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United States of America v. Anne Jane Kulhanek

December 8, 2010


The opinion of the court was delivered by: Judge McLaughlin



Presently pending before the Court is Defendants' Second Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons which follow, the motion will be denied.


Defendants Anne Jane Kulhanek, Barbara J. Smith, and Susan C. Ulf ("Defendants") are the surviving daughters of Robert Q. Roth, Sr. ("Roth"), who died in Erie, Pennsylvania on June 10, 1991. (Amended Complaint ¶¶ 4-6, 8). At the time of his death, Roth held a retirement account with a balance of $306,843.00 and an insurance policy that paid $10,127.00. (Amended Complaint ¶¶ 10, 12). Each of the Defendants, along with Robert Q. Roth, Jr, a non-party to this suit, were beneficiaries of the retirement account and the insurance policy. Each Defendant received a distribution from the retirement account and the insurance policy shortly after Roth's death.

The due date for Roth's estate tax return was March 10, 1992. (Amended Complaint ¶ 14). On March 11, 1992, the IRS received an estate tax return from the Roth Estate wherein the executors elected to defer payment of $216,366.00 of the estate tax liability over a ten-year period pursuant to 26 U.S.C. § 6166 because the estate contained 286 shares of the stock of a small business, Roth Caddilac, Inc. (Amended Complaint ¶ 15). Subsequently, on July 27, 1998, Robert Q. Roth, Jr entered into an agreement to sell all of the assets of Roth Cadillac. (Amended Complaint ¶¶ 18-20). The sale was consummated on March 1, 1999.

On July 24, 2008, the United States filed an action to collect unpaid estate taxes allegedly owed by the Defendants in the amount of $198,382.86 plus statutory interest accrued and accruing. In the original Complaint, the United States sought to collect the unpaid tax pursuant to 26 U.S.C. § 6324(a)(2), which generally provides that any person who receives property included in a gross estate is personally liable for any unpaid estate tax on that estate. (Complaint ¶¶ 21, 26). On March 1, 2009, the Defendants moved to dismiss on the basis that the ten-year statute of limitations within which to foreclose on a special lien pursuant to Section 6324(a)(1) had expired.

During oral argument on the Defendants' motion to dismiss, the United States clarified that it was not seeking to foreclose upon the special lien created by Section 6324(a)(1). (See Transcript, Oral Hearing, March 1, 2010). Rather, it was attempting to collect unpaid estate taxes against the Defendants pursuant to 26 U.S.C. § 6324(a)(2) by imposing personal liability upon them as transferees. In a subsequent telephonic conference, counsel for the United States stated that the government had determined that an election pursuant to 26 U.S.C. § 6166 to defer tax payments had been made in connection with the filing of the original tax return on March 11, 2002. (See Transcript, Oral Hearing, March 2, 2010). Given that this new information had potential ramifications with respect to the running of the statute of limitations, I directed that an amended complaint be filed reflecting the newly discovered date of the Section 6166 election.

Subsequent to the filing of the Amended Complaint, wherein the United States again sought to collect the unpaid estate tax against Defendants as transferees pursuant to Section 6324(a)(2), the Defendants filed a Second Motion to Dismiss once again asserting that the action was untimely based upon the ten year statute of limitations applicable to special liens pursuant to Section 6324(a)(1).


Fed. R. Civ. P. 12(b)(6) allows a defendant to file a pre-answer motion to dismiss the plaintiff's complaint because it "fail[s] to state a claim upon which relief can be granted." The court must accept as true all allegations of the complaint and all reasonable factual inferences must be viewed in the light most favorable to plaintiff. Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3rd Cir. 1985). The Court, however, need not accept inferences drawn by plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employee Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3rd Cir. 2004) (citing Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3rd Cir. 1997)). Nor must the court accept legal conclusions set forth as factual allegations. Twombly, ___ U.S. ___, 127 S. Ct. at 1965 citing Papasan v. Allain, 478 U.S. 265, 286 (1986). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, ___ U.S. ___, 127 S.Ct. at 1965. Although the United States Supreme Court does "not require heightened fact pleading of specifics, [the Court does require] enough facts to state a claim to relief that is plausible on its face." Id. at ___, 1974.

Where the basis for a 12(b)(6) motion is the statute of limitations, the Court must rely on the time alleged in the complaint to determine if the statute of limitations has expired. Cito v. Bridgewater Township Police Dept., 892 F.2d 23, 25 (3rd Cir.1989). If the statute of limitations has expired, the claim is properly dismissed on a 12(b)(6) motion. See Cito, 892 F.2d at 25.


Estate taxes, as with all federal taxes, are due at the time that a tax return is filed with the Internal Revenue Service. 26 U.S.C. § 6151(a). When, however, an estate fails to satisfy its tax liability at the time of the return, 26 U.S.C. § 6324 provides the federal government with several statutory tools to assist in collecting the unpaid tax. The first of these is the automatic "special lien" created by Section 6324(a)(1) upon the death of the decedent. This provision states:

Unless the estate tax imposed by Chapter 11 is sooner paid in full, or becomes unenforceable by reason of lapse of time, it shall be a lien upon the gross estate of the decedent for 10 years from the date of death . . . 26 U.S.C. § 6324(a)(1). This special lien "is an immediate lien upon the gross estate of the decedent" which "arises at the date of the death of the decedent without any necessity of making an assessment or of recording or filing." United States v. Cleavinger, 517 F.2d 230, 232 (7th Cir. 1975). Moreover, it has "an absolute duration of ten years" that cannot be extended or tolled. See United States v. Davis, 52 F.3d 781, 782 (8th Cir. 1995) ("The statute mandates that there 'shall be a lien upon the gross estate of the decedent for 10 years from the date of death....' 26 U.S.C. ยง 6324(a)(1). The statute does not say that the government has ten years to file its claim, only that the lien ...

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