Court Opinion

ID: 820251
Source: CourtListenerOpinion
Date Created: 2013-02-11 19:18:03.886403+00
Date Added: 2024-06-11T15:21:56.493032
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 12-1726

              JONATHAN SHAFMASTER AND CAROL SHAFMASTER,

                       Plaintiffs, Appellants,

                                 v.

                           UNITED STATES,

                        Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF NEW HAMPSHIRE

          [Hon. Paul J. Barbadoro, U.S. District Judge]

                               Before

                         Lynch, Chief Judge,
                  Selya and Howard, Circuit Judges.

     James E. Higgins for appellants.
     Joan I. Oppenheimer, Tax Division, Department of Justice, with
whom Kathryn Keneally, Assistant Attorney General, Ivan C. Dale,
Tax Division, Department of Justice, and John P. Kacavas, United
States Attorney, were on brief, for appellee.

                          February 11, 2013
           LYNCH,   Chief   Judge.        Plaintiffs   Jonathan   and   Carol

Shafmaster, once a married couple and now divorced, appeal from the

United States District Court for the District of New Hampshire's

grant of summary judgment to the United States on the plaintiffs'

claim for refund of a failure-to-pay penalty imposed on them by the

Internal Revenue Service (IRS).

           The Shafmasters argue that there was at least a dispute

of material fact as to whether the IRS was equitably estopped from

assessing this fee, whether they had reasonable cause not to pay

the relevant taxes within the time provided by statute, and whether

the IRS had ever provided them with proper notice and demand for

payment.   We affirm, and reject the attempt to get us to recognize

the doctrine of equitable estoppel against the IRS by tax-owing

taxpayers who do not come close to satisfying equitable principles.

                                     I.

A.   Factual Background

           This dispute about the payment of penalties arises out of

the Shafmasters' underlying joint personal income tax liability for

the tax year 1994.    The IRS audited the Shafmasters for 1994, as

well as for tax years 1993 and 1995-1998, eventually calculating

deficiencies and penalties totaling $14,367,234.1             In 1998 and

1999, the Shafmasters brought petitions in Tax Court challenging

     1
      This total also included adjustments to the tax liability of
various entities owned by the Shafmasters and to a personal tax
return for Jonathan Shafmaster's daughter.

                                     -2-
the adjustments for 1993, 1994, and 1995.           The IRS referred those

years to its office in Portsmouth, New Hampshire, where the case

was assigned to an agent named Robert Hamilton.

           On March 19, 2001, the Shafmasters and the IRS entered

into three limited stipulations of settlement for the years 1993-

1995, which were entered by the Tax Court on April 25, 2001.               The

Tax Court order for 1994 stated that the Shafmasters owed a penalty

for failing to timely file a return, but it was silent on the

separate penalty provision that would have addressed whether the

Shafmasters would owe a penalty if they did not pay the required

amounts within the prescribed statutory period of time after notice

and demand for payment (a "failure-to-pay" penalty, see 26 U.S.C.

§ 6651(a)(3)).

           Meanwhile,      the    Shafmasters     had      also   filed     an

administrative appeal relating to the adjustments for tax years

1996, 1997, and 1998.      Those years were also referred to Hamilton

and had not yet been resolved at the time of the 2001 stipulations.

The   Shafmasters   took    the   position   that    net    operating     loss

carrybacks from 1996-1998 would offset much, if not all, of their

1993 and 1994 tax liabilities.

           In the summer and fall of 2001, the Shafmasters' attorney

had discussions with Hamilton and another IRS agent about obtaining

a stay of collection.      This stay would suppress the accrual of a

failure-to-pay penalty for six months.          In the district court and

                                    -3-
in   this   appeal,    the    Shafmasters         have    represented      that   these

discussions    also    included       an   offer     by   Hamilton    to    waive    the

failure-to-pay penalty permanently; the government denies that the

evidence supports the claim that Hamilton said any such thing or

that he had any authority to do so.                   On September 6, 2001, the

parties agreed to a six-month stay of collection.

            On September 10, 2001, the IRS created a Form 3552 for

the Shafmasters' account, which included a "Statutory Notice of

Balance Due" reflecting the 1994 tax liability.                         The parties

dispute whether this form ever reached the taxpayers or whether it

was re-routed to the Boston IRS appeals office.                      The Shafmasters

argue that,    in     any    event,    the       agreed-upon   six-month      stay    of

collection should have prevented the issuance of any Notice of

Balance Due.

