Notice 2021-20

The United States' own description of the Notice

Notice 2021-20 is, on the United States' own theory, non-binding guidance that "lacks the force of law," whose 10 percent figure is "a safe harbor" and "not an eligibility requirement," and whose provisions "merely construe" a statute that "will control whether a refund is warranted." The United States said so in a cross-motion for summary judgment, obtained judgment on it, and repeated it in the Ninth Circuit.¹ This analysis holds the United States to that theory in both directions. Every Notice gloss that narrows the Suspension Clause has no force of law and cannot be the rule of decision against any employer; where a gloss conflicts with the text, the text governs. Where the Notice's own words help an employer, the Service is bound by them by its own directive "to the same extent as a revenue ruling" and by the positions on which it obtained judgment. And the United States cannot describe the Notice as an optional safe harbor when the Notice is challenged and apply it as a binding rule of exclusion when a claim is examined. That inconsistency is named here plainly, because the Service's letters, Forms 886-A, Chief Counsel memoranda and public page do exactly that, and the United States has furnished, in its own briefs, every sentence needed to answer them.

The record of those statements is public. "Doc. 44" is the United States' 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. 49" is the summary-judgment order of June 20, 2025, ECF No. 49; "Tr." is the transcript of the July 16, 2024 preliminary-injunction hearing in the same case; "Compl." is the complaint, ECF No. 1 (May 14, 2024); "Opening Br." is the opening brief of the appellant, an ERC advisory firm, in No. 25-4217 (9th Cir. Sept. 17, 2025); "Br. for Appellees" is the answering brief of the United States in that appeal (Jan. 30, 2026); and Tri-State is Tri-State Memorial Hospital v. United States, No. 2:25-cv-0181-TOR, ECF No. 38 (E.D. Wash. May 28, 2026), the order declining to dismiss a hospital's refund suit. Throughout this page the "Service" is the Internal Revenue Service; the "United States" is the Government as litigant; the "Notice" is Notice 2021-20, 2021-11 I.R.B. 922; the "Suspension Clause" is the operative statutory text; and the "Library" is this site's Orders Library. Where a quotation from the United States names the plaintiff, the name is replaced by "[the plaintiff]".

What a safe harbor is

The United States' own authority defines the term: a rule that "was nothing more than a safe harbor, a nonexclusive objective test for employers to use in determining whether they could be certain of qualifying," as distinct from "the exclusive means" of qualifying.² A safe harbor is by definition nonexclusive: a claim that does not use it is judged on the statute. When the Service writes a safe harbor it labels it one, uses the word "permits," and says it is optional; Rev. Proc. 2021-33, § 3.02, provides that "[a]n employer is not required to apply this safe harbor."³ Notice 2021-20's 10 percent paragraphs say "will be deemed" and nothing else; the United States nonetheless told two courts they are "a quintessential safe harbor" and "not an eligibility requirement," and this analysis holds it to that account.⁴ The District Court held the figure interpretive only because it is a rebuttable rule of thumb: under Hoctor, "the use of a number as a rule of thumb to guide the application of a general norm will often be legitimately interpretive," and a department that "would therefore presume, subject to rebuttal," a figure "would have been on stronger ground"; the court held that "the ten-percent threshold is 'subject to rebuttal' because the IRS, in evaluating the 'facts and circumstances'" retains discretion.⁵ That hinge is what this analysis holds the United States to: a number "subject to rebuttal" cannot be applied as a floor. Appalachian Power supplies the other half: "[i]f an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties ... to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency's document is for all practical purposes 'binding.'"⁶ The United States chose the first description in two federal courts. It cannot have the second in its letters.

Every representation, pinned

The United States made the following statements in writing to the District of Arizona, and the court entered judgment on them.

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. ... Effectively, this is a safe harbor ... Properly understood, it isn't an eligibility requirement. ... [I]t does not impose a threshold or place a limitation on receiving the credit.

Doc. 44 at 14

The same page states that a business "could have been partially suspended, under the facts and circumstances, even if only suffering, say, a six percent reduction in gross receipts."⁷

Notice 2021-20 is merely guidance. ... The Notice, as explained in Part __ [sic] below, lacks the force of law. ... The Notice itself does not require [the plaintiff] or its clients to do anything or prevent them from doing anything.

Doc. 44 at 19

If Notice 2021-20 did not exist, the IRS would still have a duty to approve or deny a claim for refund under I.R.C. § 3134 using its own interpretation of its terms and, in any refund suit, the courts would still determine whether the IRS's interpretation was correct or not. ... Whether Notice 2021-20 exists or not, the statute will control whether a refund is warranted.

Doc. 44 at 24 & n.4

The same passage states that the reasons given in the Service's letters "cannot give anything the force of law," and adds: "One would hope that the IRS is indeed evaluating ERC claims consistent with the explanations it has offered the public."⁸ The United States wrote that the Service "consistently refers to the information provided as guidance"; that "the IRS did not say that a taxpayer cannot qualify for the ERC if they have been impacted less than 10 percent"; that the 10 percent line "isn't the limit or threshold that [the plaintiff] makes it out to be" but "exists only as a safe harbor"; that eligibility "is done on a case-by-case basis"; that "the United States is not arguing that the IRS interpretation has the force of law or is entitled to deference"; and that the Notice's "taxpayer friendly" interpretations include "a supply chain exception" and "a safe harbor for partial suspension."⁹

The District Court's acceptance

The District Court accepted each of those representations and rested its judgment on them: "This Court agrees" that the provision is a safe harbor; "the text itself provides a baseline ... but it still contemplates the IRS exercising discretion in determining if other employers might nonetheless qualify based on additional 'facts and circumstances'"; "So long as the agency ultimately retains its discretion with respect to application of this 'nominal effects' test, this weighs against a finding that it constitutes a legislative rule"; "the ten percent standard 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"; "a practical binding effect is not equivalent to a legally binding effect"; and "the Notice carries no force of law and is entitled to no deference."¹⁰ The court also wrote that it was "concerned by the prospect of something labeled as a 'policy statement' being practically applied as though it were a binding rule."¹¹

The United States in the Ninth Circuit

In the Ninth Circuit the United States wrote that the Notice is "nonbinding guidance" that "merely republish[es] FAQs," that it "does not have the force of law in this respect (or any other)," that "no party contends that the Notice is binding in this stronger sense," that the only floor the text supplies is "more than a 'nominal' or de minimis suspension," that the 10 percent provision states "sufficient—though not necessary—conditions," is "a quintessential safe harbor" and "a safe harbor rather than a hard floor," that reading it as a floor "erroneously swaps an 'if' with an 'only if,'" that the substantiation guidance "is not mandatory" and "identifies what is sufficient—without dictating what is necessary," that examiners "can still exercise their discretion to conclude that a taxpayer has substantiated its eligibility for the ERC using other documentation," that "a business may be suspended 'due to' a government order addressing a third party," that in a refund suit "the Notice would be reviewed under the same standards that govern judicial review of any other agency rule," that "[the plaintiff] is free to assist its clients whose ERC claims have been disallowed to bring such refund suits challenging the Notice," and that "[t]here is no question of deference here."¹²

