985 . Watson cites no legal requirement that the Notice of Federal Tax Lien must list separately the assessment for each quarter.

Additionally, the evidence submitted by the United States demonstrates that Watson was assessed for five tax quarters. Suse Dodson, a revenue officer for the IRS for 16 years, states that the IRS conducted valid tax assessments against Watson for five tax quarters. See Declaration of Suse Dodson, attached as an Exhibit to Plaintiff's Cross-Motion, ¶¶4, 6. The IRS also offers copies of the recommendations for the 100% penalty assessment. See Exhs. 7-10 to Plaintiff's Motion. These documents refer to five tax periods and five separate assessments, and further demonstrate that the assessment was for each of the five tax periods referenced by the United States.

The Court finds that Watson has failed to raise a genuine fact question in connection with his allegation that the assessment was based on one single tax period. The Court holds that the assessments were for five tax quarters during 1984 and 1985.

B. Statute of Limitations

The statute of limitations for an assessment is generally three years from the date a return is filed. See 26 U.S.C. §6501(a). In the case of employment taxes, the statute of limitations for all calendar quarters in a given year commences on April 15 of the following year, even though four separate returns may be due. 26 U.S.C. §6501(b)(2); Treas. Reg. §301.6501(b)-1(b).

In this case, the earliest tax period for which Watson was assessed a §6672 penalty was the second quarter of 1984. The statute of limitations on the assessment for this quarter would commence on April 15 of the following year, April 15, 1985 . The §6672 penalty against Watson was assessed on April 11, 1988 , within the three-year limitations period.

Under Section 6502(a)(1), the statute of limitations for a tax collection suit is ten years from the date of the assessment. The IRS filed its tax collection suit on April 7, 1998 , less than ten years after the April 11, 1988 assessment. Thus, neither the assessment nor this tax collection suit is barred by the applicable statute of limitations.

C. Accuracy of Assessment

Watson challenges the amount of the §6672 assessment and argues that the assessment is incorrect, whether for all of the quarters the government alleges or for only the third quarter of 1985. ⁴ First, Watson asserts that the $854,442.36 assessment is incorrect because it is greater than the total employment tax deposit liability of the corporation listed on the Proof of Claim filed in the Company's bankruptcy proceeding. Watson also contends that the assessment amount is flawed because the IRS cannot produce the originals or copies of the tax returns used to prepare the assessment.

1. Burdens of Proof

It is a well-settled principle that the government's deficiency assessment is generally afforded a presumption of correctness. See United States v. Janis [76-2 USTC ¶16,229], 428 U.S. 433, 440-42 (1976); Helvering v. Taylor [35-1 USTC ¶9044], 293 U.S. 507, 515 (1935). A properly executed " IRS Certificate of Assessments and Payments" referring to the tax periods for which liability is assessed is sufficient "to invoke the 'presumption of validity' as to that assessment." Stallard v. United States [94-1 USTC ¶50,056], 12 F.3d 489, 495 (5th Cir. 1994); United States v. McCallum [92-2 USTC ¶50,448], 970 F.2d 66, 70 (5th Cir. 1992).

In order to overcome this presumption, a taxpayer defending a collection suit must establish by a preponderance of the evidence that the government's assessment was arbitrary or erroneous. Janis [76-2 USTC ¶16,229], 428 U.S. at 440; Portillo v. Commissioner of Internal Revenue [91-2 USTC ¶50,304], 932 F.2d 1128, 1132 (5th Cir. 1991); Carson v. United States [78-1 USTC ¶16,280], 560 F.2d 693, 695-96 (5th Cir. 1977). "[P]roof that an assessment is utterly without foundation is proof that it is arbitrary and erroneous." Janis [76-2 USTC ¶16,229], 428 U.S. at 442; see also Carson [78-1 USTC ¶16,280], 560 F.2d at 696.

