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A federal judge ruled the government’s request for summary judgment in a nearly $1 million tax case against a New Jersey contractor cannot proceed yet.

Newark, NJ – A federal judge in New Jersey has denied—without prejudice—the U.S. government’s motion for summary judgment in a civil tax case seeking nearly $1 million from a Union County contractor tied to unpaid payroll taxes.

The case involves Sabatino Paparatto, who the federal government says is personally liable for unpaid employment taxes connected to a construction company he owned.

Key Points

• U.S. government seeks nearly $1 million in tax penalties from a New Jersey contractor
• Case stems from unpaid payroll taxes tied to Sky High Construction
• Federal judge denied the government’s summary judgment request without prejudice

Government pursuing trust fund recovery penalties

According to court documents filed in U.S. District Court for the District of New Jersey, the government is attempting to collect trust fund recovery penalties assessed against Paparatto under federal tax law.

The penalties relate to employment taxes that were withheld from employees’ wages but allegedly not paid to the federal government.

Paparatto founded Sky High Construction LLC in 2006 and served as the company’s sole owner and president, according to filings cited in the opinion.

IRS actions began in 2009

The Internal Revenue Service began enforcement actions after the company failed to file required payroll tax returns in 2008.

Court records show the IRS delivered notices warning of potential levies and later filed a federal tax lien against the company.

The government ultimately assessed penalties totaling about $996,376.52 against Paparatto, arguing he was responsible for collecting and paying over employee withholding taxes.

Property transfer also examined

The case also references a residential property in Mountainside, New Jersey purchased by Paparatto and his wife in 2001.

Court documents indicate that after the IRS notified Paparatto in 2012 that it intended to assess significant penalties, he transferred his interest in the home.

The government has examined that transfer as part of its efforts to collect the tax debt.

Judge allows case to continue

In the latest ruling, U.S. District Judge Julien Xavier Neals denied the government’s motion for summary judgment without prejudice, meaning the government may refile the motion at a later time.

The court noted that Paparatto is representing himself in the case and submitted letters opposing the motion rather than a formal response to the government’s factual statements.

The litigation remains ongoing in federal court.

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