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United States v. Kees

United States District Court, W.D. Louisiana, Lake Charles Division

August 30, 2018

UNITED STATES OF AMERICA
v.
BRUCE C. KEES

          REPORT AND RECOMMENDATION

          KATHLEEN KAY UNITED STATES JUDGE.

         Before the court is an unopposed Motion for Entry of Default Judgment [doc. 10] filed by the United States of America, plaintiff in this matter, against defendant Bruce C. Kees. This matter has been referred to the undersigned for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636. For the reasons that follow it is recommended that the Motion for Entry of Default Judgment be DENIED, without prejudice.

         I.

         Background

         On August 15, 2016, the United States filed suit against Kees, seeking judgment in the amount of alleged unpaid federal income taxes and frivolous tax submission penalties for several years between 2003 and 2012 and an order for the foreclosure of federal tax liens that arose against real property (described in detail in the complaint) belonging to Kees in Vinton, Calcasieu Parish, Louisiana, authorizing the sale of the property and directing that the proceeds be applied to the tax liabilities.[1] Doc. 1, pp. 1-2.

         Under Count One of the complaint, the United States asserts that “a duly authorized delegate of the Secretary of the Treasury, following tax examination and the deficiency procedures under 26 U.S.C. §§ 6211-6213, assessed tax, penalties, and interest against Kees for his federal income tax liabilities” for, respectively, (1) tax years 2003, 2004, 2010, and 2012 and (2) tax years 2005-2008. Id. at pp. 4-6. The United States alleges that the Internal Revenue Service (“IRS”) gave Kees notice of the assessments and made demand for payment. Id. It also alleges that Kees has failed to pay the amounts assessed plus additional interest, penalties, and other statutory additions that have continued to accrue. Id. Accordingly, the United States asserts, after applying all payments and credits, as of June 30, 2016, the remaining balance owed on these assessments is (1) $177, 466.32 for the 2003, 2004, 2010, and 2012 liabilities and (2) $173, 946.22 for the 2005- 2008 liabilities. Id. at pp. 5-6.

         The United States further alleges under Count One that Kees was assessed penalties under 11 U.S.C. § 6702 by a duly authorized delegate of the Secretary of the Treasury for filing frivolous tax returns for the years 2003 and 2005. Id. at pp. 6-7. It asserts that the IRS gave notice to Kees of these assessments and made demand for payment. Id. It alleges that after applying all payments and credits as of June 30, 2016, the remaining balance owed by Kees to the United States based on these assessments is $1, 498.67. Id. at p. 7.

         In Count Two of the complaint, The United States alleges that federal tax liens for the unpaid tax liabilities arose under 26 U.S.C. §§ 6321 and 6322 on the dates of the assessments listed above and have attached to all property and rights to property of Kees, including Kees's interest in the property described in the complaint. Id. The United States alleges that the IRS filed “Notices of Federal Tax Lien” concerning the federal tax liens for the tax liabilities owed by Kees with the Clerk of Court of Calcasieu Parish, Louisiana on the dates set forth in the following table:

Tax Period

Date of Assessment

Date of NFTL Filing

2003

10/02/2006

01/23/2007

2004

03/31/2008

02/21/2013

2005

09/03/2007

02/21/2013

2006

06/22/2009

02/21/2013

2007

04/15/2013

05/07/2013

2008

07/11/2011

02/21/2013

2010

12/09/2013

01/30/2104

2012

03/24/2014

05/05/2014

2003 Section 6702 Penalty

11 /27/2006

02/21/2013

2005 Section 6702 Penalty

11 /06/2006

02/21 /2013

Id. at p. 8.

         Based on these alleged facts, the United States seeks judgment that Kees owes to the United States $352, 911.71 plus interest and statutory additions that accrue, but minus credits and payments applied, after June 30, 2016. Id. The United States further seeks judgment that it has valid federal tax liens to and upon all property and property rights of Kees, including his interests in the property, for the tax liabilities and civil penalties described above. Id. Finally, the United States seeks an order that the tax liabilities be foreclosed upon the property; that the property be sold in accordance with the law and practice of the court, the findings of the court, and the rights of the United States, free and clear of any right, title, lien, claim, or interest of any other party hereto, their heirs, estates, or assigns; that the proceeds of the sale be distributed to the United States in accordance with the priority ranking of its claims and interests in the property; and that the court award the United States costs of the action. Id. at pp. 9-10.

         Kees was personally served with a summons and the complaint on August 24, 2016, at 1601 Highway 109 South, Vinton, Louisiana 70663. Doc. 3. He did not file an answer or other pleading. On November 10, 2016, the United States moved for an entry of default as to Kees. Doc. 6. The Clerk of Court noticed an entry of default as to Kees on November 14, 2016. On June 6, 2017, the United States moved for default judgment against Kees, seeking the same relief it seeks against Kees in its complaint, but alleging that the amount Kees owes as of April 26, 2017, is $365, 022.38 plus prejudgment and postjudgment interest and any statutory additions, less credits and payments applied after April 26, 2017, and prior to the entry of judgment. Doc. 10. The United States certified that a copy of the motion was sent to Kees at 1601 Highway 109 South, Vinton, Louisiana 70668, on June 6, 2017. Id. at p. 6. Kees was provided twenty-one days from the date of service of the motion within which to respond [doc. 11], but failed to do so.

         II.

         Law ...


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