OPINION

KEVIN MCNULTY, U.S.D.J.:

The government's complaint asserts a claim under Section 6324(b) of the Internal Revenue Code for gift taxes owed by defendants as donees. Now before the court are the motions of defendants Sheila Strauss and Mitchell Nenner to dismiss the complaint for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), which I construe as a motion for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c). Defendants' motions assert that the government's claims are time-barred and that the government has failed to comply with certain individual-assessment procedures necessary to hold them liable. For the reasons stated herein, defendants' motions to dismiss are denied.

I. Summary1

This action arises as a result of gifts Sidney Elson made to several individuals, including the two defendants who bring these motions to dismiss. (Compl. ¶ 10) In relevant part, defendants concede that in 2004, Mr. Elson made the following gifts:

(Compl. ¶¶ 21, 46) (see, e.g. S.MTD at 4 ("Sidney Elson made gifts to the Defendants"); M.MTD at 4 (same)) Mr. Elson did not file a gift tax return in 2004, and had not done so at the time he died in 2006. (Id. ¶ 12) The parties appear to agree that in 2009 Sheila Strauss, as Executrix, filed a gift tax return on behalf of Mr. Elson's estate. (Id. ¶ 13; S.MTD at 4, M.MTD at 4) The government alleges that the return reported certain gifts and reported a gift liability of $80,300. (Compl. ¶ 13) After the Internal Revenue Service ("IRS") audited the return, however, it concluded that the return failed to report additional gifts. The government asserts that in 2009, it assessed the Estate of Sidney Elson additional gift taxes in the amount of $374,131 and sent notice of that assessment to the Estate. (Id. ¶¶ 15, 17)

The Estate of Sidney Elson has made certain payments towards its gift tax liability: "$150,000 in 2009; $60,000 in 2011; and $136,000 in 2015 from the sale of the real estate transferred to Sheila Strauss." (Id. ¶¶ 18, 22) However, as of December 4, 2017, a total of $684,217.79 allegedly remained owing to the IRS. (Id. ¶ 19)

On July 3, 2018, the government filed the complaint in this action. On August 13, 2018, both defendants answered the complaint. (DE 20; 22) Defendants asserted four affirmative defenses including the statute of limitations and failure to provide required notice. (DE 20 at 7; DE 22 at 7)

On February 4, 2019, the government submitted its responses and objections to defendants' first requests for document production. (DE 59-1; DE 60-1) Defendants note that these discovery responses fail to establish that the government ever sent them individual assessments for taxes owed, pursuant to 26 U.S.C. § 6901.

On May 6, 2019, Defendants moved to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (DE 59, 60) The government opposed those motions, arguing inter alia that they were procedurally defective. (DE 65). In their reply, the defendants requested that the Court convert their motions to dismiss into motions for summary judgment. (DE 67)

II. Discussion

a. Procedural issues with defendants' 12(b)(6) motions

As a threshold matter, I must decide first whether it was procedurally proper for defendants to: (1) move to dismiss after filing an answer; and (2) rely on evidence outside of the pleadings.

Defendants filed their rule 12(b)(6) motions after answering the complaint. It is true, of course, that a Rule 12(b)(6) motion to dismiss a complaint "must be filed before any responsive pleading." Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991). Still, a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) may be filed at any time, and may be the functional equivalent of a motion to dismiss. Federal Rule of Civil Procedure 12(h)(2) "provides that a defense of failure to state a claim upon which relief can be granted may also be made by a motion for judgment on the pleadings." Turbe v. Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991). Accordingly, when a Rule 12(c) motion asserts that the complaint fails to state a claim, the familiar Rule 12(b)(6) standards apply. Id.

It is therefore fairly routine to simply recharacterize a post-answer 12(b)(6) motion as a Rule 12(c) motion for judgment on the pleadings. Having done so, I would proceed to analyze it under Rule 12(b)(6) standards.

Those Rule 12(b)(6) standards provide that the facts alleged in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014). "[A] plaintiff's obligation to provide the `grounds' of his `entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, so that a claim is "plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955; see also West Run Student Hous. Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013).

Where a motion to dismiss attaches or relies on documents extrinsic to the pleadings, the court must first consider whether such documents may permissibly be considered. In general, the Court in considering a Rule 12(b)(6) motion is confined to the allegations of the complaint, with narrow exceptions:

In re Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 n.7 (3d Cir. 2016).