Once the taxpayer presents evidence that the assessment is arbitrary or incorrect, the burden shifts to the government to establish the amount of deficiency owed. See Portillo [91-2 USTC ¶50,304], 932 F.2d at 1133; Bar L. Ranch, Inc. v. Phinney [70-1 USTC ¶9399], 426 F.2d 995, 998 (5th Cir. 1970).

2. Analysis

Watson presents uncontroverted evidence that the IRS filed an amended Proof of Claim in the Company's bankruptcy proceedings in which the IRS represented that the amount of tax due for the second quarter of 1984 was $77,707.52 as of the date the bankruptcy petition was filed on August 29, 1985. Watson notes that the United States does not have the tax returns or other supporting documentation used to calculate the tax due for purposes of the Proof of Claim or for purposes of the penalty assessment. Watson does not, however, present similar evidence to raise a fact question regarding the accuracy of the remaining four quarters.

The IRS concedes, as it must, that the Proof of Claim stated a "tax due" significantly lower than the amount the IRS now seeks to recover from Watson for the second quarter of 1984. The IRS 's only argument is an unadorned contention that the Proof of Claim is "significantly understated" and that the tax due for the second quarter of 1984 should have been stated as $187,012.21 on the Proof of Claim, instead of $77,707.52. As noted by Watson and conceded by the United States, the underlying documentation to support either calculation is missing. ⁵

The Court concludes that Watson's evidence regarding the Proof of Claim, together with the absence of documentation to support the United States' current calculation as the correct calculation rather than the tax due amount listed in the earlier-filed Proof of Claim, raises a genuine issue of material fact regarding his claim that the assessment for the second quarter of 1984 was erroneous and arbitrary. The United States is not entitled to summary judgment on this limited issue. At trial, Watson will have the initial burden to prove by a preponderance of the evidence that the assessment for the second quarter of 1984 was arbitrary and erroneous. If Watson satisfies this burden, the United States will have the burden to establish the correct amount of the tax liability, including the proper application of deposits and payments made by or on behalf of the Company for the second quarter of 1984.

IV. CONCLUSION AND ORDER

For the reasons discussed above, the Court concludes that genuine issues of material fact preclude summary judgment on the accuracy of the assessment for the second quarter of 1984, but that summary judgment on all other issues raised by Watson is appropriate. Accordingly, it is hereby ORDERED that Defendant's Motion for Partial Summary Judgment and Alternative Motion to Dismiss [Doc. #18] and Plaintiff's Cross-Motion for Partial Summary Judgment [Doc. #19] are DENIED in part and GRANTED in part, as set forth in this Memorandum and Order. The case remains scheduled for docket call on December 10, 1999, unless the parties advise the Court before that date that the case has been settled.

¹ Because the parties have presented and relied upon matters outside the pleadings the Court reviews Watson's alternative motion to dismiss as one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Fed. R. Civ. 12(b).

² The Internal Revenue Code ("IRC") requires that certain employers withhold federal income and social security taxes from the wages of their employees and remit the amounts withheld on a quarterly basis. 26 U.S.C. §§3102(a), 3402(a). Prior to the time they are remitted, the withheld taxes constitute a special fund held by the employer "in trust" for the government. See 26 U.S.C. §7501(a).

Section 6672 provides that "[a]ny person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax... shall... be liable for a penalty equal to the total amount of the tax... not collected, or not accounted for and paid over." 26 U.S.C. §6672(a). The penalty is imposed on the "responsible person," that is, the person who (1) was responsible for either collecting, truthfully accounting for, or paying over such taxes, and (2) willfully failed to do so. See Barnett v. Internal Revenue Service [93-1 USTC ¶50,269], 988 F.2d 1449, 1453 (5th Cir.), cert. denied, 510 U.S. 990 (1993); Raba v. United States [93-1 USTC ¶50,039], 977 F.2d 941,943 (5th Cir. 1992). Watson was the President, Secretary, shareholder, director and incorporator of the Company. He does not dispute that he was the "responsible person" for purposes of collecting, accounting for, and paying the Company's employment taxes.

