United States of America v. Carolyn S. Stephens

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF ARKANSAS FAYETTEVILLE DIVISION UNITED STATES OF AMERICA PLAINTIFF V. CASE NO. 5:23-CV-5151 CAROLYN S. STEPHENS DEFENDANT JUDGMENT Now before the Court is the United States of America’s Motion for Default Judgment (Doc. 16), Brief in Support (Doc. 17), and Affidavits (Docs. 18–20). The Clerk of Court entered a default against Defendant Carolyn S. Stephens under Federal Rule of Civil Procedure 55(a) on March 20, 2024 (Doc. 10). In view of Ms. Stephens’s failure to answer or otherwise plead, the facts in the Complaint are deemed admitted and a default judgment under Rule 55(b) is appropriate.

Ms. Stephens was the sole shareholder of three helicopter companies she inherited from her father and was a successful commercial chef, creating and selling a mushroom appetizer recipe for nationwide distribution through Sam’s Club. She filed with the Internal Revenue Service (“IRS”) federal income tax returns for tax years 2004, 2005, 2006, and 2007, but significantly understated her income and willfully attempted to evade or defeat paying taxes on her income. The IRS served Ms. Stephens with notice of the federal income tax assessments and made demands for payment, but she failed to pay the full amount owed. As a matter of law, federal tax assessments made against a taxpayer are presumed correct, and the burden is on the taxpayer to prove that they are incorrect. See David E. Watson P.C. v. United States, 668 F.3d 1008, 1016 (8th Cir. 2012).

The Court concludes that Ms. Stephens owes the United States a total of $1,545,365.94 in tax liabilities. This amount excludes the penalties discharged in Ms. Stephens’s Chapter 7 bankruptcy. See Doc. 17, p. 5.10.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Judgment is hereby entered in favor of the United States and against Defendant Carolyn S. Stephens in the amount of $1,545,365.94 (relating to Ms. Stephens’s federal income tax liabilities for tax years 2004, 2005, 2006, and 2007) plus statutory interest under 26 U.S.C. §§ 6621 and 6621 and other additions accruing according to law from December 31, 2025 until fully paid.

IT 1S SO ORDERED AND ADJUDGED on this 7th day of April, 2026.

Ze CHIEF UNITED STATES DISTRICT JUDGE