The hearing, Tri-State and the other courts

At the preliminary-injunction hearing counsel for the United States told the District Court that § 6402(a) "absolutely imposes a duty upon the IRS to pay out a refund once it's been determined a taxpayer is entitled to a refund" and that "[t]he United States does not disagree that once a refund has been determined to be appropriate, the IRS must pay it out."¹³ In Tri-State the United States agreed on the definitions of "suspension" and "due to," asked the court to dismiss a complaint that did not plead the 10 percent figure, and was refused: the Notice "provides a method for the test to be met not as a requirement to meet the test."¹⁴ In the Court of Federal Claims: "The government has not argued that IRS Notice 2021-20 sets out binding interpretations of the governing statute."¹⁵ In the Western District of Michigan: "The statute does not define order, partial suspension, or the causation requirement."¹⁶

The representations in one table

Against those representations, the Service's practice

The Service's own instruments apply the Notice as law and the figure as a floor. Each sentence below is the Service's; the answer beneath each is the United States'.

[An employer] needs to substantiate ... a reduction ... of not less than 10 percent to fall within the provisions of Notice 2021-20.

Office of Chief Counsel, IRS, Mem. AM 2023-007, at 12 (Oct. 18, 2023)

The IRS considers "more than nominal" to be at least 10% of your business. ... We consider "more than a nominal effect" to be at least a 10% reduction in your ability to provide goods or services in the normal course of your business.

IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders," Q5/A5 (added Sept. 14, 2023)

[The employer] did not substantiate how ... modifications resulted in ... [a] reduction ... of not less than 10 percent.

Form 886-A, as quoted in Opening Br. at 43-46 (citing 3-ER-396)

Notice 2021-20 governs the ERC for all periods.

Form 886-A, as quoted in Compl. ¶ 71

Our records indicate there were no government orders related to COVID-19 in effect during the quarter(s) you claimed ERC which could have fully or partially suspended your trade or business.

Letter 105C, form sentence (2024)

A number that by the United States' own account "isn't an eligibility requirement" cannot be the ground on which any employer's claim is decided. A letter that decides a claim on the 10 percent figure, on an "essential" designation, on a "recommendations" label, on the addressee of an order or on a "comparable operations" test applies as law what the United States told two courts is not law, and applies as a floor what it told two courts is a ceiling of its own generosity. The position is not a close call on a contested record; it is wrong, and the United States has said so in two courts.

The first direction: no narrowing gloss can be the rule of decision

Because the Notice "lacks the force of law" and "the statute will control," the "essential" framing of Q&A-11, the customer exclusion of Q&A-13, the "voluntary" rule of Q&A-14, the "comparable operations" telework rule of Q&A-15 and its four factors in Q&A-16, the "more than a nominal effect" requirement of Q&A-17 and Q&A-18, the categorical masks-and-aisles sentence, the two 10 percent deeming rules, the "jurisdiction over the employer's operations" sentence of Q&A-10 and the treatment of declarations are each the Service's interpretation and nothing more.²¹ None can be the rule of decision against any employer. Where any conflicts with the text, the text governs; the statute page states the text's answer to each, and the section Passages that narrow the statute below states it again beside the Notice's own words.

The second direction: the favorable text binds the Service

The Service's own directive provides that "all notices and announcements issued by the Service and published in the IRB are considered authority and the Service is bound by the substantive or procedural guidance provided in a notice or announcement to the same extent as a revenue ruling or revenue procedure," and that "Chief Counsel attorneys may not rely on case law to take a position that is less favorable to a taxpayer in a particular case than the position set forth in a publication."²² The Bulletin "is the authoritative instrument of the Commissioner of Internal Revenue for the publication of official rulings and procedures," and "[t]axpayers generally may rely upon Revenue Rulings published in the Bulletin in determining the tax treatment of their own transactions."²³ The Tax Court has refused to let the Commissioner's counsel "argue the legal principles of those opinions against the principles and public guidance articulated in the Commissioner's currently outstanding revenue rulings," because "taxpayers should be entitled to rely on revenue rulings in structuring their transactions, and they should not be faced with the daunting prospect of the Commissioner's disavowing his rulings in subsequent litigation."²⁴ The United States itself told the Ninth Circuit that rules, "though they can be either interpretive or legislative," are "binding on the agency."²⁵

The Notice was published at 2021-11 I.R.B. 922 and carried into every 2021 quarter by Notice 2021-23 and Notice 2021-49.²⁶ The passages that bind the Service are these; each is set out in full, with the Service's words and the United States', in the section Passages that help employers below.

• Q&A-10 (at 927-28): the list of governmental orders includes "[a] State's emergency proclamation that residents must shelter in place," "[a]n order from a local official imposing a curfew on residents that impacts the operating hours of a trade or business," and "[a]n order from a local health department mandating a workplace closure for cleaning and disinfecting," each "without regard to the level of enforcement." A stay-at-home order addressed to the public is on the Service's own list, and the United States' sentence to the District Court that treats orders "directed at business operations (operational hours, space, etc.)" as "considered" while excluding the orders addressed to the public that its own Q&A-10 lists cannot be squared with the Notice the United States was asking the court to uphold.
• Q&A-12 (at 928-29): "[a]n employer may be considered to have a full or partial suspension of operations due to a governmental order if ... the business's suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations," which is the statute's causation logic applied to a third-party order and does not stop at suppliers.
• Q&A-15's second paragraph and Q&A-17 (at 929, 930): "if the closure of the workplace causes the employer to suspend business operations for certain purposes, but not others, it may be considered to have a partial suspension"; a workplace "closed due to a governmental order for certain purposes, but ... open for other limited purposes" is partially suspended; a compelled modification "is considered to be a partial suspension of business operations due to a governmental order"; Example 2 holds that an employer that "resumed all categories of its business operations" remains partially suspended while a spacing order is in force; Example 4 finds a hospital the order treats as essential partially suspended by the order that "prevents Employer H from performing elective and non-urgent medical procedures."
• Q&A-18's first paragraph (at 930): "limiting occupancy to provide for social distancing, requiring services to be performed only on an appointment basis ..., changing the format of service ..., or requiring employees and customers to wear face coverings" are modifications "required by a governmental order as a condition of reopening a physical space for business or service to the public"; those are the third-quarter 2021 instruments in the Service's own words.
• Q&A-19 (at 931): "[a]n employer that reduces its operating hours due to a governmental order is considered to have partially suspended its operations since the employer's operations have been limited by a governmental order," with no nominal qualifier and with an indirect sanitation order as its own example.
• Q&A-20 and Q&A-21 (at 931-32): a multi-location employer subject to orders "in some, but not all, jurisdictions" is "an eligible employer with respect to all of its operations in all locations," and the suspension of one member of an aggregated group suspends every member "even if another member of the group is in a jurisdiction that is not subject to a governmental order."
• Q&A-22 and Q&A-16(4) (at 932, 930): "[a]n employer with business operations that are fully or partially suspended due to a governmental order during a portion of a calendar quarter is an eligible employer for the entire calendar quarter," and "some adjustment period is expected" after an order operates, a "significant delay ... in moving operations" being itself "a partial suspension during that transition period."
• The facts-and-circumstances language: the Notice says "under the facts and circumstances" in Q&A-11, -12, -17 and -18; the United States represented that the Notice "contemplates the IRS exercising discretion in determining if other employers might nonetheless qualify"; and the Service's own page says "Eligibility depends on specific facts and circumstances."
• Notice 2021-49 carried every one of those passages into the third quarter of 2021 on August 4, 2021.

