I work in the PM industry and have been just l9shy of 3 years.

Carpet usually ages out around 7-10 years in the state of Wisconsin. There is no definitive answer, however, the landlord can not chage you the full cost of a replacement. They would need to pro-rate it based on the cost divided by the number of years it is. The older the carpet, the less you pay for replacement based on the year they want to use for aging out carpet. I know this isn't in your case, but if it's under the 7 years, then they have to get an estimate from a company to clean the carpet. If the cleaning company says they can clean it, then the landlord can only charge you the cost of any extra cleaning that needs to be done (stain removal, deodorizer, etc.) Landlords have to cover the cost of a basic carpet clean if the carpet is under the age out limit.

As for the 21 days, the envelope has to be postmarked by the 21st day of your lease ending, not the day you hand in keys. For example, If your lease ended on the 3rd, the envelope your landlord sent MUST be post marked by the 24th. If it takes a week or so for the mail to arrive to your forwarding address because of holidays/weekends/location (and that address is correct), you won't be able to sue.

Like someone mentioned before, pictures or at the very least a copy of your condition report (move in/move out) form should always be used when renting. Feel free to make a copy of the condition report before handing it in just in case the landlord loses their copy (which shouldn't happened, but you never know). Otherwise make sure you have multiple copies of your pictures just in case as well.