            The Shafmasters and Hamilton continued to negotiate the

assessments for 1996-1998 during the rest of 2001 and 2002.                          On

October 7, 2002, the IRS sent the Shafmasters a Notice of Tax Lien

based on the 1993 and 1994 taxes.                   The lien notice stated, in

relevant part: "[W]e are giving a notice that taxes (including

interest     and    penalties)        have        been    assessed     against       the

following-named taxpayer.          We have made a demand for payment of

this liability, but it remains unpaid."                   It also stated that the

"IRS will continue to charge penalty and interest until you satisfy

the amount you owe."         The Shafmasters did not make any payments in

                                           -4-
response to this notice.      They say they did not because they

believed that the amounts owed for 1993 and 1994 would be reduced

due to the carryback issue and thus that the amount reflected in

the lien notice was overstated.

            The Shafmasters' amended returns for 1993 and 1994 were

processed in December 2003, at which point the IRS determined that

the 1994 liability should be reduced by $177,769 due to the

carryback losses.    The scope of that determination was reduced to

writing, and in December 2003 and January 2004, the Shafmasters and

Kathleen Brown, a supervising agent in the Portsmouth IRS office,

executed a Form 870-AD that reflected the downward carryback loss

adjustments to tax years 1992, 1993, and 1994.         The Form 870-AD is,

however, notably silent as to the imposition or waiver of any

failure-to-pay penalty.

            In August 2004, Jonathan Shafmaster signed an installment

payment plan agreement pursuant to the Form 870-AD for the 1993 and

1994 tax    liabilities,   which at     that   point   totaled   over   $2.6

million. Significantly, the installment plan document, Form 433-D,

provided that the taxpayers "agree to pay the federal taxes shown

above, plus penalties and interest provided by law" (emphasis

omitted).

            In March 2005, after the Shafmasters objected to certain

penalties that appeared on their IRS account transcript, Brown sent

Jonathan Shafmaster a letter in which she agreed to abate a

                                  -5-
failure-to-pay penalty that had been assessed on the 1993 taxes,

concluding that it had been a "calculation error."      Brown's letter

went on to state explicitly: "However, the failure to pay tax

penalty will continue to accrue on any unpaid tax balance until

either the penalty reaches 25% or the account is full [sic] paid"

(emphasis omitted).2

            On April 17, 2006, the IRS assessed the failure-to-pay

penalty at issue in this case, in the amount of $261,189.50.

According to the IRS's calculations, the maximum statutory penalty

for 1994 had accrued by that date.      That same day, the IRS sent the

Shafmasters an updated Statutory Notice of Balance Due.

            The Shafmasters completed payment of their agreed 1994

tax liability under the payment plan on November 16, 2007.          On

September 18, 2008, they filed an administrative claim for, inter

alia, refund of the 1994 failure-to-pay penalty and the interest

they had paid on that penalty.          The IRS denied the claim on

November 28, 2008.

B.   District Court Proceedings

            The Shafmasters filed suit in the district court on July

15, 2009.   They argued that Hamilton had orally agreed that the IRS

     2
       The 25% figure is a reference to 26 U.S.C. § 6651(a)(3),
which provides that a failure-to-pay penalty accrues at the rate of
"0.5 percent of the amount of such tax if the failure is for not
more than 1 month, with an additional 0.5 percent for each
additional month or fraction thereof during which such failure
continues, not exceeding 25 percent in the aggregate."

                                  -6-
would permanently waive any failure-to-pay penalties, and that this

agreement     was   implicitly   incorporated        into   the     Tax    Court

stipulations, the Form 870-AD, and the installment plan.                       They

contended that this agreement equitably estopped the IRS from

assessing the penalty. They further argued that, under the penalty

statute, they had "reasonable cause" to not make timely payment,

see 26 U.S.C. § 6651(a)(3), because they had relied on the alleged

agreement.3

            The government moved for summary judgment, arguing that

in the absence of a written agreement to waive the penalty, made

using the statutory closing mechanisms of 26 U.S.C. §§ 7121-7122,

the IRS could not be held to any alleged promise.              In response to

this motion, the Shafmasters introduced an argument not made in

their complaint: that they had never received proper notice and

demand to trigger accrual of the penalty.

            On September 30, 2011, the district court granted the

government    summary   judgment      on    the   equitable    estoppel        and

reasonable    cause   claims.    It    held   that   because      none    of   the

statements cited by the Shafmasters conformed to the statutory

closing procedures, the Shafmasters could not have reasonably

relied on those statements, thus negating an essential element of

     3
       In addition to the claim for refund of the failure-to-pay
penalty, the Shafmasters' complaint in the district court also
sought refund of certain interest payments. The plaintiffs have
not appealed the portion of the district court's decision that
dismissed the interest claim for lack of jurisdiction.