³ Watson objects to documents recently submitted by the United States which were not previously produced. The Court finds that both parties currently have all the available documentation, and that the delayed disclosure does not unfairly prejudice Watson. The Court overrules Watson's objection and admits the IRS 's belatedly produced documents.

⁴ The United States, in addition to its substantive responses, argues that Watson failed to plead that the assessment was incorrect as an affirmative defense in the original response and is now barred from raising it. Watson, in accordance with Rule 8(b) of the Federal Rules of Civil Procedure, stated in his answer to the Complaint that he lacked sufficient knowledge or information to form a belief as to the truth of the averments regarding the penalty assessment. Defendant's Original Response, [Doc. #9] ("Original Response"), ¶6. This averment operates as a denial. Fed. R. Civ. P. 8(b); Glater v. Eli Lilly & Co., 712 F.2d 735, 737 (1st Cir. 1983).

Furthermore, during the second Pre-Trial Conference on March 19, 1999, Watson's counsel stated in open court that the issues in the case were the statute of limitations and verification of the correct amount of the assessment. The IRS cannot claim undue surprise, and the Court finds that Watson may challenge the accuracy of the assessment.

⁵ The United States argues that the report of an interview with Watson on April 16, 1985 demonstrates that Watson knew and agreed with the amounts of the liability in question. The Report of Interview, attached as Exhibit 10 to Plaintiff's Cross-Motion, does not support the United States' argument that Watson admitted the accuracy of the assessment amount. The Report of Interview is not r

 [99-1 USTC ¶50,399] United States of America, Plaintiff v. David L. Long, Defendant

U.S. District Court, Mid. Dist. Pa., 4:CV-97-1432, 3/11/99

[Code Secs. 6103 and 7431 ]

Disclosures of return information: Authorized.--The government's disclosures of a delinquent taxpayer's return information that were made in connection with collection activities were authorized by law.

[Code Sec. 6203 ]

Assessment: Notice: Evidence: Form 4340.--A Form 4340, Certificate of Assessments and Payments, was presumptive proof that a proper assessment was made.

[Code Sec. 6331 ]

Levy: Notice.--A notice of intent to levy was properly sent by the government and received by the taxpayer. The government was not required to issue a notice of seizure prior to issuing the levy against his bank accounts.

[Code Sec. 6672 ]

Penalties, civil: Trust fund recovery penalty: Collection activities: Damages: Assessment.--A delinquent taxpayer who was assessed the trust fund recovery penalty for his failure to collect and pay over his corporation's employment taxes could not recover damages in connection with the government's collection efforts. His claim that the penalty was improperly imposed because he was not a responsible person was irrelevant to the validity of the collection activities, and his challenge to the determination of the penalty was not actionable in damages. Also, the government was not required to provide the taxpayer with notice that the trust fund penalty was being assessed against him, since the notice provision of Code Sec. 6672 became effective after the assessment was made.

[Code Secs. 6672 and 6871 ]

Penalties, civil: Trust fund recovery penalty: Bankruptcy: Discharge: Statute of limitations: Tolling.--A person responsible for the trust fund recovery penalty could not discharge the penalty in bankruptcy. The statute of limitations for collection activities was also tolled during his bankruptcy.

[Code Secs. 7432 and 7433 ]

Penalties, civil: Trust fund recovery penalty: Collection activities: Damages: Statute of limitations: Reckless violation of law.--An individual who was assessed the trust fund recovery penalty could not recover damages in connection with the government's collection efforts. His claim that he was not a responsible person was irrelevant to the validity of the collection activities, and allegedly improper assessments did not give rise to damages. Further, even if the collection activities violated the statute of limitations, they did not rise to the level of intentional or reckless disregard for the law. The limitations period was tolled during the taxpayer's bankruptcy and, the collecting agent believed, while the taxpayer's offer in compromise was pending. Thus, he reasonably believed that the limitations period was open when he levied against the taxpayer's bank accounts.

