Skip to content
The COVID Project

Industry 08 of 27 · Findings

Dealers and Repair Shops

The conclusions for each of the six quarters and the standard of proof they meet.

SRshowroom and salesSVservice and repairPTpartsDLdelivery, test drives and field…DMmotor-vehicle offices, titles and…FIfinance and insuranceSCmanufacturers' plants, chips and…MKshows and eventsHRhiring, screening, training and…OPoffice, administration and…WFworkforce availabilityCBthe customer base
Build the report for this industrySearch the Library for this industry

Findings

On the statute's words, on Tri-State's definitions, on the United States' own representations and on the orders in the Library, employers in automotive, truck, RV, boat and equipment dealing and repair in the United States had the operation of their trade or business partially suspended during each of the six calendar quarters from the second quarter of 2020 through the third quarter of 2021 due to orders from appropriate governmental authorities limiting commerce, travel and group meetings due to COVID-19. The Service's contrary account of the period is not a contest of weight; it is a description of a period that did not occur.

The second quarter of 2020

During the calendar quarter beginning April 1, 2020 and ending June 30, 2020, the operation of the trade or business of employers in this industry was partially suspended due to the showroom-closure, remote-sales and appointment orders of twenty-three States and the District of Columbia and of the largest counties of Texas and California, the occupancy and distancing conditions of the open States, the closure or restriction of every State's motor-vehicle agency under the emergency orders, the closure of the plants of Michigan, Pennsylvania and Mexico, the border, entry and leave instruments of the United States, and the capacity, appointment, test-drive and delivery conditions of the reopening orders, each an order from an appropriate governmental authority limiting commerce, travel or group meetings due to COVID-19.

The third quarter of 2020

During the calendar quarter beginning July 1, 2020 and ending September 30, 2020, that operation was partially suspended due to the capacity, appointment and test-drive conditions of the reopening orders, the statewide face-covering orders of thirty-three States, airborne-transmission controls on every indoor workplace, the State workplace standards, the motor-vehicle appointment and extension instruments, the traveler quarantines, the entry proclamations and border notifications, and the paid-leave mandate.

The fourth quarter of 2020

During the calendar quarter beginning October 1, 2020 and ending December 31, 2020, that operation was partially suspended due to the winter re-tightening orders that re-closed or re-capped showrooms and service departments in California, Colorado, Illinois, Michigan, Minnesota, Nevada, New Mexico, Pennsylvania, Washington and Los Angeles County, the second closure of the Illinois title offices, the State workplace rules of Michigan and California, Texas's GA-32, and the continuing capacity, exposure-control, motor-vehicle and entry instruments.

The first quarter of 2021

During the calendar quarter beginning January 1, 2021 and ending March 31, 2021, that operation was partially suspended due to the continuing winter orders through their stepped expiry, the federal workplace infection-prevention order (masks and distancing) and twenty-five-percent occupancy cap on every fleet customer's office, the airborne-transmission controls of the conveyance order and the rail order, the entry proclamations, the State workplace standards, the Texas title and registration waiver, and the capacity tiers that still listed "automobile dealerships" at fifty percent in Los Angeles County.

The second quarter of 2021

During the calendar quarter beginning April 1, 2021 and ending June 30, 2021, that operation was partially suspended due to the capacity, exposure-control and dealership orders in force to their expiry between April 4 and July 1, 2021, Kentucky's dealership requirements to June 11, the Texas waiver to April 14, the Cal/OSHA, Virginia, Oregon, Washington and Michigan workplace standards, Honolulu's tier conditions, the federal workplace, conveyance, entry, border and port orders, and the motor-vehicle and notarial instruments in force through the quarter's last day.

The third quarter of 2021

During the calendar quarter beginning July 1, 2021 and ending September 30, 2021, that operation was partially suspended due to Hawaii's proclamations and Honolulu's emergency orders naming "New and used car and truck dealerships," the Cal/OSHA, Virginia, Oregon and Washington workplace standards and the New York exposure prevention plans, the exposure-control (universal indoor face-covering), quarantine and vaccination orders of ten States and a dozen metros from July 17, 2021 onward, the federal workplace, contractor, conveyance, rail, port, border and entry orders in force on every day of the quarter, the motor-vehicle, notarial and court instruments of the States, and the emergency and regulatory instruments of the remaining States, tribes and territories, in the circumstances of the supply interruption that the Commerce Department put in the Federal Register and the Federal Reserve recorded in the quarter itself, through which the plant, border, port and rail orders reached the industry's inventory.