The Service is bound by each of them, and this analysis invokes each as an additional, affirmative ground: the Notice's own words state the result the statute already requires.

The third direction: the inconsistency named

The United States cannot describe the Notice as an optional safe harbor when the Notice is challenged and apply it as a binding rule of exclusion when a claim is examined. Under the framework Tri-State applied after Loper Bright, an agency reading earns weight only by its "thoroughness, consistency, and persuasiveness"; a reading described one way in court and applied another way in letters has none of the second quality.²⁷ The Service's 10 percent position has three faces: a "facts and circumstances" test in the Notice, a "safe harbor" in two federal courts and a floor in every examination the record discloses. An interpretation with three faces has no "power to persuade." The chronology fixes the point: as posted on April 29, 2020 the Service's FAQs contained no "nominal" test and no percentage; the words "more than a nominal" first appeared on June 19, 2020; and the two 10 percent deeming rules, the four comparable-operations factors, the masks-and-aisles sentence and the broadened customer exclusion first appeared in the Notice on March 1, 2021.²⁸ The same is true of the "essential" gloss, which the Notice's own first sentence confines to an employer whose order "allows all of the employer's operations to remain open" (Q&A-11, at 928), which the United States described to the District Court as a facts-and-circumstances inquiry into whether "more than a nominal portion of its business operations are suspended by governmental order" (Doc. 44 at 13), and which the Service's page and Publication 5887 administer as a rewrite of the clause to "shut down due to a government order"; of the stay-at-home gloss, which the Notice's own list contradicts; and of the customer exclusion, which the Service confined on April 29, 2020 to "an essential business that is not required to close its physical locations" and extended on March 1, 2021 to every employer and any "reduction in demand," in the same document the United States describes as adding nothing to the statute.²⁹

Party-opponent admissions

The statements quoted on this page are statements of the United States made by the Department of Justice in its representative capacity, and they are admissible against the United States in any refund suit. A statement offered against an opposing party that the party made "in an individual or representative capacity," "manifested that it adopted or believed to be true," authorized, or made through its agent within the scope of the relationship is not hearsay.³⁰ Government briefs filed in other federal cases are adoptive admissions: "The Justice Department here has, as clearly as possible, manifested its belief in the substance of the contested documents; it has submitted them to other federal courts to show the truth of the matter contained therein"; the assertions of the government in formal litigation "establish the position of the United States and not merely the views of its agents who participate therein"; and "[t]he government cannot indicate to one federal court that certain statements are trustworthy and accurate, and then argue to a jury in another federal court that those same assertions are hearsay."³¹ A publication of "the relevant and competent section of the government" is "an admissible party admission," and "statements of fact contained in a brief may be considered admissions of the party in the discretion of the district court."³²

Judicial estoppel available

"First, a party's later position must be 'clearly inconsistent' with its earlier position. ... Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position ... A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped."³³ The Ninth Circuit applies the doctrine where the earlier court "relied on, or 'accepted,'" the party's previous inconsistent position, holds it "appropriate to bar litigants from making incompatible statements in two different cases," applies the New Hampshire factors to the United States, and confines the doctrine to positions that are not the product of "inadvertence or mistake."³⁴ A briefed, repeated position accepted by the District Court, written on the face of Doc. 49 ("This Court agrees"; "As the Government puts it"; "not an exclusionary cut-off point"; "no force of law and is entitled to no deference"), is the opposite of inadvertence.³⁵ Judicial estoppel is available against the United States in every refund suit in which the Service's letter rests on a gloss the United States told the District of Arizona and the Ninth Circuit has no force of law. The positions on which the United States obtained judgment are set out above, pinned, so that any employer whose claim was decided on such a gloss can hold the United States to them.

How this analysis uses the Notice

Accordingly, this analysis reads eligibility word by word from the Suspension Clause; treats every Notice provision as the United States' interpretation, binding on the Service where it helps an employer and without force where it narrows the text; counts every order limiting commerce, travel or group meetings from every appropriate authority, whatever its addressee, and counts counterparty orders as orders under the statute's words and under Q&A-12's own reasoning; applies but-for causation on the United States' agreed definition; treats any real portion of an operation as a "portion," any compelled delay or interruption as a "suspension," and the 10 percent figure as the United States' safe harbor that the function-by-function showings in the twenty-seven industry analyses exceed many times over as a matter of the orders' own terms; answers the form Letter 105C sentence with the inventory of orders in force in every quarter; and never presents a gloss the United States has represented has no force of law as a reasonable alternative to the text.

Passages that help employers, and how the Service is bound to them

The Service published Notice 2021-20 in the Internal Revenue Bulletin, carried it forward to every 2021 quarter by Notice 2021-23 ("the applicable provisions of Notice 2021-20 ... continue to apply to employee retention credits for the first and second calendar quarters of 2021") and Notice 2021-49 ("the rules set forth in Notice 2021-20 and Notice 2021-23 ... continue to apply for the third and fourth calendar quarters of 2021"), and its own Chief Counsel Directives Manual provides that "the Service is bound by the substantive or procedural guidance provided in a notice or announcement to the same extent as a revenue ruling or revenue procedure" and that Chief Counsel attorneys "may not rely on case law to take a position that is less favorable to a taxpayer in a particular case than the position set forth in a publication."³⁶ The United States, having obtained judgment on the representation that the Notice is "merely guidance" that "lacks the force of law," that "the statute will control whether a refund is warranted" and that the Notice is "nonbinding guidance" as to which "[t]here is no question of deference," is held to the positions on which it prevailed.³⁷ The passages below therefore operate in one direction only: they are the Service's own words, they bind the Service by its own directive, and they restate what the statute already provides. Each is quoted from the Bulletin; the verbatim text of Q&A-10 through Q&A-22 is in the Q&A panel on this page.