The documents attached to the defendants' motions consist of discovery responses. These I will not consider under Rule 12(b)(6) because they are not cited in the complaint and the government's claims are not based on them. See id.

The defendants, however, propose another solution. In their reply brief, they request that the court convert their motion to one for summary judgment.

Fed. R. Civ. P. 12(d). When presented with extrinsic documents not properly considered on a motion to dismiss, the Court may of course simply disregard them; otherwise, it "may either deny the motion or convert it into a motion for summary judgment, providing the parties with a schedule for submission of statements in compliance with Local Civil Rule 56.1, supplemental briefs, and any supplemental evidence they deem necessary." Dix v. Total Petrochemicals USA, Inc., No. 10-3196, 2011 WL 2474215, at *2 (D.N.J. June 20, 2011).

The decision whether to convert a motion to dismiss into a summary judgment, however, is a discretionary one. See Telfair v. Tandy, No. 08-731, 2009 WL 2132433, at *3 (D.N.J. July 13, 2009) ("A court deciding a motion to dismiss has the discretion to accept materials beyond the pleadings and then convert the motion into one for summary judgment") (citing Gunson v. James, 364 F.Supp.2d 455, 460-61 (D.N.J.2005)). I choose not to exercise my discretion in this manner, for two reasons.

First, a motion for summary judgment is premature; I adhere to the usual rule that summary judgment motions are best considered at the close of fact discovery. This ensures an orderly procedure and saves the court from serial motions brought by parties to exploit some temporary advantage in the discovery process.

Second, the defendants have invoked summary judgment only in their reply brief. To give the government a fair chance to respond would require the court to initiate a wasteful, additional round of briefing.

The defendants' motions to dismiss, construed as motions for judgment on the pleadings, are thus denied to the extent they are based on the extrinsic documents.

b. Claims under Section 6324(b)

I conclude, however, that I may profitably address the motions to dismiss without resort to reliance on extrinsic documents, because the motions pose issues of law. The defendants assert two essential grounds for dismissal:

As to the first issue, I hold herein as a matter of law that the ten-year lien limitation period does not apply. As to the second, I hold as a matter of law that the government was not required to impose an individual § 6901 assessment in order to bring this action; thus it is not necessary to resort to extrinsic documents to determine whether the government in fact did so.

1. Section 6324(b), Sentence 1 and Sentence 2

In its complaint, the government asserts a claim pursuant to 26 U.S.C. § 6324(b). Each defendant, says the government, is personally liable for gift taxes to the extent of the value of the property he or she received by gift from Sidney Elson (or his Estate). Defendants Strauss and Nenner do not dispute that they are donees under § 6324(b). Nevertheless, they say, the government's claims are subject to § 6324(b)'s ten-year limitation period for gift tax liens, and are now time-barred.

Section 6324(a) concerns special liens and personal/transferee liability for estate taxes, and section 6324(b) for gift taxes.2 As relevant here, the overall purpose of § 6324 is to impose liability on the decedent's estate and upon transferees or donees of the estate when the estate fails to pay federal taxes.

At issue here is the interplay between the two sentences of Section 6324(b), which I have designated "Sentence 1" and "Sentence 2".

26 U.S.C. § 6324(b).

Sentence 1, then, provides that any gift tax owed shall remain as a lien against the gift for a period of ten years, running from the date the gift is made. Sentence 2 imposes personal liability (limited to the value of the gift) on the donee for any gift tax not paid when due.

2. Application of Sentence 1's 10-year limitation or the Section 6501 and 6502 statutes of limitations to a claim under Sentence 2 of § 6324(b).

Two initial questions presented are these:

Sentence 1 is not the issue as such. The defendants received the gifts in August 2004, but the complaint was filed nearly fourteen years later, on July 14, 2018. This action was not filed within 10 years after the gift was made. Under Sentence 1, then, the government's enforcement of its lien would be time-barred.

That leaves Sentence 2, the donee personal-liability provision under which the government is proceeding. The government urges that even if Sentence 1's 10-year lien has expired, "the gift tax assessment against the Estate of Sidney Elson is enforceable against [defendants] under the personal liability provision [i.e., Sentence 2] of Section 6324(b)." (Opp. at 4) Defendants argue to the contrary that the ten-year limitation of Sentence 1 applies to Sentence 2 as well.