MEMORANDUM

BACKGROUND

MCCLURE, JR., District Judge:

On September 19, 1997 , the United States of America commenced this action with the filing of a complaint against David L. Long ("Long") pursuant to 26 U.S.C. §6672 for allegedly unpaid trust fund liabilities resulting from Long's ownership and operation of D & B Electric, Inc. ("D & B") Presently before the court is the United States' motion for summary judgment (record document no. 48) as to Long's counterclaims, and Long's cross-motion (record document no. 60).

For the reasons which follow, we will grant the United States' motion for partial summary judgment as to Long's counterclaims and deny Long's cross-motion.

DISCUSSION

I. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED . R. CIV . P. 56(c) (emphasis added).

. . . [T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is 'entitled to judgment as a matter of law' because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.

Celotex Corp. v. Catrett, 477 U.S. 317, 323-324 (1986).

The moving party bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. He or she can discharge that burden by "showing . . . that there is an absence of evidence to support the nonmoving party's case." Celotex at 323, 325.

Issues of fact are genuine "only if a reasonable jury, considering the evidence presented, could find for the non-moving party." Childers v. Joseph, 842 F.2d 689, 694 (3d Cir. 1988) (citing Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 249 (1986)). Material facts are those which will affect the outcome of the trial under governing law. Anderson at 248. In determining whether an issue of material fact exists, the court must consider all evidence in the light most favorable to the non-moving party. White v. Westinghouse Electric Co., 862 F.2d 56, 59 (3d Cir. 1988).

II. STATEMENT OF MATERIAL AND UNDISPUTED FACTS

Long and the United States have filed statements of material facts and responses thereto with their respective motions for summary judgment. The following statements, set forth in those documents, are those the court deems material and undisputed. Any changes to the statements are generally stylistic or grammatical, but in some instances reflect the other parties' disagreement or expansion.

****

1. D & B Electric ("D & B") began doing business on or about August 16, 1982. D & B was a closely-held corporation, and David L. Long ("Long") was the president.

2. D & B paid wages in the fourth quarter of 1983, and the first and second calendar quarters of 1984 in the respective amounts of $32,418.89, $30,550.63, and $4,527.00 as reported on federal employment tax returns which D & B filed with the IRS .

3. D & B failed to remit the withheld taxes to the government when it filed its returns.

4. On July 22, 1985, the Internal Revenue Service (" IRS ") assessed a trust fund recovery penalty (commonly known as a 100% penalty), pursuant to 26 U.S.C. §6672, against Long, arising out of his ownership and operation of D & B.

5. The trust fund liability at issue assessed against Long consists of the unpaid trust fund portion of D & B's unpaid employment taxes for all of these quarters. See ¶2, supra.

6. The IRS determined that Long was the responsible person who failed to pay over D & B's employment taxes.

7. The IRS made a "notice of assessment and demand for payment," which is required pursuant to 26 U.S.C. §6303 within sixty (60) days after assessment.

8. On December 29, 1995 , Revenue Officer Raymond Handlong ("Handlong") was assigned to collect unpaid taxes owed by Long, including the trust fund ("100% penalty") liability for the period ending June 30, 1984 (including two prior quarters); and a civil penalty for filing a false Form W-4 pertaining to income tax withholding status.

9. After receiving the assignment pertaining to Long, Handlong obtained an IRS transcript of his tax account for the civil penalty (100% penalty) assessed on July 22, 1985.

10. On March 11, 1988, Long filed a petition under Chapter 7 in the United States Bankruptcy Court for the Middle District of Florida.

11. Long received a discharge in his bankruptcy case on June 22, 1988, one hundred and three (103) days after filing his petition.

12. As a result of his bankruptcy case, pursuant to 26 U.S.C. §6503(h), the statute of limitations on collection was extended by one hundred and three (103) days, plus six (6) months, until May 4, 1996 .

13. In order to determine the time period during which he could collect the trust fund liability, Handlong computed when the statute of limitations on collection would expire.

14. Handlong computed the statute of limitations on collection of the July 22, 1985 , assessment using the ten year collection statute, and the extensions resulting from Long's bankruptcy case and the Offer in Compromise which appears on Long's Individual Master File ("IMF") transcript.

