Even though Chem-Div Inc., Docket No. 6928-23, filed 7/14/25, substantially prevailed, didn’t unreasonably delay, and its claimed litigation costs were reasonable; and IRS agreed it has no substantial justification for  alleged $2 million ChemDiv’s deficiency, ChemDiv had too much cash in the bank the day it petitioned.

In consequence whereof, Judge Courtney D. (“CD”) Jones finds ChemDiv doesn’t get Section 7430 legals.

ChemDiv’s trusty attorneys assert “… the balance sheet on the date of its Petition was an ‘anomaly,’ attributable to approximately $10,000,000 in cash that had not been distributed. ChemDiv argues that the Court should construe the law in accordance with ChemDiv’s view of Congressional intent since, as ChemDiv claims, it is exactly the type of taxpayer who should be able to recover costs. ChemDiv states that ‘determin[ing] Petitioner’s net worth based on a snapshot in time that is not consistent with its historical and accurate net worth is inconsistent with such Congressional intent.’ Accordingly, ChemDiv submits that its net worth is $5,704,610, and argues that a holding otherwise ‘would be inconsistent with Congress’ intent, the facts of this case, and would reward Respondent’s unreasonable conduct in this case.’” Order, at p. 5.

“Unreasonable” is putting it mildly. Check out Order at pp. 1-2, where “… the revenue agent said that she would not allow the accrual no matter what documentation ChemDiv provided.”

And when an Appeals conference ended with “no litigation risk” for IRS, Order, at p. 2, I wonder who made that assessment.

But the law says what it says.

“The statutes are clear. As applicable in this case, 28 U.S.C. § 2412(d)(2)(B) provides that a “party” means in relevant part a ‘corporation . . . the net worth of which did not exceed $7,000,000 at the time the civil action was filed.’ Section 7430 is a waiver of sovereign immunity and must be strictly construed in the Commissioner’s favor. While we are sympathetic with ChemDiv’s frustration––at having to provide its substantiation to the IRS multiple times and engage in extended proceedings before respondent ultimately conceded nearly the entirety of the case––ChemDiv does not meet the net worth requirement. Accordingly, ChemDiv is not the ‘prevailing party’ within the meaning of section 7430(c)(4)(A)(ii) and is not entitled to recover any costs or fees in this case.” Order, at p. 5. (Citations omitted).

The trusty attorneys, whom I’ll call The Sullivans, get a Taishoff “Good try.” The client gets nothing.