                                      -7-
an   estoppel     claim.   It    also rejected         the   "reasonable cause"

argument as merely an "attempt to repackage" the equitable estoppel

argument.    However, the district court concluded that there was a

genuine issue of material fact with regard to the notice and demand

question, because the Shafmasters had produced a document from the

Boston IRS appeals office indicating that notice may not have been

delivered to the Shafmasters' last known address, as required by

statute.

            The    government    again    moved   for    summary     judgment    on

November 23, 2011, producing another part of the Form 3552 that it

argued could show proper notice and demand.                  The district court

denied this motion, finding that the document did not explicitly

demand   payment     and   did   not     show   that    it   was    sent   to   the

Shafmasters.       But the court noted in its memorandum denying the

motion that the Notice of Tax Lien dated October 7, 2002, which was

undisputedly sent to the Shafmasters, "may well satisfy the notice

and demand requirement," if the government could make a developed

argument on that point.

            Accordingly,     the   government      filed      a    third   summary

judgment motion on February 16, 2012, arguing that the Notice of

Tax Lien provided satisfactory notice and demand.                 On May 7, 2012,

the district court allowed this motion, resulting in judgment for

the government on all claims.          The Shafmasters timely appealed.

                                       -8-
                                      II.

           Our review of the district court's grant of summary

judgment is de novo, "drawing all reasonable inferences in favor of

the   non-moving    party     while   ignoring       'conclusory    allegations,

improbable inferences, and unsupported speculation.'"                Sutliffe v.

Epping Sch. Dist., 584 F.3d 314, 325 (1st Cir. 2009) (quoting

Sullivan v. City of Springfield, 561 F.3d 7, 14 (1st Cir. 2009)).

We may affirm on any basis apparent in the record.                 Id.

           In tax refund suits, the decision of the IRS Commissioner

enjoys a presumption of correctness, so the taxpayer bears the

burden of proving that an assessment was erroneous.                Hostar Marine

Transp. Sys., Inc. v. United States, 592 F.3d 202, 208 (1st Cir.

2010).

           The     Internal    Revenue      Code's    failure-to-pay     penalty

provision, at issue here, provides that if a taxpayer fails

           to pay any amount in respect of any tax
           required to be shown on a return . . . which
           is not so shown . . . within 21 calendar days
           from the date of notice and demand therefor
           (10 business days if the amount for which such
           notice and demand is made equals or exceeds
           $100,000), unless it is shown that such
           failure is due to reasonable cause and not due
           to willful neglect, there shall be added to
           the amount of tax stated in such notice and
           demand 0.5 percent of the amount of such tax
           if the failure is for not more than 1 month,
           with an additional 0.5 percent for each
           additional month or fraction thereof during
           which such failure continues, not exceeding 25
           percent in the aggregate.

                                      -9-
26   U.S.C.    §   6651(a)(3).      Because   the    Shafmasters'     1994    tax

liability exceeded $100,000, they were subject to the ten-day

period for payment.

A.   Equitable Estoppel

              The Shafmasters argue that the IRS was equitably estopped

from assessing the failure-to-pay penalty because the agency had,

through   Hamilton     and   through    the   various    documents    that    the

Shafmasters signed, agreed not to assess such a penalty, and the

Shafmasters had relied on that promise.            The argument fails, for a

number of reasons.          We need not reach the question of whether

equitable estoppel can ever bind the IRS in informal settlements

reached apart from the §§ 7121-7122 procedures.

              In Botany Worsted Mills v. United States, 278 U.S. 282

(1929), the Supreme Court interpreted the predecessor of 26 U.S.C.

§§ 7121-7122 as providing the "exclusive method" for compromising

tax liability, holding that Congress "did not intend to intrust the

final   settlement     of    such   matters   to   the   informal    action    of

subordinate officials in the [IRS]."          Id. at 288-89.    As a result,

the Court concluded, informal settlements are not binding on either

the taxpayer or the government.          Id. at 288.      However, the Court

went on to note that it was not "determining whether such an

agreement, though not binding in itself, may when executed become,

under some circumstances, binding on the parties by estoppel." Id.

at 289.   The Court thus left the door open for the argument that

                                       -10-
some informal agreements between taxpayers and the IRS might give

rise to claims of estoppel -- at least when, as in Botany Worsted,

the government asserts estoppel against a taxpayer.