15. On February 23, 1990, Long submitted an Offer in Compromise (Form 656) to the IRS through Revenue Officer James Feist.

16. The transcript of account pertaining to Long's liability for the 100% penalty contains a "480" transaction code on "22390." This "480" code indicates that an Offer in Compromise was received on February 23, 1990.

17. Feist forwarded the offer to the IRS 's Special Procedures Function in Jacksonville, Florida, and the IRS assigned Revenue Officer Frank Martin to review and investigate the offer.

18. On July 20, 1990, the IRS rejected Long's Offer.

19. The transcript of the account contains a "481" transaction code on "72090." This "481" transaction code indicates the date the IRS rejected the Offer in Compromise.

20. Long has produced a copy of the Offer which shows the provision waiving the running of the statute of limitations on collection to be altered to strike out the provision.

21. The IRS does not believe the copy of the Offer Long has produced, see §20, supra, to be a true and correct copy, since it disputes that Long ever altered the offer to waive the running of the statute of limitations on collection.

22. The IRS has destroyed the original Offer In Compromise file and, in November, 1997, informed Long of this fact.

23. Pursuant to 26 U.S.C. §6601(e), interest continues to accrue on the unpaid tax liability in question.

24. On September 17, 1997, in order to collect the unpaid tax liabilities, Handlong served a levy on Northern Central Bank in Millville, Pennsylvania.

25. On March 11, 1996, the IRS sent Long a Notice of Intent to Levy.

5. On October 30, 1997 , Handlong received a faxed copy of Long's February 23, 1990 , Offer in Compromise, and first learned that Long contended that he did not agree to suspend the statute of limitations on collection while his Offer was pending.

III . LONG'S COUNTERCLAIMS ¹

Before we begin our analysis, we will highlight briefly Long's counterclaims, the arguments he asserts in support thereof, and the sections of the Internal Revenue Code on which he bases his counterclaims.

1. Count I: Unauthorized Collection Activity: 26 U.S.C. §7433 ²

1. Alleged liability was discharged in bankruptcy.

2. Statute of limitations on assessment had expired.

3. Statute of limitations on collection had expired.

4. Long was not a responsible party pursuant to 26 U.S.C. §6672.

5. Long was not given the necessary notice under 26 U.S.C. §6672(b).

6. Long was not issued a notice and demand for proper payment pursuant to 26 U.S.C. §6303(a).

7. Long was not issued a notice of intent to levy pursuant to 26 U.S.C. §6331(d).

8. Long was not issued a notice of seizure pursuant to 26 U.S.C. §6335(a).

2. Count II: Failure to Release Liens Upon Long's Property: 26 U.S.C. §7432 ³

1. Alleged liability was discharged in bankruptcy.

2. Statute of limitations on assessment had expired.

3. Statute of limitations on collection had expired.

4. Long was not a responsible party pursuant to 26 U.S.C. §6672.

5. Long was not issued a notice and demand for proper payment pursuant to 26 U.S.C. §6303(a).

6. Long was not given the necessary notice under 26 U.S.C. §6672(b).

3. Count III : Unauthorized Disclosures of Long's Return Information by Employees of the IRS : 26 U.S.C. §7431 ⁴

A. Employees knowingly or by reason of negligence disclosed return information in violation of 26 U.S.C. §6103.

B. The issuance of liens and levies containing information concerning Long were unauthorized disclosures.

C. The recording of the tax liens after the discharge in bankruptcy was an unauthorized disclosure.

IV. COUNTS I AND II

A. The "100% Penalty"

26 U.S.C. §6672 allows the IRS to assess a trust fund recovery penalty, commonly known as a 100% penalty. In pertinent part, the provision states as follows:

(a) General rule.--Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

26 U.S.C. §6672 (emphasis added). In accordance with this provision, on July 22, 1985, the IRS assessed a 100% penalty against Long arising out of his ownership and operation of D & B Electric, Inc.