Q&A-10: the list of governmental orders, "without regard to the level of enforcement"

"Orders, proclamations, or decrees from the Federal government or any State or local government" qualify, and whether they do "is determined without regard to the level of enforcement of the governmental order"; the Service's own list includes "[a] State's emergency proclamation that residents must shelter in place for a specified period," "[a]n order from a local official imposing a curfew on residents that impacts the operating hours of a trade or business for a specified period," and "[a]n order from a local health department mandating a workplace closure for cleaning and disinfecting."³⁸ A stay-at-home order addressed to the public is on the Service's own list. The United States' statement to the District Court that orders "directed at business operations (operational hours, space, etc.) would also be considered but not stay-at-home orders to the public" cannot be squared with the Notice the United States was asking that court to uphold; the Service's current FAQ page still lists the shelter-in-place proclamation and the curfew.³⁹ Q&A-10 also supplied the District Court's reading of "appropriate" as "especially suitable or compatible," which locates the authority's suitability in its power over the commerce, travel or meetings it limited.⁴⁰ Q&A-10's two narrowing sentences, "relate to the suspension" and "jurisdiction over the employer's operations," are answered below.

Q&A-12: suppliers suspended by order

"An employer may be considered to have a full or partial suspension of operations due to a governmental order if, under the facts and circumstances, the business's suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations."⁴¹ This is the Service's own recognition that an order addressed to a third party suspends the employer "due to the governmental order," and the United States repeated it to the Ninth Circuit: "a business may be suspended 'due to' a government order addressing a third party."⁴² The logic is the statute's causation logic and it does not stop at suppliers; every counterparty order in the Library is an order under the statute's words and under this Q&A's own reasoning. The Chief Counsel memorandum that later rewrote Q&A-12 as "a narrow, limited exception" is answered in the final section of this page.

Q&A-17 and Q&A-15's second paragraph: closed "for certain purposes, but not others"

Q&A-15's second paragraph provides that "if the closure of the workplace causes the employer to suspend business operations for certain purposes, but not others, it may be considered to have a partial suspension of operations due to the governmental order," and Q&A-17 provides that a workplace "closed due to a governmental order for certain purposes, but ... open for other limited purposes" is partially suspended, and that where operations "are subject to modification due to a governmental order (for example, to satisfy distancing requirements), such a modification of operations is considered to be a partial suspension of business operations due to a governmental order."⁴³ Examples 2 and 3 of Q&A-15 find partial suspension wherever equipment, a laboratory or persons who cannot be served remotely were reached. Example 2 of Q&A-17 holds that an employer that "resumed all categories of its business operations" remains partially suspended while a spacing order is in force; Example 4 finds a hospital that the order treats as essential partially suspended by the order that "prevents Employer H from performing elective and non-urgent medical procedures."⁴⁴ The words "for certain purposes, but not others" are the statute's word "partially," and they are the frame for every function-by-function analysis on this site. Q&A-18's first paragraph then describes the modifications Q&A-17 contemplates: "limiting occupancy to provide for social distancing, requiring services to be performed only on an appointment basis (for businesses that previously offered walk-in service), changing the format of service (for example, restrictions on buffet or self-serve, but not prepackaged or carry-out), or requiring employees and customers to wear face coverings," each "required by a governmental order as a condition of reopening a physical space for business or service to the public."⁴⁵ Those are the third-quarter 2021 instruments, the capacity steps, the appointment-only mandates, the format restrictions and the face-covering orders, stated in the Service's own words as orders limiting commerce. The narrowing sentences that follow in Q&A-18 are answered below.

Q&A-19: reduced operating hours

"Yes. An employer that reduces its operating hours due to a governmental order is considered to have partially suspended its operations since the employer's operations have been limited by a governmental order."⁴⁶ The Service equates "limited" with "partially suspended" with no nominal qualifier, and its own example is an indirect order: a local health department's sanitation mandate that led a food processor to reduce its daily hours by five "[i]n order to comply with the governmental order."

Q&A-20: multiple locations

Employers subject to orders "requiring full or partial suspension of operations in some, but not all, jurisdictions are considered to have a partial suspension of operations," and such an employer "would be an eligible employer with respect to all of its operations in all locations for calendar quarters during which the employer's operations are partially suspended whether or not the employer voluntarily adopts consistent measures for its business operations in other jurisdictions."⁴⁷

Q&A-21: aggregated groups

"[I]f the operations of one member of the aggregated group are suspended due to a governmental order, then all members of the aggregated group are considered to have their operations partially suspended, even if another member of the group is in a jurisdiction that is not subject to a governmental order."⁴⁸

Q&A-22: eligible "for the entire calendar quarter"

"An employer with business operations that are fully or partially suspended due to a governmental order during a portion of a calendar quarter is an eligible employer for the entire calendar quarter."⁴⁹ In the Suspension Clause, "during the calendar quarter" modifies "suspended," and the Service reads it that way. Q&A-16's fourth factor recognizes that a suspension an order caused persists for a period after the order operates: "some adjustment period is expected," and a "significant delay ... in moving operations" is itself "a partial suspension during that transition period"; the two-week illustration is offered "for example."⁵⁰ Together the two passages are the Notice's own statement of continuing suspension: the suspension the order caused continues, because of it, for the period its compelled dismantling took to reverse, and the industry analyses prove that period from the orders' own terms. Q&A-22's own example places the start of qualified wages at March 13, 2020, "the effective date of section 2301 of the CARES Act."⁵¹

The facts-and-circumstances language

The Notice says "under the facts and circumstances" in Q&A-11, -12, -17 and -18 and "based on the facts and circumstances" in Q&A-18.⁵² The United States represented that the Notice "contemplates the IRS exercising discretion in determining if other employers might nonetheless qualify based on additional 'facts and circumstances,'" as the District Court put it and as Tri-State quoted, and that a business "could have been partially suspended, under the facts and circumstances, even if only suffering, say, a six percent reduction in gross receipts."⁵³ The Service's own release and page say "Eligibility depends on specific facts and circumstances" and "Whether a business was fully or partially suspended depends on its specific situation."⁵⁴ A Letter 105C reciting that no government orders were in effect was issued, by the National Taxpayer Advocate's account, without an examination, which is the opposite of a facts-and-circumstances determination.⁵⁵

Rev. Proc. 2021-33, § 3.02: what the Service writes when it means a safe harbor

"An employer is not required to apply this safe harbor."⁵⁶ When the Service writes a safe harbor it labels it one, uses the word "permits," and says it is optional. Notice 2021-20's 10 percent paragraphs say "will be deemed" and nothing else; the United States nonetheless told two courts they are "a quintessential safe harbor" and "not an eligibility requirement." This analysis holds the United States to that account.⁵⁷

Notices 2021-23, 2021-49 and 2021-65: the rules carried into every 2021 quarter

Section 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 did not touch the Suspension Clause, and Notice 2021-23 provides that "the applicable provisions of Notice 2021-20 addressing rules that were not changed by section 207 of the Relief Act, continue to apply to employee retention credits for the first and second calendar quarters of 2021."⁵⁸ On August 4, 2021 the Service carried the suspension rules into the third quarter of 2021: the rules of Notices 2021-20 and 2021-23 "continue to apply for the third and fourth calendar quarters of 2021," and the Suspension Clause is restated for those quarters "[a]pplying the same rules as for the first two quarters of 2021."⁵⁹ In December 2021 the Service wrote that those rules "no longer apply for the fourth calendar quarter of 2021," which is a statement that they applied for the third.⁶⁰ A letter saying no orders were in effect in the third quarter of 2021 describes a quarter the Service's own guidance did not contemplate.