           In the years since Botany Worsted, a number of courts of

appeals have determined that informal settlements such as the Form

870-AD can in fact trigger estoppel against taxpayers, although

there is disagreement as to when, if ever, estoppel may apply.         See

Whitney v. United States, 826 F.2d 896, 897-98 (9th Cir. 1987)

(collecting cases).     It does not appear that any circuit has used

an informal tax settlement to bind the government under estoppel

principles, although it also appears that the question simply may

never have been addressed.4

           The First Circuit has not decided whether informal tax

settlements can be binding by estoppel even on taxpayers, and we

need not do so now in order to resolve this case.          Nor do we need

to determine the relationship between claims of estoppel and the

statutory closing mechanisms of 26 U.S.C. §§ 7121-7122.               Even

assuming arguendo that an informal IRS settlement such as the Form

870-AD could ever have estoppel effects against the government --

a   proposition   of   which we   are   skeptical   --   the   Shafmasters'

      4
       One unpublished table decision from the Seventh Circuit did
mention the issue, and it rejected estoppel against the government
based on reasoning similar to that used by the district court in
this case. See Meyers v. Comm'r of Internal Revenue, No. 95-1542,
1996 WL 116818, at *2 (7th Cir. Mar. 13, 1996).

                                   -11-
argument would fail.           There is no viable claim here in any event

under general principles of equitable estoppel.

             Generally, in order to make out a claim for equitable

estoppel, a party must show that "(1) the party to be estopped made

a 'definite misrepresentation of fact to another person having

reason to believe that the other [would] rely upon it'; (2) the

party seeking estoppel relied on the misrepresentations to its

detriment; and (3) the 'reliance [was] reasonable in that the party

claiming the estoppel did not know nor should it have known that

its adversary's conduct was misleading.'"            Ramírez-Carlo v. United

States, 496 F.3d 41, 49 (1st Cir. 2007) (alterations in original)

(quoting Heckler v. Cmty. Health Servs., 467 U.S. 51, 59 (1984)).

Additionally, when a party seeks to equitably estop the government,

it   "must    show    that      the   government    engaged   in    affirmative

misconduct."        Id.   Although "there is no settled test for what

constitutes" affirmative misconduct, it must at least include "an

affirmative    misrepresentation          or affirmative    concealment   of   a

material fact by the government."              Id. (quoting Watkins v. U.S.

Army, 875 F.2d 699, 707 (9th Cir. 1989)).

             Here, the Shafmasters did not present a genuine issue of

material     fact    as   to    whether    a   government   actor   engaged    in

affirmative misconduct.           In fact, the Shafmasters do not even

allege that Hamilton, Brown, or any other representative of the IRS

did engage in misconduct during the Shafmasters' negotiations or

                                       -12-
when   executing   the   various    documents.     Instead    they    argue,

erroneously, that this circuit's case law should be read to excuse

the misconduct requirement and instead to apply a "balancing

approach" that would weigh the interests of the party asserting

estoppel against the public interest represented by the underlying

policy at issue.       This is a misunderstanding of our precedent.

Indeed, we recently reaffirmed the principle that the affirmative

misconduct requirement applies in this context.              See Dickow v.

United States, 654 F.3d 144, 152 (1st Cir. 2011) ("The argument of

estoppel by silence on the part of the busy IRS is, on these facts,

simply a non-starter."). The Shafmasters also conflate affirmative

misconduct with the separate element of misrepresentation of fact.

           Further, none of the documents on which the Shafmasters

rely -- the Tax Court stipulation for 1994, the Form 870-AD, or the

installment payment agreement -- mention the 1994 failure-to-pay

penalty at all, let alone demonstrate that the penalty was waived.

To the contrary, the installment plan specifically states that the

taxpayer will pay the amount shown "plus penalties and interest

provided by law" (emphasis omitted).         Brown's letter to Jonathan

Shafmaster in March 2005 reminded him that failure-to-pay penalties

were accruing on the unpaid balance. Because none of the documents

promised to waive the penalty -- and some explicitly warned of the

penalty   --   there   was   no   definite   misrepresentation       of   fact

contained therein as to whether the penalty would be assessed.

                                    -13-
           This disposes of any dispute over what Hamilton did or

did not say. The written settlement documents made it unreasonable

for the Shafmasters to continue to rely on any alleged oral promise

from Hamilton.