26 U.S.C. §6672 requires that the penalty be imposed against any person required to "collect, truthfully account for, and pay over any tax," and that this person must be willful in his attempt to evade any such tax. See 26 U.S.C. §6672(a); see also Quattrone Accountants, Inc. v. Internal Revenue Service [90-1 USTC ¶50,103], 895 F.2d 921, 927 (3d Cir. 1990). Long contends that the IRS erroneously assessed this 100% penalty against him because the IRS has not made this two-prong showing. See Defendant's Brief in Support of Motion for Summary Judgment at 9. We disagree with Long.

In our analysis, we do not even reach the merits of Long's argument. Instead, we find that whether or not Long is a responsible party, and whether or not he acted willfully, is not dispositive for purposes of the present summary judgment motion. A jury ultimately finding Long either (1) not responsible or (2) not willfull, does not preclude granting summary judgment in favor of the United States.

Indeed, notwithstanding Long's responsibility or willfullness, the validity of the collection activity remains unaffected. We agree with the United States' assertion that a taxpayer cannot seek damages for improper assessment of taxes. Such a principle has been espoused by the Fifth Circuit in Shaw v. United States [94-1 USTC ¶50,254], 20 F.3d 182, 184 (5^th Cir. 1994), cert. den'd, 513 U.S. 1041 (1994), and by the Ninth Circuit in Miller v. United States [95-2 USTC ¶50,516], 66 F.3d 220, 223 (9^th Cir. 1995). Because Long is challenging the determination of the tax, his claim for damages under §§7432 and 7433 is not actionable.

Long also argues that the IRS failed to provide a notice pursuant to 26 U.S.C. §6672(b). This section states in pertinent part that "[n]o penalty shall be imposed under subsection (a) unless the Secretary notifies the taxpayer in writing by mail . . . that the taxpayer shall be subject to an assessment of such penalty." See 26 U.S.C. §6672(b)(1). We disagree that the IRS was required to give Long such notice. Attached to the United States' Brief in Support of its Motion for Summary Judgment is Public Law 104-168, §901(a). It is clear that this notice provision was enacted well after the IRS assessed the 100% penalty against Long. That is, the notice provision of §6672(b)(1) was enacted on June 30, 1996, and the IRS assessed the 100% penalty against Long on July 22, 1985. Accordingly, the notice provision is not applicable in this case, and Long's argument must fail.

B. Assessment of Tax

Long also argues that the IRS did not properly assess the 100% penalty liability against him. See Defendant's Brief in Support of Motion for Summary Judgment at 14. Long contends that the "only document offered by the United States is the certificate of assessments and payments." Id. While we agree with Long's assertion, we find that the government's offering of the Certificate is sufficient to show that a proper assessment, as well as notice and demand, was made.

26 U.S.C. §6203 sets forth the method of assessment. 26 U.S.C. §6303 sets forth the provision for notice and demand after an assessment pursuant to §6203 is made. In pertinent part, §6303 states:

(a) General rule.--Where it is not otherwise provided by this title, the Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof. Such notice shall be left at the dwelling or usual place of business of such person, or shall be sent by mail to such person's last known address.

26 U.S.C. §6303(a) (emphasis added). The procedures with respect to the making of an assessment and the timely sending of a notice and demand are prerequisites to tax collection through the use of a levy. See, e.g., Laing v. United States [76-1 USTC ¶9164], 423 U.S. 161, 184 (1976); United States v. Berman [87-2 USTC ¶9460], 825 F.2d 1053, 1060 (6^th Cir. 1987).