In each quarter

In each quarter the orders caused a temporary delay, interruption or termination of a more than nominal portion of the industry's operations; in each quarter the suspension existed "during the calendar quarter"; and in each quarter, but for the orders, no law required the change.256

Each finding is established by a preponderance of the evidence, on public records subject to judicial notice, in a de novo proceeding.257 Each position taken in this analysis has substantial authority: the statutory text, four enactments of Congress, the Supreme Court's canons of construction and causation, Tri-State's holdings on the United States' agreed definitions, the District Court's holdings in Stenson Tamaddon, LLC v. IRS, the United States' representations to two federal courts, and the instruments themselves.258 An employer that assembled the orders that governed its industry and applied the statute's words to them acted with reasonable cause and in good faith under section 6664(c); the erroneous-claim penalty of section 6676 does not reach such a claim; and a position that applies the words Congress wrote to the Federal Register, the State registers and the emergency orders of the counties is not frivolous under section 6702 or Notice 2010-33.259 Fraud is the Government's burden by clear and convincing evidence, and nothing in a claim founded on the public record supports it.260

  1. CARES Act § 2301(c)(2)(A)(ii)(I), 134 Stat. at 348 (Ex. LAW-001); I.R.C. § 3134(c)(2)(A)(ii)(I), 135 Stat. at 177 (Ex. LAW-003); Tri-State at 9, 17-19; the six quarters and function by function, above. ↩
  2. Lewis v. Reynolds, 284 U.S. 281, 283 (1932) (Ex. LAW-020); United States v. Janis, 428 U.S. 433, 440 (1976) (Ex. LAW-042); Welch v. Helvering, 290 U.S. 111, 115 (1933) (Ex. LAW-021); Delaney v. Commissioner, 743 F.2d 670, 671 (9th Cir. 1984) (Ex. LAW-070); Fed. R. Evid. 201 (Ex. LAW-024); Kater v. Churchill Downs Inc., 886 F.3d 784, 788 n.3 (9th Cir. 2018) (Ex. LAW-023); Daniels-Hall v. National Education Ass'n, 629 F.3d 992, 998-99 (9th Cir. 2010) (Ex. LAW-073); Clark v. Governor of New Jersey, slip op. at 8 n.5 (Ex. LAW-032); Doc. 44 at 22-23. ↩
  3. Treas. Reg. § 1.6662-4(d)(2)-(3) (Ex. LAW-036); Treas. Reg. § 1.6662-3(b)(3) (Ex. LAW-035); Exs. LAW-001, LAW-002, LAW-003, LAW-004; Connecticut National Bank v. Germain, 503 U.S. 249, 253-54 (1992) (Ex. LAW-010); Russello v. United States, 464 U.S. 16, 23 (1983) (Ex. LAW-014); EEOC v. Abercrombie & Fitch Stores, Inc., 575 U.S. 768, 774 (2015) (Ex. LAW-013); Burrage v. United States, 571 U.S. 204, 210-13 (2014) (Ex. LAW-015); Gross v. FBL Financial Services, Inc., 557 U.S. 167, 176 (2009) (Ex. LAW-016); Bostock v. Clayton County, 590 U.S. 644, 656 (2020) (Ex. LAW-012); Tri-State at 9-19; Doc. 49 at 15-17, 26-27; Doc. 44 at 14, 19, 24, 30; Br. for Appellees at 37-38, 41, 49. ↩
  4. 26 U.S.C. § 6664(c)(1) (Ex. LAW-039); 26 U.S.C. § 6676(a) (Ex. LAW-040); Pub. L. 119-21, § 70605(f)-(g), 139 Stat. at 288-89 (Ex. LAW-005); 26 U.S.C. § 6702(a) (Ex. LAW-041); Notice 2010-33, 2010-17 I.R.B. 609 (Ex. LAW-026). ↩
  5. 26 U.S.C. § 7454(a) (Ex. LAW-038); Tax Ct. R. 142(b). ↩