B.   Reasonable Cause

           The IRS will not impose a failure-to-pay penalty if "it

is shown that such failure is due to reasonable cause and not due

to willful neglect."    26 U.S.C. § 6651(a)(3).       The taxpayer bears

the burden of proving both reasonable cause and the absence of

willful neglect. United States v. Boyle, 469 U.S. 241, 245 (1985).

The Supreme Court has defined "willful neglect" as "a conscious,

intentional failure or reckless indifference."            Id.   Treasury

regulations   provide   that   "reasonable   cause"    exists   when   the

taxpayer has "exercised ordinary business care and prudence in

providing for payment of his tax liability and was nevertheless

either unable to pay the tax or would suffer an undue hardship

. . . if he paid on the due date."      26 C.F.R. § 301.6651-1(c)(1).

Undue hardship, in turn, means that "substantial financial loss,

for example, loss due to the sale of property at a sacrifice price,

will result to the taxpayer for making payment on the due date of

the amount with respect to which the extension is desired."            26

C.F.R. § 1.6161-1(b).

           The Shafmasters did not argue in the district court that

they were unable to pay, or would have suffered undue hardship if

                                 -14-
they had attempted to pay, the 1994 tax liability within ten days

of receiving notice and demand, as required to prevent accrual of

the penalty.    See 26 U.S.C. § 6651(a)(3); 26 C.F.R. § 301.6651-

1(c)(1).     The Shafmasters cannot assert for the first time on

appeal that there was a triable issue as to undue hardship when

they bore the burden of presenting evidence to the district court

that would have demonstrated such hardship.    The issue is waived.

See Cochran v. Quest Software, Inc., 328 F.3d 1, 11 (1st Cir.

2003).     Since the Shafmasters did not show inability to pay or

undue hardship, they cannot seek refuge in the "reasonable cause"

exception.

            Moreover, the Shafmasters have never argued that their

failure to pay within the statutory time frame was anything but

intentional.    Instead, they argue that they had "reasonable cause"

to intentionally delay payment because they were negotiating with

the IRS at the time and anticipated that the 1994 liability would

ultimately be reduced by loss carrybacks.       The district court

correctly found that this argument is essentially a "repackag[ing]"

of the equitable estoppel claim: the Shafmasters again attempt to

defeat the penalty by asserting a reliance interest in alleged

promises from the local IRS officer.     Yet none of the settlement

documents reflect a commitment by the IRS to delaying assessment or

collection of the 1994 taxes until all of the loss carryback issues

                                -15-
were resolved.    The 1994 penalty was assessed outside the agreed-

upon six-month stay period.

C.   Notice and Demand

            The Shafmasters argue on appeal, as they did before the

district court, that the October 2002 Notice of Tax Lien did not

constitute sufficient notice and demand because it stated an

incorrect amount, did not explicitly "demand" payment, and was sent

too late.     They also renew their argument that the April 2006

assessment did not properly "relate back" to the Notice of Tax

Lien.    Like the district court, we reject these arguments.5

            Under 26 U.S.C. § 6303(a), the IRS

            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.

This provision does not require the IRS to use any specific form of

notice.    See United States v. Roccio, 981 F.2d 587, 591 (1st Cir.

1992).    Although the statute instructs the agency to give notice

     5
       The government argues on appeal that the district court
erred in finding that there was a genuine issue of material fact as
to whether the IRS gave notice and demand on September 10, 2001.
Because we can resolve the Shafmasters' notice and demand claim
based on the October 7, 2002 Notice of Tax Lien, we need not
address this point.

                                -16-
and demand within sixty days of assessment, lateness alone is not

grounds to invalidate the notice.          26 C.F.R. § 301.6303-1(a).

           As to the argument that the Notice of Tax Lien reflected

an inaccurate amount, the Shafmasters contend that because the

carryback losses had not yet been applied to their 1994 tax

liability as of the date of the Notice of Tax Lien, that notice

could not have been correct because it did not state the true

amount they owed the IRS.6       The Shafmasters do not offer any case

law or regulations to support the proposition that an assessment is

"inaccurate" because there is a chance that a taxpayer's liability

may   change   at   a   later   date,   even   though   the   assessment   is

accurately calculated as of the date it is made.              Further, they

distort the record when they argue that as of October 2002, "there

was a concrete understanding between the IRS and taxpayer[s]" that

the 1994 liability was lower than the amount reflected on the lien

notice.   While there were negotiations and calculations ongoing

throughout 2002 and 2003, the IRS did not make any "concrete"

determination that carryback losses would reduce the 1994 tax

liability until it prepared the Form 870-AD in December 2003.