It is well-settled that Certificates of Assessments and Payments are presumptive proof of a valid assessment. See United States v. Chila [89-1 USTC ¶9299], 871 F.2d 1015, 1017 (11^th Cir. 1989), cert. denied, 493 U.S. 975 (1989). Moreover, "Certificates of Assessments and Payments are 'routinely used to prove that tax assessment has in fact been made.' " Geiselman v. United States [92-1 USTC ¶50,200], 961 F.2d 1, 6 (1^st Cir. 1992), cert. denied, 506 U.S. 891 (1992) (citing Rocovich v. United States [91-1 USTC ¶60,072], 933 F.2d 991, 994 (D.C. Cir. 1991)). With respect to the notice and demand, Certificates of Assessments and Payments which list "First Notice" dates for each assessment are also considered presumptive proof that the IRS gave notice and demand. See Geiselman [92-1 USTC ¶50,200], 961 F.2d at 6 (citing United States v. Chila [89-1 USTC ¶9299], 871 F.2d at 1019; United States v. Lorsen Electric Co. [73-1 USTC ¶9449], 480 F.2d 554, 555 (2d Cir. 1973)).

Here, the United States has offered a certified Form 4340, Certificate of Assessments and Payments, as evidence that the IRS assessed a tax liability and sent a notice and demand to Long. Indeed, the Certificate of Assessments and Payments demonstrates that on July 22, 1985 , the IRS assessed a liability against Long in the amount of $14,230.74. Moreover, Long's Individual Master File clearly indicates that an assessment was made on July 22, 1985 and that a notice and demand was sent to Long on that same date. Accordingly, we find the evidence is sufficient to support a showing of the IRS 's compliance with 26 U.S.C. §6303(a), and Long's argument must therefore fail.

C. Bankruptcy

In support of his wrongful collection and failure to release the federal tax lien claims, Long contends that his discharge in bankruptcy resulted in the discharge of the 100% penalty which is the subject of this litigation. See Defendant's Brief in Support of Motion for Summary Judgment at 12. We disagree.

It is well-settled that the civil liability pursuant to 26 U.S.C. §6672 is nondischargeable in bankruptcy. Specifically, 11 U.S.C. §507 lists the tax in question as a priority claim. This section states:

(a) The following expenses and claims have priority in the following order:

****

(8) Eighth, allowed unsecured claims of governmental units, only to the extent that such claims are for--

****

(C) a tax required to be collected or withheld and for which the debtor is liable in whatever capacity;

11 U.S.C. §507(a)(8)(C) (emphasis added).

Moreover, as a priority claim, it is nondischargeable in bankruptcy. 11 U.S.C. §523(a)(1)(A) states a discharge in bankruptcy does not discharge a debtor from any debt from a tax of the kind specified in §507(a)(8). See 11 U.S.C. §523(a)(1)(A); see also Matter of Taylor [98-1 USTC ¶50,130], 132 F.3d 256, 261 (5^th Cir. 1998) ("Responsible person penalty for withholding taxes under Internal Revenue Code falls within tax discharge exception as tax required to be collected or withheld and for which debtor is liable 'in whatever capacity.' ").

Accordingly, we find that the 100% penalty in question was not discharged by virtue of Long's bankruptcy case, and Long's argument must therefore fail.

D. Statute of Limitations

By separate memorandum and order entered today, this court denied Long's motion for partial summary judgment as to the statute of limitations on collection as set forth in 26 U.S.C. §6502, and denied the United States' cross-motion as to the same issue. The court found that there was a genuine issue of material fact as to whether Long waived the running of the statute of limitations by crossing out the tolling provision on the Offer in Compromise.

However, notwithstanding the court's disposition of that motion, we find that Long cannot prevail on his counterclaim as to the same issue. Here, Long alleges that Handlong filed a lien at the Columbia County Courthouse on April 17, 1996 , and served a levy on Northern Central Bank on September 17, 1997 . Long asserts that these actions were done after the expiration of the statute of limitations on collection, and therefore, the IRS should be held liable under §§7432 and 7433. However, based on the record, a reasonable jury could not find that the government's actions rose to the level of "intentional or reckless disregard," for the law, see 26 U.S.C. §7433, or that the government "knowingly, or by reasons of negligence, fail[ed] to release a lien under [§] 6325 . . ." See 26 U.S.C. §7432(a).