Passages that narrow the statute, and the statutory answer

Each gloss below has no source in the Suspension Clause, which reads in every enactment: "the operation of the trade or business ... is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019 (COVID-19)."⁶¹ The United States has represented that the Notice "lacks the force of law" and that "the statute will control"; the District Court held that "the Notice carries no force of law and is entitled to no deference."⁶² This analysis states the statutory answer and never presents the gloss as an alternative.

Q&A-11: the "essential" framing and the first 10 percent deeming rule

The statute does not ask whether an employer was "essential." The designation was the premise of the conditions the orders imposed on essential employers (occupancy, hours, protocols, testing, distancing, visitor bans, elective-procedure suspensions), never an exemption from them. Q&A-11's own first sentence excludes only an employer whose order "allows all of the employer's operations to remain open"; its second sentence returns the question to "the facts and circumstances"; and its last sentence treats a compelled closure "for a period of time during normal working hours" as a partial suspension.⁶³ Q&A-17's Example 4 finds a hospital the order treats as essential partially suspended. The United States described Q&A-11 to the District Court as a facts-and-circumstances inquiry into whether "more than a nominal portion of its business operations are suspended by governmental order."⁶⁴ The Service's public materials administer it otherwise.

… shut down due to a government order …

IRS Publication 5887 (Rev. 12-2024), checklist

The first 10 percent deeming rule sits in Q&A-11's second paragraph: "Solely for purposes of this employee retention credit, a portion of an employer's business operations will be deemed to constitute more than a nominal portion of its business operations if either (i) the gross receipts from that portion of the business operations is not less than 10 percent of the total gross receipts ... or (ii) the hours of service performed by employees in that portion of the business is not less than 10 percent of the total number of hours of service performed by all employees in the employer's business."⁶⁶ The sentence says "will be deemed"; it does not say "only if." The United States told the Ninth Circuit that reading it as a floor "erroneously swaps an 'if' with an 'only if.'" The figure is addressed as a whole below.

Q&A-13: the customer exclusion

Q&A-13 answers "No" to the question whether an employer that "suspends some or all of its operations because its customers are subject to a government order requiring them to stay at home or otherwise causing a reduction in demand" is suspended due to a governmental order.⁶⁷ A stay-at-home order on the customer base is an order "limiting commerce, travel, or group meetings" in terms; the commerce it limited was the employer's; and the statute asks only whether the operation was partially suspended because of the order. The United States told the Ninth Circuit that an order "addressing a third party" can suspend a business; Q&A-10 lists the shelter-in-place proclamation as a governmental order; Q&A-12 honors third-party orders on suppliers. Q&A-13 cannot be reconciled with any of them, and its own example describes the order as one that "limits travel and requires members of the community to stay at home."⁶⁸ The exclusion was, moreover, confined in April 2020 to "an essential business that is not required to close its physical locations or otherwise suspend its operations" and to a suspension claimed "for the sole reason" of the customers' order; the Notice extended it to every employer and to any "reduction in demand" on March 1, 2021, after every 2020 quarter had closed.⁶⁹

Q&A-14: the voluntary-suspension rule

"Voluntary" is not in the statute; "due to" is, and it means but-for causation.⁷⁰ Q&A-14 by its own terms reaches only a suspension that "is not due to a governmental order."⁷¹ A change made because an order required it, or because orders on customers, suppliers, workforce, schools, venues or carriers limited the commerce the operation depended on, is a change due to those orders. The standing duties page states the other half of the answer: compliance with a health officer's order was a legal duty of every licensed operation, not a choice.

Q&A-15: the comparable-operations telework rule

"Comparable operations" and "telework" are not in the statute. An order that closed a workplace suspended the operation at the workplace; an operation conducted remotely under compulsion is an operation the order changed; the remainder continuing is what "partial" means. The Notice's own text supplies the rest: Q&A-15's exclusion applies only where operations "comparable to its operations prior to the closure" continued; its second paragraph and Examples 2 and 3 find partial suspension wherever any purpose was closed; and Q&A-16's third factor makes physical work space "so critical" that "this factor alone" defeats comparability wherever tasks central to the operation cannot be performed remotely.⁷² The Service's current page is narrower than the Notice itself.

If all your employees were able to telework ... your business wasn't suspended.

IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders," Q4

Q&A-16: the four factors and the transition period

Q&A-16 lists four factors for "comparable" operations: telework capabilities, portability of work, "[n]eed for presence in employee's physical work space," and "[t]ransitioning to telework operations."⁷⁴ None is in the statute; each first appeared on March 1, 2021. Two of the four supply the answer to the other two. Factor (3) provides that where "the employer's physical work space is so critical to its trade or business operations that tasks central to the trade or business's operations are unable to be performed remotely, then this factor alone indicates that the employer is not able to continue comparable operations," and names "laboratories or manufacturing involving special equipment or materials" as examples. Factor (4) provides that where an employer "incurs a significant delay (for example, beyond 2 weeks) in moving operations to comparable telework," its operations "may be deemed subject to a partial suspension during that transition period"; the Notice thereby recognizes that a suspension an order caused persists after the order operates, and the two-week figure is an illustration, offered "for example." The factor is the Notice's own statement of continuing suspension.

Q&A-18: the nominal-effect requirement, the second 10 percent rule and the masks-and-aisles sentence

Q&A-18's first paragraph lists the modifications "required by a governmental order as a condition of reopening a physical space for business or service to the public," including "requiring employees and customers to wear face coverings"; that paragraph binds the Service and is set out above. Its second and third paragraphs add three sentences the statute does not contain.⁷⁵

The mere fact that an employer must make a modification to business operations due to a governmental order does not result in a partial suspension unless the modification has more than a nominal effect on the employer's business operations. ... A governmental order that results in a reduction in an employer's ability to provide goods or services in the normal course of the employer's business of not less than 10 percent will be deemed to have more than a nominal effect on the employer's business operations.