Sentence 2, the Third Circuit has held, "neither creates nor defines a substantive liability but provides merely a new procedure by which the Government may collect taxes." Poinier v. Comm'r, 858 F.2d 917, 920 (3d Cir. 1988). Thus, "courts interpreting this provision have routinely analyzed the personal liability prong of § 6324 independent from and without reference to the lien provision." United States v. Botefuhr, 309 F.3d 1263, 1277 (10th Cir. 2002) (relying on Baur v. Comm'r, 145 F.2d 338, 339 (3d Cir. 1944)). The distinction between the two sentences of Section 6324(b) is therefore significant "because § 6324(b) does not explicitly state a statute of limitations for a donee's personal liability" Botefuhr, 309 F.3d at 1277. The "relatively few cases to have considered the issue suggest that the statute of limitations for the donee's liability depends upon the statute of limitations for the donor's liability: so long as the government could bring a timely action against the donor, its action against the donee will be considered timely." Id. In short, the ordinary statute of limitations, not the 10-year limit on the life of a lien, governs a claim under Sentence 2, the donee personal liability provision.

The next task, then, is to identify and apply the relevant statute of limitations for a Sentence 2 claim. While the Third Circuit has not directly addressed this issue, courts have generally defaulted to the statutes of limitations contained in 26 U.S.C. § 6501 (Limitations on assessment and collection) and § 6502 (Collection after assessment). See, e.g., Botefuhr, 309 F.3d at 1277-78 (citing various cases that have applied these sections); United States v. Geniviva, Civ. A. No. 92-1045, 1993 WL 597442, at *2-*3 (W.D. Pa. Apr. 14, 1993), aff'd, 16 F.3d 522 (3d Cir. 1994).

Section 6501 governs limitations on assessments. It provides that "the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed." 26 U.S.C. § 6501(a). An exception to § 6501's three-year rule applies where an estate tax return omits taxable gifts exceeding a certain threshold (for these purposes, a "substantial omission"). In such a case, the government must make an assessment or file a complaint within six years:

26 U.S.C. § 6501(e)(2).

If the government opts to make a tax assessment against the estate, the § 6502 ten-year limitations period for an action on an assessment then comes into play. Any action to collect an assessed tax "by levy or by a proceeding in court" must be commenced "within 10 years after the assessment of the tax." 26 U.S.C. § 6502(a)(1).

Defendants seemingly concede that a substantial omission occurred, in that the Estate of Sidney Elson failed to account for the total amount of various gifts. (See S.MTD at 6-7; M.MTD at 6-7) In particular, certain gifts were omitted from a return filed on behalf of the Estate by Sheila Strauss as Executrix in 2009. (Id. ¶ 13) The Complaint alleges (and it seems to be undisputed) that about two years later, on May 2, 2011, the government "assessed additional gift taxes against the Estate of Sidney Elson in the amount of $347,131." (Compl. ¶ 15) That assessment was therefore timely under § 6501(a)'s three-year limitations period.

At that point, the § 6502 period to bring an action on an assessment was triggered. Starting from May 2, 2011, when the assessment was filed, the government had an additional ten years within which to commence an action to collect under the assessment. This action was filed on July 3, 2018, well within the ten-year period.

So if this action was properly brought under § 6324(b), based on the 2011 assessment filed against the Estate, then it is timely.

3. The section 6901 individual-assessment provision

Big if, say the defendants; the government is invoking the wrong procedure, the wrong statute of limitations, and the wrong starting date for the limitations period. In their view, their individual liability as donees cannot be premised on the 2011 assessment against the Estate; rather, the government was required to obtain individual assessments against the defendants themselves under 26 U.S.C. § 6901. And section 6901 has its own, short statute of limitations, which has already expired.

The issue, in defendants' view, does not hinge on the government's 2011 assessment of additional taxes against the Estate of Sidney Elson. Rather, the Court should be looking to the date that an assessment for gift tax was levied against each defendant individually. Ordinarily, of course, such a (presumably later) date might not be of assistance to a defendant making a statute of limitations argument. Here, however, defendants argue that the government dropped the ball; it never properly assessed them separately and individually under 26 U.S.C. § 6901. (S.MTD at 5-8; M.MTD at 5-8; Reply at 2-3)

Whether the government filed such an individual assessment might pose a factual issue. But the government makes an argument of law that renders that factual issue moot. Relying on Geniviva, cited supra, the government argues that it was entitled to proceed under § 6324(b), Sentence 2, based on the 2011 assessment against the Estate. An individual § 6901 assessment, says the government, was not a prerequisite to an action to impose liability on these defendant transferees. (Opp. at 8) I agree.