To begin with, Handlong's filing of a federal tax lien on April 17, 1996 , did not constitute wrongful collection activity because the statute of limitations was clearly open until at least May 4, 1996 , by reason of Long's bankruptcy, which Long concedes. See Defendant's Motion for Partial Summary Judgment, at 5. Moreover, the government contends, and we agree, that Handlong did not recklessly or intentionally violate any Code provision when he filed the lien, and no IRS employee knowingly or negligently failed to release the lien. Handlong computed the statute of limitations on collection by utilizing the information on a computer transcript of Long's account which indicated that an Offer in Compromise was pending between February 23, 1990 , and July 20, 1990 . Thus, his belief that the statute of limitations was still open was reasonable based on information before him. His actions clearly do not rise to the level of recklessness, intentional disregard, or even negligence.

E. Remaining Issues

Long contends that the IRS failed to issue a notice of intent to levy, and that the IRS also was required to issue a notice of seizure before levying and failed to do so. We find these remaining arguments to be without merit.

26 U.S.C. §6331 provides the Secretary with authority to collect unpaid taxes "by levy upon all property and rights to property . . . belonging to such person or on which there is a lien provided in this chapter for payment of such tax." 26 U.S.C. §6331(a). This section requires that the IRS issue a notice of intent to levy. See id.

The United States contends, and we agree, that such a notice of intent to levy was sent to Long. In fact, attached to Handlong's declaration is a copy of the notice as well as a certified mail return receipt card signed by Long evidencing that he received the notice. Long has offered no evidence to rebut this showing except his simple statement that he did not receive the notice. Absent any evidence to the contrary, we find that Long's counterclaim must fail.

With respect to Long's remaining argument regarding the IRS 's alleged failure to issue a notice of seizure before attempting to collect the unpaid tax, again, Long's assertion is wholly baseless and without merit.

26 U.S.C. §6335(a) states as follows:

(a) Notice of seizure.--As soon as practicable after seizure, notice in writing shall be given by the Secretary to the owner of the property (or, in the case of personal property, the possessor thereof), or shall be left at his usual place of abode or business . . .

26 U.S.C. §6335(a) (emphasis added). Moreover, this section has no application with respect to bank accounts, but applies to the sale and seizure of tangible personal property and real property. See G.M. Leasing Corp. v. United States [77-1 USTC ¶9140], 429 U.S. 338 (1977). Accordingly, we find that the IRS was not required to issue a notice pursuant to 26 U.S.C. §6335 prior to serving a levy on Northern Central Bank. Long's argument once again is without merit and must therefore fail.

V. COUNT III

Alleged Unauthorized Disclosures

Long asserts a claim against the IRS for alleged unauthorized disclosures. He contends that the IRS wrongfully disclosed his tax return information in the liens and levies in question. We find that the disclosures made by the IRS are authorized pursuant to 26 U.S.C. §6103(k)(6).

26 U.S.C. §6103 provides as follows:

(k) Disclosure of certain returns and return information for tax administration purposes.--

****

(6) Disclosure by internal revenue officers and employees for investigative purposes.--An internal revenue officer or employee may, in connection with his official duties relating to any . . . collection activity . . . disclose return information to the extent that such disclosure is necessary in obtaining information which is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title.

26 U.S.C. §6103(k)(6) (emphasis added).

Moreover, the Third Circuit in Venen v. United States [94-2 USTC ¶50,536], 38 F.3d 100 (3d Cir. 1994), has stated, "Although the Tax Code generally prohibits the disclosure of tax return information, it authorizes disclosure when the tax return information relates to collection activity, including a levy on assets to satisfy an outstanding tax liability." Venen [94-2 USTC ¶50,536], 38 F.3d at 101 (emphasis added).

Here, it is undisputed that the IRS disclosed Long's information in the liens and levies that were served with respect to the 100% penalty. Nowhere in Long's counterclaim does he contend that the disclosures were unnecessary or that the information could have been obtained by the IRS through other means. Absent any evidence to the contrary, we hold that the disclosures were authorized by law and that Long's claim regarding unauthorized disclosure must fail.