Notice 2021-20, 2021-11 I.R.B. 922, Q&A-18, at 931

Modifications altering customer behavior (for example, mask requirements or making store aisles one way to enforce social distancing) or that require employees to wear masks and gloves while performing their duties will not result in more than a nominal effect on the business operations.

Notice 2021-20, 2021-11 I.R.B. 922, Q&A-18, at 931

The 10 percent method as a whole

The two deeming rules are, by the United States' own account, "Effectively ... a safe harbor," "not an eligibility requirement," a rule that "does not impose a threshold or place a limitation on receiving the credit," "a quintessential safe harbor" and, as Tri-State held, "a method for the test to be met not as a requirement to meet the test."⁷⁸ Congress placed the credit's percentage thresholds in the gross-receipts prong alone: the 50 percent decline for 2020, the 80 percent test for 2021, the alternative-quarter election and the 10 percent severely-financially-distressed rule of § 3134(c)(3)(C); it wrote none into the Suspension Clause.⁷⁹ The Service's FAQ page nonetheless tells every taxpayer that "The IRS considers 'more than nominal' to be at least 10% of your business," and Chief Counsel's AM 2023-007 tells examiners that an employer "needs to substantiate ... a reduction ... of not less than 10 percent to fall within the provisions of Notice 2021-20."⁸⁰ The United States cannot describe the figure as an optional safe harbor when the Notice is challenged and administer it as a floor when a claim is examined. This analysis names that inconsistency and holds the United States to the account it gave the courts. Nothing on this site treats 10 percent as a requirement; the function-by-function showings in the industry analyses exceed it many times over as a matter of the orders' own terms.

Q&A-10's "jurisdiction over the employer's operations" and "relate to the suspension" sentences

Q&A-10 provides that orders qualify "only if they limit 'commerce, travel, or group meetings ...' and relate to the suspension of an employer's operation of its trade or business," and that "[o]rders that are not from the Federal government must be from a State or local government that has jurisdiction over the employer's operations."⁸¹ The statute says "orders from an appropriate governmental authority limiting commerce, travel, or group meetings"; it does not say orders addressed to the employer or issued by an authority with jurisdiction over the employer. "Appropriate" identifies an authority with power over the subject it regulated, which is the District Court's reading of the word as "especially suitable or compatible."⁸² A federal agency order (CDC, TSA, OSHA, CMS, DHS), a State health officer's order on venues, a court's administrative order closing a clerk's office, and a foreign-trade proclamation are each orders of an appropriate authority limiting the commerce they reached. The words "relate to the suspension" first appeared on March 1, 2021, replacing the April 2020 FAQ's definition of governmental orders as those that limit commerce, travel or group meetings "in a manner that affects an employer's operation of its trade or business, including orders that limit hours of operation."⁸³

AM 2023-005's "residual delays" sentence

residual delays caused by a governmental order in place during a prior calendar quarter will not constitute a governmental order in subsequent calendar quarters once the order has been lifted

Office of Chief Counsel, IRS, Mem. AM 2023-005, at 7 (June 30, 2023)

The FAQ history and what changed on March 1, 2021

The rules the Service now administers as eligibility requirements were posted as FAQs that the Service itself said "may not be relied upon as legal authority" and "cannot be used to support a legal argument in a court case"; they were revised on June 19, 2020; and they were rewritten again, in the directions that narrow the statute, on March 1, 2021, after every 2020 quarter had closed.⁸⁵ The Notice "incorporates the information provided in the FAQs" and claims nothing more for itself.⁸⁶ The 10 percent figure has a history of its own: no percentage appeared anywhere in the Service's guidance before June 19, 2020, none appeared on June 19, 2020, the two 10 percent rules first appeared in the Notice on March 1, 2021, and the Service began administering the figure as a floor in 2023.

April 29, 2020: the FAQs as first posted

The Service's FAQ index as captured on May 6, 2020 and the suspension-test page as captured on May 18, 2020 each carry the line "Page Last Reviewed or Updated: 29-Apr-2020."⁸⁷ FAQ 28 defined governmental orders as those that limit commerce, travel or group meetings "in a manner that affects an employer's operation of its trade or business, including orders that limit hours of operation," said an order "allows employers to qualify ... without regard to the level of enforcement," listed the shelter-in-place proclamation and the curfew, and described the governor's closure order as "entitling employers with non-essential businesses to claim the Employee Retention Credit." FAQ 30 answered the essential-business question with a flat "No." FAQ 31 stated the supplier rule in the words the Notice later used. FAQ 32 confined the customer exclusion to "an essential business that is not required to close its physical locations or otherwise suspend its operations" and to a suspension claimed "for the sole reason" of the customers' stay-at-home order. FAQ 33 stated the telework rule without a partial carve-out. FAQ 34 answered "Yes" without qualification: a workplace closed "for certain purposes, but ... open for other purposes ... would be considered to be partially suspended." FAQs 35 through 38 stated the hours, multi-location, aggregation and partial-quarter rules in the form the Notice kept. No FAQ mentioned "nominal" or any percentage.

June 19, 2020: "more than a nominal" appears; still no percentage

The page as captured on January 15, 2021 marks FAQs 30, 33, 34 and 35 "(updated June 19, 2020)."⁸⁸ FAQ 30 acquired the "more than a nominal portion" sentence and the "close for a period of time during normal working hours" sentence. FAQ 33 acquired the "certain purposes, but not others" paragraph and the physical-therapy and laboratory examples. FAQ 34 kept its unqualified "Yes" for a closed purpose ("because a portion of its business operations - its indoor and outdoor dining service - is closed") and added "more than a nominal effect" only for the case where "all of an employer's business operations may continue, even if subject to modification," with the six examples. Still no percentage appeared anywhere.

March 1, 2021: the six changes of Notice 2021-20

The Notice made six substantive changes to the suspension rules, each in the direction of the positions the United States later took in court and away from the statute; none was made by regulation, and the United States has represented that none carries the force of law.⁸⁹ IR-2021-48 described the Notice as "similar to the information in the employee retention credit FAQs, but includes clarifications."⁹⁰

The 10 percent figure: from absence to floor

The figure's history is short and exact. Between April 29, 2020 and June 18, 2020 the Service's guidance contained no "nominal" test and no percentage. On June 19, 2020 the words "more than a nominal" entered FAQs 30 and 34, still without any percentage. On March 1, 2021 the two 10 percent deeming rules appeared for the first time, in Q&A-11 and Q&A-18, each phrased "will be deemed." On September 14, 2023 the Service's FAQ page told taxpayers that "[t]he IRS considers 'more than nominal' to be at least 10% of your business." On October 18, 2023 Chief Counsel's AM 2023-007 instructed that an employer "needs to substantiate ... a reduction ... of not less than 10 percent to fall within the provisions of Notice 2021-20." On January 6, 2025 the United States told the District Court that the figure "isn't an eligibility requirement" and that "the IRS did not say that a taxpayer cannot qualify for the ERC if they have been impacted less than 10 percent"; on June 20, 2025 the court held it "not an exclusionary cut-off point"; on January 30, 2026 the United States told the Ninth Circuit it is "a safe harbor rather than a hard floor."⁹¹ Every 2020 quarter closed before any percentage existed.

