In plain terms: the letter says the part of your business the orders affected was "not more than nominal," and treats 10 percent as a line you had to clear. The statute says "partially suspended." It contains no "nominal" test and no percentage; Congress put its numbers in the gross-receipts test, not here. The 10 percent figures appeared in the IRS's Notice on March 1, 2021, after every 2020 quarter had closed. When the IRS had to explain the figure in court, it told the District Court the figure "is not determinative," "isn't an eligibility requirement" and "exists only as a safe harbor," and told the Ninth Circuit that reading it as a floor "erroneously swaps an 'if' with an 'only if.'" This page sets what the letters apply beside what the United States told two federal courts.
The portion of the business affected was not more than nominal (the 10 percent figure applied as a floor).
As stated in the Service's letters, Forms 886-A and memoranda
The statute contains no number
The Suspension Clause, section 2301(c)(2)(A)(ii)(I) of the CARES Act and section 3134(c)(2)(A)(ii)(I) of the Internal Revenue Code, asks whether the operation was "partially suspended." It contains no "nominal" qualifier and no percentage. Congress placed its thresholds in the gross-receipts prong alone, clause (ii)(II) of the same provision. Tri-State Memorial Hospital v. United States, No. 2:25-cv-0181-TOR, ECF No. 38 (E.D. Wash. May 28, 2026) ("Tri-State"), holds that "a 'partial suspension' is a temporary delay, interruption, or termination of a portion an employer's business," that "[t]he language is plain," and that the United States' effort to read "significant" into "more than nominal" is unsupported by the words:1
Defendant attempts to conflate "more than nominal" to suggest that it means "significant" and must "surpass[] basic economic impact that all employers faced during the pandemic." ... However, the plain language and ordinary meaning of partial and nominal do not suggest either of those interpretations.
Tri-State, ECF No. 38, at 10-11
The history of the number
As posted on April 29, 2020 the Service's FAQs contained no "nominal" test and no percentage. The phrase "more than a nominal portion" first appeared in FAQ 30 as revised June 19, 2020. The two 10 percent deeming rules first appeared in Q&A-11 and Q&A-18 of the Notice (Notice 2021-20, 2021-11 I.R.B. 922, at 928, 931), released March 1, 2021, after every 2020 quarter had closed. The Service's current FAQ page states that "[t]he IRS considers 'more than nominal' to be at least 10% of your business" (Ex. GOV-003, at 7), and Chief Counsel memorandum AM 2023-007 requires the employer to "substantiate that the modifications resulted in a reduction ... of not less than 10 percent to fall within the provisions of Notice 2021-20" (Ex. GOV-004, at 12). The appellant's opening brief in the Ninth Circuit records that "the IRS has identified no instance where a claim was approved below the 10 percent cutoff" (Opening Br. at 46, the opening brief of the appellant in Stenson Tamaddon, LLC v. IRS, No. 25-4217 (9th Cir. Sept. 17, 2025)).2
What the United States told two courts
To the District Court, in its opposition and cross-motion for summary judgment in Stenson Tamaddon, LLC v. IRS, No. 2:24-cv-01123-SPL (D. Ariz. Jan. 6, 2025), ECF No. 44 ("Doc. 44"), the United States said this of the figure its letters apply as a floor:
Rather than setting a threshold or a requirement, what the IRS has explained is that in its interpretation, partial suspension means something between a full suspension and no suspension. ... The 10 percent is not determinative for whether an employer has been partially suspended.
Doc. 44 at 14
Effectively, this is a safe harbor; taxpayers whose gross receipts or hours have been impacted at that level can rely on the IRS not denying their ERC claim on that basis. Properly understood, it isn't an eligibility requirement.
Doc. 44 at 14
And the 10 percent line isn't the limit or threshold that [the plaintiff] makes it out to be. Rather, it exists only as a safe harbor; taxpayers can still establish eligibility if, under the facts and circumstances, they demonstrate their business was partially suspended even if it was to a lesser degree.
Doc. 44 at 29-30
The District Court agreed, in its summary-judgment order of June 20, 2025 (ECF No. 49, "Doc. 49"): the figure "is not an exclusionary cut-off point, but rather a safe harbor above which the IRS will consider there to have been a more-than-nominal disruption to business," and is "subject to rebuttal." Doc. 49 at 15, 17, 26.
To the Ninth Circuit, in its answering brief of January 30, 2026 ("Br. for Appellees"), the United States said the same:
The language of the Notice speaks of sufficient—though not necessary—conditions in which it "will be deemed" that more than a nominal portion of a business's operations have been suspended. ... That is a quintessential safe harbor. In reading the 10 percent provision otherwise, [the plaintiff] erroneously swaps an "if" with an "only if," as the District Court correctly explained.
Br. for Appellees at 37-38
And again: "the District Court correctly held that it is a safe harbor rather than a hard floor." Br. for Appellees at 49. In Tri-State the court held that the Notice "provides a method for the test to be met not as a requirement to meet the test." Tri-State, ECF No. 38, at 16.3
The showing against the number
This analysis does not need the safe harbor and does not rely on it, and the showing exceeds it many times over. The closure orders of 2020 terminated whole functions: every dining room (Exs. NY-010, IL-004, TX-003; California's Executive Order N-33-20 (Mar. 19, 2020)); every showroom in twenty-two States (Michigan's Executive Order 2020-42, Ex. SEC-07-022; Exs. NJ-004, NV-014); every elective procedure in more than thirty (Exs. TX-004, NY-005, NJ-006); every gym, theater and salon by name (Exs. NY-010, CT-004, SEC-18-008). The winter orders did so a second time (California's Regional Stay at Home Order (Dec. 3, 2020); Illinois's Executive Order 2020-73 (Nov. 18, 2020); Exs. WA-047, MN-032, PA-028). The capacity orders of 2021 held the remainder to 25 or 50 percent until dates between April 4 and June 30, 2021 (Exs. NJ-050, MA-048, WA-065; New York's Executive Order 202.108 (May 17, 2021); Illinois's Executive Order 2021-12 (June 11, 2021); Michigan's rescission order of June 17, 2021; California's State Public Health Officer order of June 11, 2021). And the third-quarter instruments governed every commute, every entry, every health-care workplace and every indoor premises in eight statewide jurisdictions and more than thirty metropolitan areas.4
The Service administers as the definition of "more than nominal" a number the United States has twice described in court as a safe harbor and "not an eligibility requirement." The number marks where the United States has agreed eligibility is established, not where it begins, and The COVID Project holds the United States to that description.
The statute says "partially suspended" and gives no percentage. The 10 percent figure is a rule the IRS wrote into its Notice on March 1, 2021, and when the IRS had to explain it to two federal courts it called the figure a safe harbor, "not determinative" and not "an eligibility requirement," and said that reading it as a floor "swaps an 'if' with an 'only if.'" If your letter applies 10 percent as a floor, it applies a test the United States has told the courts does not exist. A closed dining room, showroom, procedure line or office is a suspended portion of your business whatever percentage the letter assigns to it.