I’ve heretofore acknowledged the brilliant job the trusty attorney for Sarah S. O’Nan, T. C. Memo. 2024-57, filed 5/15/24, whom I’ll call Louie, did for his young, widowed and broke client, getting her back the $123K IRS took from the proceeds of sale of the OH marital domicile. See my blogpost “Relief = Refund,” 9/18/23.

IRS did beat Louie when STJ Peter (“HB”) Panuthos determined the date whereon arose the lien for late spouse’s unpaid taxes, from which Sarah got innocent spousery. See my blogpost “Love Is Strong As Death,” 6/18/20.

But Louie’s settlement offers omitted the magic number Section 7430, and the magic words “qualified offer.” Even worse, the tax liability at issue wasn’t Sarah’s (she was innocent), so Section 7430(c)(4)(E) says no legals or admins for Louie or Sarah. Even were that not so, Louie’s brilliant equitable argument was a case of first impression, so IRS was justified because Louie was the first to raise the point that, when innocent spousery prevails after a lien arises, the lien secures only what the innocent spouse owes.

Judge Elizabeth A. (“Tex”) Copeland has the bad news for Louie and Sarah, which you’ll have to read for yourself, since the Genius Baristas posted it in a PDF which prohibits dragging-and-dropping.

You can win a case with brilliant strategy (not putting in the mortgage note where it might hurt your client) and a winning original argument (innocent spousery after the lien arises means only what the innocent owes is subject to the lien), and IRS still wins.

Bummer.