The reliance point

FS-2025-07 restates the Service's current doctrine on FAQs: they "will not be relied on or used by the IRS to resolve a case," and "if a FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer's case, the law will control the taxpayer's tax liability."⁹² The Service's own doctrine is this analysis's: the law controls.

AM 2023-005 and Q&A-12's own words

AM 2023-005 (June 30, 2023; released July 21, 2023) says of itself that it "may not be used or cited as precedent."⁹³ Its analysis converts Q&A-12 into "a narrow, limited exception," adds the requirement that an order "appl[y] to the employer's operations," adds an "alternate supplier" element, requires the employer to possess and produce the supplier's order, and answers continuing suspension with the "residual delays" sentence set out above.⁹⁴ Q&A-12's words answer each addition.

AM 2023-005's scenarios stipulate their conclusions: an employer "not subject to any governmental orders ... at any time"; a jurisdiction that "lifted all orders related to COVID in May 2020"; a "surplus" of goods; "a limited number of products."⁹⁵ No State in the Library fits them; the State pages show what was in force, where, on every day of the six quarters. This analysis counts supplier and counterparty orders as orders limiting commerce under the statute and cites Q&A-12 as the Service's own statement of the same rule.

AM 2023-007's own words

AM 2023-007 (October 18, 2023) addresses OSHA website guidance and enforcement memoranda only. Its footnote 1 excludes the OSHA Healthcare Emergency Temporary Standard, 86 Fed. Reg. 32376 (June 21, 2021), from its conclusion; its conclusion states that an employer "may be eligible" where "an executive order from a Governor" made workplace protocols mandatory; and its own dictionary work defines "order" as "a command or mandate delivered by a government official" and "commerce" as "the exchange of goods and services, esp. on a large scale involving transportation between cities, states, and countries," which are the definitions this site applies.⁹⁶ Its sentence that an employer "needs to substantiate ... not less than 10 percent to fall within the provisions of Notice 2021-20" is the Service applying the figure as a requirement; fifteen months later the United States told the District Court that the figure "isn't an eligibility requirement."⁹⁷

