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 the retail trade 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 the retail trade was partially suspended due to the non-essential retail closure and stay-at-home orders of forty-three jurisdictions and their curbside-only and capacity successors, the occupancy, per-square-foot, one-adult-per-household and department-closure orders on essential retail in the remaining jurisdictions, the mall closure orders, the metropolitan health officers' orders, the HHS scarce-materials designation, the FFCRA leave mandate, the land-border notices and entry proclamations, the plant and warehouse closures of the supplier States and the school and child-care closures of every State, each an order from an appropriate governmental authority limiting commerce, travel or group meetings due to COVID-19.275
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 retail capacity orders of every closure State, the masked-entry and exposure-control orders of thirty-four States and the District with their retailer enforcement duties, the mall reopening conditions, the metropolitan face-covering orders, the HHS designation as extended, the land-border notices, the entry proclamations, the FFCRA mandate and the traveler-quarantine orders.
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 continuing capacity and masked-entry orders and the winter re-tightening orders that cut retail to 20, 25, 30 or 50 percent of capacity in thirteen jurisdictions, closed non-essential retail again in New Mexico, conditioned every Ohio retailer's right to be open on a compliance inspection and closed every Ohio store at 10:00 p.m., imposed new face-covering enforcement duties on the businesses of five States, and kept the federal designation, border, entry, leave and eviction instruments in force.
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 winter orders in force on January 1 and the caps in force in twenty-five jurisdictions and the binding retail conditions of four more on March 31, the masked-entry and exposure-control orders of thirty-one jurisdictions, the federal conveyance order and transit directives from February 1, the entry proclamations, the land-border notices, the inbound-testing order, the HHS designation as extended and the eviction moratorium.
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 retail capacity orders of twenty-five jurisdictions and the binding retail conditions of four more in force on April 1 and withdrawn on dates from April 4 to July 1, the masked-entry and exposure-control orders of thirty-one jurisdictions, the unvaccinated-patron masking and verification rules of seven, the State workplace standards, the federal conveyance and transit orders, the entry proclamations, the land-border notices, the HHS designation, the eviction moratorium and the Healthcare Emergency Temporary Standard.
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 the HHS scarce-materials designation effective July 1 through November 15, 2021, the federal conveyance order, the airborne-transmission control on every conveyance and transportation hub, and its security directives, the entry proclamations and land-border notices in force on every day of the quarter, OSHA's Healthcare Emergency Temporary Standard, the Safer Federal Workforce Task Force rules, Hawaii's statewide face-covering requirement, Executive Order 21-05 and Safe Travels, the indoor face-covering orders, airborne-transmission controls with the business as enforcer, reinstated statewide in Louisiana, Oregon, New Mexico, Washington, Illinois, Nevada and the District of Columbia and the masking and verification rules kept for the unvaccinated in California, New York, Connecticut, Rhode Island and Nevada, the face-covering orders of more than forty of the largest cities and counties, the vaccination-proof conditions of New York City, San Francisco, New Orleans and Honolulu, New York's Subpart 66-3 and HERO Act plans, the Cal/OSHA, Oregon OSHA, Virginia and Washington workplace standards, the school, child-care, quarantine, health-care, court and eviction orders on the industry's workforce and counterparties, and the continuing suspension that the closures and caps of the preceding fifteen months had compelled and that their own last steps, taken between March 10 and July 1, 2021, had not yet reversed.276
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 door closed, the floor capped, the department cordoned, the store shut at night, the customer's entry conditioned on a face covering and its companion controls, the goods rationed, the plant closed, the border shut or the school closed.277
The standard
Each finding is established by a preponderance of the evidence, on public records subject to judicial notice, in a de novo proceeding in which the Service's administrative reasoning is of no consequence.278 Each finding stated here has substantial authority: the statutory text of 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, the United States' representations to two federal courts, the Notice's own favorable provisions published in the Internal Revenue Bulletin, and the instruments themselves; the weight of those authorities is substantial in relation to any contrary authority, and a position "supported only by a well-reasoned construction of the applicable statutory provision" has substantial authority on the regulation's own terms.279 A taxpayer who 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, as amended for employment-tax claims made after July 4, 2025, does not reach a claim made with reasonable cause; and a position that applies the words Congress wrote to the Federal Register, the State registers and the county codes is not frivolous under section 6702 or Notice 2010-33, which lists no position concerning the ERC or the meaning of a governmental order.280 Fraud is the Government's burden by clear and convincing evidence, and nothing in a claim founded on the public record supports it.281 The reading stated here was correct when the quarters closed and is correct now; the United States' own representations to two federal courts confirm it.