Recent Tax Case Shows Importance of Proof of Mailing with IRS

A recent ruling by the United States District Court of the Southern District of Ohio in United States v. Greenwald, No. 2:23-cv-04100 (S.D. Ohio 10/23/25) is neither groundbreaking nor is the amount of refund significant, less than $10,000. However, it is a very good reminder that making a qualified settlement offer to the IRS can result in the awarding of attorney’s fees and, most importantly, sending letters to IRS, especially qualified settlement offers, by certified mail is extremely important.

Crystal Greenwald’s lawsuit arose from a refund she was seeking on her 2020 income tax return. The IRS denied most of her refund claim and after she exhausted her administrative remedies, Ms. Greenwald filed suit in December 2023 to recover her refund plus interest. During the administrative appeal of the IRS denial of her refund claim, Ms. Greenwald sent a qualified settlement offer by certified mail to the IRS in May 2023. Readers will recall that under Section 7430(g), a qualified offer is a written offer that: (i) specified the offered amount of the taxpayer’s liability or in this case a refund (without interest), (ii) designated as a “qualified” offer under Section 7430(g), and (iii) is made by the taxpayer after the 30-Day Letter (i.e., final audit report offering IRS Appeal review rights) but before the date that is 30 days before the case is first set for trial. Section 7430 permits the award of reasonable administrative and litigation costs to a taxpayer in an administrative or court proceeding brought against the United States in connection with the determination of any tax, interest, or penalty. Ultimately, the IRS agreed to settle the case by paying Ms. Greenwald the full refund plus interest.

After the agreed resolution of the refund case, Ms. Greenwald, who was represented by a low-income taxpayer clinic, filed a motion for attorney’s fees in the amount of $37,505 as the prevailing party under section 7430. You might question why attorney’s fees and costs of $37,505 for a case involving a refund of $10,000 being handled by a low-income tax clinic. The statute allows the court to award attorney’s fees for pro bono services. The government responded that no qualified offer was ever sent because the IRS had no record of it, and if one was sent, it was sent to the wrong address and therefore was a not a qualified offer.

This is the where the lesson from Greenwald kicks in. Ms. Greenwald and her advisors kept very good records and could prove that a qualified settlement offer (1) had been sent by certified mail, (2) had been received by the IRS, and (3) although the settlement offer had been sent to the wrong address, a PO Box instead of a street address, that the letter was forward to the correct address. Instead of being placed in the IRS file, the settlement offer had simply been lost or misplaced by the IRS. As a result, Ms. Greenwald and the low-income tax clinic were awarded attorney’s fees and costs.

It is not surprising to most tax professionals that the IRS could not find the Ms. Greenwald’s qualified settlement offer letter. In recent years it has become more common to receive an IRS letter stating they received but cannot find a taxpayer’s form or correspondence or can’t find a record although there is evidence it was received by the IRS. I don’t know how many times I have received a response from the IRS that references a date of a correspondence or contact from me that does not correspond to any letter or contact from me.

Greenwald shows how important it is to keep detailed and meticulous records of communication with the IRS and to send correspondence to the IRS in a manner that can be tracked if necessary.

For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact me at jcrouch@meadowscollier.com.