The opinion of the court was delivered by: Sifton, Senior Judge
MEMORANDUM OPINION AND ORDER
Plaintiff American Friends of Yeshivat Ohr Yerushalayim, Inc. ("American Friends") commenced this action against the United States on May 6, 2004, seeking the Court's review of a determination by an officer of the Appeals Office of the Internal Revenue Service (the "appeals officer")*fn1 sustaining the assessment of late filing penalties relating to the American Friends' Forms 990 for the tax years ending June 30, 2000, June 30, 2001, and June 30, 2002. American Friends does not dispute that it filed its Form 990s late, but instead challenges the denial of a request for an abatement. Defendant United States argues that the appeals officer acted properly in rejecting the plaintiff's appeal, and on that basis moves to affirm the officer's decision and dismiss the plaintiff's complaint. For the reasons stated herein, the defendant's motion is granted.
The following facts are taken from parties' submissions in connection with this motion and the record of proceedings before the appeals officer.
1. American Friends Structure and Records Keeping
American Friends is a not-for-profit corporation that is exempt from taxation pursuant to Internal Revenue Code Section 501(c)(3). American Friends was created in 1993 to raise funds in the United States for Yeshivat Ohr Yerushalayim (the "Yeshivat"), a religious school located in Israel that offers a post high-school program for boys. Over 90% of the Yeshivat's students are from the United States. American Friends claims that it collects tuition payments for the Yeshivat from students in the United States and transfers these funds to the Yeshivat's bank account in Israel.
Until August 2000, the office of American Friends was located in New York City and its bookkeeper was Michelle Fishman, although her husband, Howard Fishman occasionally substituted for her.*fn2 The organization subsequently hired a new bookkeeper, Isabelle Kogan ("Kogan"), and relocated to Chicago, Illinois, where Kogan was located.*fn3 Kogan was responsible for receiving tuition payments, paying disbursements, and maintaining the corporation's financial records, among other responsibilities. Shortly after the relocation, steps were taken to ship a large number of American Friends' financial documents and files to the new office in Chicago. However, they were never received and are now considered lost by the organization.*fn4 These records included records of cash receipts and cash disbursements.
American Friends did not timely file its 2000, 2001, or 2002 Forms 990.*fn5 American Friends claims that it was unable to timely file its Form 990 for the tax period ending June 30, 2000 because the financial records needed to file the return had been lost. Saul Strauss, the accountant for American Friends, required copies of bank statements for the organization in order to reconstruct the financial records to facilitate preparation of the return. American Friends asserts that it took Kogan several months to obtain duplicate copies of its bank statements, allegedly because the bank was not cooperative.*fn6 Strauss did not receive the records until sometime in 2002. Once the records were received, it took Strauss some time to reconstruct American Friends' records for the Tax year ending June 3, 2000. Strauss filed the 2000 return on August 25, 2002. American Friends claims that Strauss was unable to prepare the Form 990 for the 2001 and 2002 until the 2000 return was completed. American Friends filed its Form 990 for the years 2001 and 2002 on February 11, 2003.
American Friends claims that, when Strauss prepared the Form 990s for 2000, 2001, and 2002, he did not distinguish between money received by American Friends in connection with its own activities in the United States and tuition money received on behalf of the Yeshivat. As a result, the income of American Friends was inflated on the Forms 990. Strauss estimated that 90% of the money received by American Friends was transferred to the Yeshivat as tuition payments. As of 2004, Strauss no longer lists the receipt of tuition payments on the American Friends Form 990s.
2. IRS Proceedings Against American Friends
The IRS assessed American Friends late filing penalties pursuant to 26 U.S.C. § 6652(c)(1)(A) for its failure to timely file its Form 990s.*fn7 The following penalties were assessed:
$50,000 for the tax year ending June 30, 2000, $24,100 for the tax year ending June 30, 2001, and $8,800 for the tax year ending June 30, 2002. At the time of the assessments, the IRS issued statutory notices of the assessments and made demands for payment of the amounts due for the 2000-2002 tax years. Because the Form 990s submitted by Strauss reflected annual revenue in excess of $1,000,000, American Friends was charged a penalty of $100 for each day the Form 990 was late, up to a maximum penalty of $50,000. 26 U.S.C. § 6652(c)(1)(A). Had the Yeshivat's tuition payments not been included in the income listed on the Form 990s, American Friends would have been assessed a penalty of $20 for each day late, up to a maximum of the lessor of $10,000 or 5 percent of the gross receipts for the year. Id.
In June 2003, American Friends requested an abatement of the late filing penalties, but received no response other than a Final Notice of Intent to Levy. American Friends timely requested a Collection Due Process Hearing, which took place on February 24, 2004. American Friends submitted proofs that it had a reasonable cause for its inability to timely file its Form 990 returns and that it had exercised ordinary business care and prudence. In its letter to the IRS, American Friends explained that it had fired its bookkeeper and moved to Chicago to work with a new bookkeeper, who never received the records from the old office and had to undertake a laborious and time consuming process of recreating the financial records. See Affirmation of Howard Fishman, Ex E, at 2-4.
On April 1, 2004, the IRS Appeals Office issued a Notice of Determination ("Determination"), which sustained the IRS's collection action.*fn8 The Determination stated that American Friends was previously assessed late filing penalties for the 1996 and 1997 Forms 990, and asserted that American Friends' explanation for the late filings in both cases was that the bookkeeper failed to keep the necessary records. Based on this premise, the appeals officer found that American Friends did not exercise normal business care and prudence to ensure that the previously negligent bookkeeper was keeping the records in order. Regarding the request for an abatement, the Determination stated that American Friends had been "recklessly indifferent" with regard to the timely filing of its returns. Govt. Ex. 4, ...