Section 6901 was enacted after Section 6324. Section 6901(a) provides that transferee liability related to a gift shall "be assessed, paid, and collected in the same manner and subject to the same provisions and limitations as in the case of the taxes with respect to which the liabilities were incurred."3 Thus the government's § 6901 power to assess a tax liability against a transferee mirrors its power to assess the estate itself. Section 6901 contains its own, piggy-back statute of limitations. The assessment with respect to an initial transferee shall be made within one "year after the expiration of the period of limitation for assessment against the transferor." 26 U.S.C. § 6901(c)(1).4

I accept the government's concession arguendo that an assessment under 6901 would not be timely, and that therefore an action based on such an assessment would not be timely, either. But that, the government asserts, is not the action it brought. This action, says the government, is brought under section 6324(b) Sentence 2, and is timely under sections 6501 and 6502, as set forth above. See Section II.b.2, supra. So unless the defendants are correct that § 6901 is the narrow gate through which any claim against them as donees must pass, their argument fails.

Defendants are incorrect; Section 6901 is not the government's exclusive route to a remedy against them. The Third Circuit held in United States v. Geniviva that "Section 6901 did not eliminate or limit the government's ability to bring an action [under Section 6324]; rather, it provided an additional means by which the government could enforce the collection of taxes." 16 F.3d 522, 524 (3d Cir. 1994) (citing Leighton v. United States, 289 U.S. 506, 507-08, 53 S.Ct. 719, 77 S.Ct. 1350 (1933)). The Third Circuit went on to "hold that an individual assessment under 26 U.S.C. § 6901 is not a prerequisite to an action to impose transferee liability under 26 U.S.C. § 6324(a)(2)." Geniviva, 16 F.3d at 525.

Defendants assert that Geniviva is not controlling here because it concerned estate tax liability under § 6324(a)(2), not gift tax liability under § 6324(b). (Reply at 5) For these purposes, however, I am in agreement with courts that have construed § 6324(a) in pari materia with § 6324(b). Sections 6234(a) and (b) create parallel liens against transferees, and they contain nearly identical provisions that hold transferees personally liable. As other courts have held, "[t]he gift tax was supplementary to the estate tax. The two are in pari materia and must be construed together." Sanford's Estate v. Comm'r of Internal Revenue, 308 U.S. 39, 44, 60 S.Ct. 51, 84 S.Ct. 20 (1939); see also Estate of Mandels v. Comm'r of Internal Revenue, 64 T.C. 61, 78 (1975) (("... [referring to] sec. 6324(b) covering liability for estate taxes, [and] sec. 6324(a)(2), these provisions have been interpreted in part materia.") (relying on Commissioner v. Chase Manhattan Bank, 259 F.2d 231, 256 (5th Cir. 1958) (rev'g on other grounds 25 T.C. 617 (1955)), cert. denied 359 U.S. 913, 79 S.Ct. 589, 3 L.Ed.2d 575 (1959); Melba Schuster, 32 T.C. 998, 1007 (1959), aff'd, 312 F.2d 311, 315 n.3 (9th Cir. 1962); Equitable Trust Co., 13 T.C. 731, 737 (1949)). see also United States v. Saleh, 514 F.Supp. 8, 9 (D.N.J. 1980) ("`By contrast, the "special" lien of s 6324(a)(1) is imposed only for federal estate taxes. (§ 6324(b) imposes a similar "special" lien on account of the federal gift tax.')").

I therefore do not find Geniviva distinguishable. Its holding that a § 6901 assessment is not a prerequisite to a claim for transferee liability under § 6324(a)(2) applies equally to a claim for donee liability under § 6324(b). Accordingly, I hold as a matter of law that an individual assessment under 26 U.S.C. § 6901 is not a prerequisite to the government's Section 6324(b) claim here.

III. Conclusion

For the reasons set forth in Sections II.a, b, and c, supra, the government has timely and properly brought its claims against defendants. Defendants' motions to dismiss the complaint for failure to state a claim (DE 59 and 60), construed as Rule 12(c) motions for judgment on the pleadings, are denied.

An appropriate order follows.