           A taxpayer cannot refuse to pay an assessment following

notice and demand on the mere assertion and belief that he might be

able to apply carrybacks at a later date, and then avoid the

      6
       The Shafmasters argued in the district court that there was
a calculation error in addition to the loss carryback issue. They
do not press that claim on appeal.

                                    -17-
penalty for failing to timely pay.      See, e.g., Simon v. Comm'r of

Internal Revenue, 248 F.2d 869, 877 (8th Cir. 1957) ("The carryback

provision does not relieve the taxpayer of the obligation to pay

the tax in full when it falls due, and can not be interpreted as

deferring taxpayer's duty to pay the tax promptly."); Rev. Rul. 72-

484, 1972-2 C.B. 638 ("Even though a carryback of a net operating

loss eliminates the tax for a given year, penalties incurred for

failure to file a return and pay the tax for that year within the

prescribed time are not affected by the carryback."); cf. Manning

v. Seeley Tube & Box Co. of N.J., 338 U.S. 561, 565-66 (1950)

(holding that "[t]he subsequent cancellation of the duty to pay" a

deficiency due to carryback adjustments "does not cancel in like

manner the duty to pay the interest on that deficiency," because

"[t]he fact that the statute permits the taxpayer subsequently to

avoid the payment of that debt in no way indicates that the

taxpayer is to derive the benefits of the funds for the intervening

period").    We reject the Shafmasters' argument to the contrary.

            With regard to the "relation back" issue, the Shafmasters

argue that, if October 7, 2002 was the date of notice and demand,

then the full penalty would not have accrued by April 17, 2006, the

date of the penalty assessment.    The district court concluded, and

the government concedes in its briefing before us, that the IRS had

based its accrual calculation on having sent notice in September

2001, not October 2002. Although the district court found that the

                                 -18-
government had not shown that proper notice was actually sent in

September 2001, the court ruled that the Shafmasters' argument

failed nonetheless, because the Shafmasters did not actually pay

their 1994 taxes in full until November 2007, almost a year after

the full penalty would have accrued based on a notice date of

October 2002.

          Neither the plaintiffs nor the government have provided

us with circuit court or regulatory authority governing the effect

of a premature penalty assessment.7    In this particular factual

situation, however, we agree with the district court that the

Shafmasters have shown no plausible basis for invalidating the

penalty based on its timing.   The full penalty would have accrued

by the time the Shafmasters finished paying their 1994 taxes, and

they have made no argument and provided no evidence that they would

have paid their taxes earlier if they had known that the full

penalty would accrue on a later date.       To the contrary, the

evidence shows that the Shafmasters had ample warning that they

would be subject to a failure-to-pay penalty -- at the least, via

the 2002 Notice of Tax Lien, the installment payment plan, and the

     7
        The government cites several district court decisions
stating that failure-to-pay penalties do not have to be separately
assessed, but these cases all addressed the timing of penalties
vis-à-vis the statute of limitations, not the penalties' relation
to the date of notice or the date of assessment. See, e.g., United
States v. Lund, No. 6:12-CV-62-TC, 2012 WL 3779105, at *1 (D. Or.
Aug. 31, 2012); Bob Hamric Chevrolet, Inc. v. IRS, 849 F. Supp.
500, 515 (W.D. Tex. 1994); United States v. Krasnow, 548 F. Supp.
686, 688-89 (S.D.N.Y. 1982).

                               -19-
2005 letter from Brown -- yet they still did not complete their

payments until November 2007.

            We can dispense quickly with the remaining two arguments.

As noted above, sending notice and demand more than sixty days

after the assessment is not grounds for invalidating the notice.

26 C.F.R. § 301.6303-1(a).     And the Shafmasters' contention that

the Notice of Tax Lien did not actually demand payment is belied by

the plain language of the document, which "giv[es] a notice that

taxes (including interest and penalties) have been assessed";

states that the IRS "ha[s] made a demand for payment of this

liability, but it remains unpaid"; alerts the taxpayers that a lien

has been placed on their property; and warns that the lien will not

be released until the full amount is paid or bond is posted and

that the IRS will "continue to charge penalty and interest until

you satisfy the amount you owe."        Under these circumstances, it

strains credulity to argue that the Notice of Tax Lien did not

"demand" payment.

                                 III.

            The Shafmasters failed to raise a genuine issue of

material fact as to any of their claims.        The district court's

grant of summary judgment to the United States on all claims is

affirmed.    Costs of this appeal are awarded to the IRS.

                                 -20-