United States District Court, D. New Jersey, Camden Vicinage
B. KUGLER UNITED STATES DISTRICT JUDGE.
case arises from Hector Daniel Sanchez's
(“Defendant”) alleged failure to pay federal
income taxes and delinquent tax assessments. The Court
previously determined that default judgment against Defendant
was appropriate, and granted such a judgment in favor of the
United States of America (“Plaintiff”). The issue
presently before the court is one of damages owed by
Defendant upon receipt of Plaintiff's explanatory papers,
as ordered by the Court (See Doc. No. 60). For the
reasons set forth below, Plaintiff's motion is
GRANTED and Plaintiff is AWARDED
$210, 917.49 IN DAMAGES as of March 19, 2018, as
well as interest that may accrue after such time and until
the damages are paid in full.
FACTUAL BACKGROUND AND PROCEDURAL
facts of the case have not significantly changed since this
Court's opinion granting Plaintiff's motion for
default judgment against Defendant. United States v.
Sanchez, No. 16-3024, 2018 WL 1151710, at *1-2 (D.N.J.
Mar. 5, 2018). After granting Plaintiff's motion for
default judgment, the Court requested further briefing from
Plaintiff regarding total damages, pursuant to Federal Rule
of Civil Procedure 55(b)(2)(B). Id. at *4.
subsequently submitted a supplemental memorandum, in which it
calculated the total damages to be $210, 917.49. (Pl. Supp.
Memo. at 1). This total was based on a combination of
penalties for failure to make payments, late payments, lack
of accuracy in regards to payments, and outstanding interest
compounded daily. (Id. at 2-4) (See 26
U.S.C. §§ 6654, 6651, 6621, 6622). Defendant has
made no attempt to defend himself in any way in this case and
has neither answered nor responded to Plaintiff's
calculation of damages.
Rule of Civil Procedure 55(b)(2) allows the Court, upon a
plaintiff's motion, to enter default judgment against a
defendant that has failed to plead or otherwise defend a
claim for affirmative relief. The Court should accept as true
all well-pleaded factual allegations in the complaint by
virtue of the defendant's default except for those
allegations pertaining to damages. Chanel, Inc. v.
Gordashevsky, 448 F.Supp.2d 532, 536 (D.N.J. 2008)
(citing Comdyne I, Inc. v. Corbin, 908 F.2d 1142,
1149 (3d Cir. 1990)). The Court also does not adopt
Plaintiff's legal conclusions because whether
the facts set forth an actionable claim is for the Court to
decide. Doe v. Simone, No. 12-5825, 2013 WL 3772532,
at *2 (D.N.J. July 17, 2013).
the decision to enter default judgment is left principally to
the discretion of the district court, there is a
well-established preference in the Third Circuit that cases
be decided on the merits rather than by default judgment
whenever practicable. Hritz v. Woma Corp., 732 F.2d
1178, 1180-81 (3d Cir. 1984). The Court has already
determined that default judgment is appropriate in the case
at hand, leaving only the question of damages to be decided.
Sanchez, 2018 WL 1151710, at *1-2.
DISCUSSION AND ANALYSIS
seeks damages totaling $210, 917.49, as of March 19, 2018,
plus interest accrued since March 19, 2018, compounded daily,
as allowed by 26 U.S.C. § 6621(a)(2) and 26 U.S.C.
§ 6622(a) (citing § 1961(c)(1)). It is “well
established” that the government's tax assessments
are “entitled to a legal presumption of
correctness[.]” United States v. Fior
D'Italia, 536 U.S. 238, 242 (2002). Plaintiff
submitted documentation showing that Defendant owes $210,
917.49 for unpaid taxes, penalties, fees, and outstanding
interest, as of March 19, 2018. (Decl. of Susan Johnston
has offered evidence demonstrating that, per Defendant's
own tax filings, Defendant owed $64, 161.00 in taxes for the
2005 tax year and $90, 717.00 for the 2006 tax year.
(Id. at ¶ 6). Fees of $50.00 were assessed for
each tax year, pursuant to 26 U.S.C. § 6331(a) to cover
the expenses of collecting the taxes by levy, for a total of
$100.00. (Id. at ¶ 9). Additionally, Defendant
accrued numerous statutory penalties for his failure to make
estimated payments pursuant to 26 U.S.C. § 6654, late
payments pursuant to 26 U.S.C. § 6651(a)(2), and
inaccuracy with the filing and payments pursuant to 26 U.S.C.
§ 6662. (Id. at ¶¶ 7-8). These
penalties amounted to $16, 978.35 for the 2005 tax year and
$32, 850.75 for the 2006 tax year, totaling $49, 829.10.
Finally, Defendant accrued interest under 26 U.S.C.
§§ 6621-6622 amounting to $44, 573.82 for the 2005
tax year and $59, 645.68 for the 2006 tax year, totaling
$104, 219.50. (Id. at ¶ 6). The interest rate
under § 6621 is the federal short-term rate, as
determined by the Secretary of the Treasury, plus three
percentage points. After subtracting Defendant's payments
and credits for the 2005 and 2006 tax years, totaling $98,
109.11, Defendant is left with an outstanding balance of
$210, 917.49 as of March 19, 2018. (Id.).
is also entitled to continuing interest payments, compounded
daily, pursuant to §6622(a), until such time as
Defendant's outstanding damages are paid in full.