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Sandra responds that “Petitioners did not label their settlement
offer as a qualified offer, but an offer to settle the case is an
offer to settle the case.”
We agree with respondent.
The settlement offer on which Sandra relies, sent by
petitioners’ counsel to respondent’s counsel, states as follows:
RE: Michael Downing and Sandra Downing
Tax Years 1994 and 1995
Dear Mrs. Canavello:
In view of the upcoming trial date and the
forthcoming expenses associated with the final
preparations for trial, I have been authorized to make
you a settlement offer. This settlement offer is
intended to cover both years (1994 and 1995) and all of
their liability including tax, interest, and penalties
for those years. This amount is $5,750.00. If you
decide to reject this offer, please do so in writing so
that I may forward such letter to my clients. If you
accept this offer, please call me.
Thank you for your cooperation and assistance in
this matter.
Section 7430(g)(1) defines “qualified offer”. Subparagraph
(C) specifically requires a qualified offer to be “designated at
the time it is made as a qualified offer for purposes of this
section”. Nothing in petitioners’ settlement offer even remotely
satisfies the subparagraph (C) requirement.10 The requirements
10 Compare petitioners’ settlement offer with the qualified
offer set forth in Johnston v. Commissioner, 122 T.C. 124, 126
(2004). We do not mean to suggest that the Johnston offer is the
only way to comply with the requirement of sec. 7430(g)(1)(C),
but there must be something in a putative qualified offer that
(continued...)
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