1. Doc. 44 at 14, 19, 24; Doc. 49 at 27; Br. for Appellees at 26, 38, 58. ↩
2. Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158, 172 (1989) (Ex. LAW-087), cited in Br. for Appellees at 37 and 45. ↩
3. Rev. Proc. 2021-33, 2021-34 I.R.B. 327, § 3.02, at 329-30 ("An employer is not required to apply this safe harbor."). ↩
4. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928, and Q&A-18, at 931 ("will be deemed"); Br. for Appellees at 38; Doc. 44 at 14. ↩
5. Hoctor v. USDA, 82 F.3d 165, 167, 170-71 (7th Cir. 1996) (Ex. LAW-065); Doc. 49 at 16-17 (quoting Doc. 44 at 28: "the IRS did not say that a taxpayer cannot qualify for the ERC if they have been impacted less than 10 percent"). ↩
6. Appalachian Power Co. v. EPA, 208 F.3d 1015, 1021, 1023 (D.C. Cir. 2000) (Ex. LAW-066) (the guidance there "commands, it requires, it orders, it dictates"). ↩
7. Doc. 44 at 14 (internal record citations omitted). ↩
8. Doc. 44 at 24 & n.4; the "One would hope" sentence is at Doc. 44 at 24 n.4 and is quoted at Doc. 49 at 16. ↩
9. Doc. 44 at 25, 28, 29-30 & n.7, 31 & n.8 ("Because the United States is not asking the Court to afford deference to its interpretation, the Supreme Court's recent decision in Loper Bright ... is not relevant here."), 33 ("many of the Notice's interpretations are taxpayer friendly ... (interpreting a supply chain exception, providing a safe harbor for partial suspension)"); Doc. 44 at 25 n.5 (a "Law" heading in a Service memorandum lists the Notice as "the IRS's interpretation of the operative law"). ↩
10. Doc. 49 at 14-15, 16, 22, 26, 27. ↩
11. Doc. 49 at 15-16. ↩
12. Br. for Appellees at 16, 18-19, 26, 29-30, 35, 37-38, 41 & n.5, 44-45, 49 & n.9, 50 ("That a rule establishes a safe harbor is sufficient, but not necessary, to make it an interpretive rule."), 58. ↩
13. Tr. 40:1-5, 40:9-12 (statements of counsel for the United States); see Tr. 42:17-18 ("I don't believe there is that authority"), 42:25-43:1 ("there has been no cancellation. There has been no suspension of a tax program here."), 66:3-11. ↩
14. Tri-State, ECF No. 38, at 8-9, 15-16 (reciting the United States' brief, ECF No. 28, at 7-8, 10; citing Stenson Tamaddon, LLC v. IRS, 2025 WL 1725942, at *8 (D. Ariz. June 20, 2025), "which both parties used for support"). ↩
15. Sundancer Pools, No. 25-1291T, at 2 (Fed. Cl.) (Ex. LAW-028). ↩
16. Ex. LAW-085, at 3 (W.D. Mich.). ↩
17. Office of Chief Counsel, IRS, Mem. AM 2023-007, at 12 (Oct. 18, 2023) (Ex. GOV-004); id. at 1 ("This GLAM may not be used or cited as precedent."); Opening Br. at 11 (quoting 3-ER-505); Doc. 44 at 14; Br. for Appellees at 38. ↩
18. IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders," Q5/A5 (added Sept. 14, 2023) (Ex. GOV-003, at 7); Opening Br. at 12-13 (quoting the page as accessed July 25, 2025); Doc. 44 at 28, 29-30; Doc. 49 at 22, 26; IRS, IR-2023-169 (Sept. 14, 2023) (announcing the moratorium on processing new claims). ↩
19. Opening Br. at 2, 8, 11-13, 23, 43-46 (quoting 3-ER-364, 3-ER-391, 3-ER-396, 2-ER-82-83, 2-ER-102); Compl. ¶¶ 6, 68-75; id. ¶ 71 (a Form 886-A stating that Notice 2021-20 "governs the ERC for all periods"). ↩
20. Nat'l Taxpayer Advocate, blog of Apr. 27, 2026 (the 2024 letters were "based on the results of risk filter analyses rather than a prior examination"); Nat'l Taxpayer Advocate, blog of Aug. 21, 2024 ("the IRS did not subject disallowed ERC claims to an examination; rather, the IRS conducted a risk-scoring analytic process"); IRS, IR-2024-203 (Aug. 8, 2024) (28,000 letters to claims that "showed a high risk of being incorrect"); Doc. 44 at 30 n.7 ("That is done on a case-by-case basis."); Doc. 49 at 16. ↩
21. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, -11, -13, -14, -15, -16, -17, -18, at 927-31; Doc. 44 at 19, 24; Doc. 49 at 27. ↩
22. Internal Revenue Manual (Chief Counsel Directives Manual) 32.2.2.10(3)-(4) (Ex. GOV-006) (citing Rev. Rul. 90-91, 1990-2 C.B. 262). The Manual "does not have the force of law and does not confer rights on taxpayers," Fargo v. Commissioner, 447 F.3d 706, 713 (9th Cir. 2006) (Ex. LAW-072); it is cited as the Service's own statement of its standard of consistency. ↩
23. 26 C.F.R. § 601.601(d)(2)(ii)(a), (v)(d)-(e) (Ex. LAW-037). ↩
24. Rauenhorst v. Commissioner, 119 T.C. 157, 170-71, 182-83 (2002) (Ex. LAW-068); Dover Corp. & Subs. v. Commissioner, 122 T.C. 324, 350 (2004) (Ex. LAW-069). ↩
25. Br. for Appellees at 47 ("rules (which are 'binding' on the agency, though they can be either interpretive or legislative)"); id. at 48. ↩
26. Notice 2021-20, 2021-11 I.R.B. 922 (Mar. 15, 2021) (released Mar. 1, 2021); Notice 2021-23, 2021-16 I.R.B. 1113, § II, at 1113; Notice 2021-49, 2021-34 I.R.B. 316, § I, at 316 ("the rules set forth in Notice 2021-20 and Notice 2021-23 ... continue to apply for the third and fourth calendar quarters of 2021"). ↩
27. Tri-State, ECF No. 38, at 7-8 (quoting Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 412 (2024), and Lemus-Escobar, 158 F.4th at 960). ↩
28. The Service's FAQ index as captured by the Internet Archive on May 6, 2020, and its suspension-test page as captured on May 18, 2020, each carrying the line "Page Last Reviewed or Updated: 29-Apr-2020" (no FAQ mentioned "nominal" or any percentage); the FAQ page as captured on January 15, 2021, with FAQs 30, 33, 34 and 35 marked "(updated June 19, 2020)" (FAQ 30 acquired the "more than a nominal portion" sentence and FAQ 34 the "more than a nominal effect" sentence, still without any percentage); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, -13, -16, -18, at 928-31 (the two 10 percent deeming rules at 928 and 931; the four comparable-operations factors and the transition-period sentence at 929-30; the masks-and-aisles sentence at 931; the customer exclusion extended to every employer and to any "reduction in demand" at 929). See The FAQ history below. ↩
29. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928; Doc. 44 at 13 (quoting Q&A-11's facts-and-circumstances sentence); IRS Publication 5887 (Rev. 12-2024) ("shut down due to a government order"); IRS, Frequently Asked Questions About the Employee Retention Credit, "Signs of incorrect ERC claims" (added Nov. 21, 2024) (Ex. GOV-003); the April 29, 2020 FAQ 32, as captured May 6 and May 18, 2020; Notice 2021-20, Q&A-13, at 929; Br. for Appellees at 12-13. ↩
30. Fed. R. Evid. 801(d)(2)(A)-(D) (Ex. LAW-024). ↩
31. United States v. Kattar, 840 F.2d 118, 127-28, 130-31 & n.9 (1st Cir. 1988) (Ex. LAW-061) ("it is disturbing to see the Justice Department change the color of its stripes to such a significant degree ... depending on the strategic necessities of the separate litigations"). ↩
32. United States v. Van Griffin, 874 F.2d 634, 638 (9th Cir. 1989) (Ex. LAW-062); Am. Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226-27 (9th Cir. 1988) (Ex. LAW-063). ↩
33. New Hampshire v. Maine, 532 U.S. 742, 749-51 (2001) (Ex. LAW-019) (quoting Davis v. Wakelee, 156 U.S. 680, 689 (1895)) (the factors are not "inflexible prerequisites or an exhaustive formula"). ↩
34. Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782-83 (9th Cir. 2001) (Ex. LAW-064); United States v. Ibrahim, 522 F.3d 1003, 1009 (9th Cir. 2008) (Ex. LAW-067) (the doctrine "seeks to prevent the deliberate manipulation of the courts"). ↩
35. Doc. 49 at 15, 17, 26, 27. ↩
36. Notice 2021-23, 2021-16 I.R.B. 1113, § II, at 1113; Notice 2021-49, 2021-34 I.R.B. 316, § I, at 316; Internal Revenue Manual 32.2.2.10(3)-(4) (Ex. GOV-006). ↩
37. Doc. 44 at 19, 24; Br. for Appellees at 26, 58; New Hampshire v. Maine, 532 U.S. at 749-51; Kattar, 840 F.2d at 127-31; Van Griffin, 874 F.2d at 638. ↩
38. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 927-28. ↩
39. Doc. 44 at 30; IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders" (page as rendered Sept. 26, 2026) (Ex. GOV-003). ↩
40. Doc. 49 at 13-14. ↩
41. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-12 and Example, at 928-29. ↩
42. Br. for Appellees at 41 & n.5; Doc. 44 at 13 n.3, 15. ↩
43. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-15, at 929; Q&A-17, at 930. ↩
44. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-15, Examples 2-3, at 929; Q&A-17, Examples 1-4, at 930. ↩
45. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-18, at 930. ↩
46. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-19 and Example, at 931. ↩
47. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-20 and Example, at 931. ↩
48. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-21 and Example, at 931-32. ↩
49. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-22, at 932. ↩
50. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-16(4), at 930. ↩
51. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-22, Example, at 932. ↩
52. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, -12, -17, -18, at 928-31. ↩
53. Doc. 49 at 14-15, 17 (as Tri-State, ECF No. 38, at 16 quotes the District Court); Doc. 44 at 14. ↩
54. IRS, IR-2024-169 (June 20, 2024) ("Eligibility depends on specific facts and circumstances"); IRS, Frequently Asked Questions About the Employee Retention Credit (page as rendered Sept. 26, 2026) (Ex. GOV-003) ("Whether a business was fully or partially suspended depends on its specific situation"). ↩
55. Nat'l Taxpayer Advocate, blog of Aug. 21, 2024; Nat'l Taxpayer Advocate, blog of Apr. 27, 2026. ↩
56. Rev. Proc. 2021-33, 2021-34 I.R.B. 327, § 3.02, at 329-30. ↩
57. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928; Q&A-18, at 931; Br. for Appellees at 38; Doc. 44 at 14. ↩
58. Notice 2021-23, 2021-16 I.R.B. 1113, §§ I-II, at 1113 (released Apr. 2, 2021; published Apr. 19, 2021); Taxpayer Certainty and Disaster Tax Relief Act of 2020, Pub. L. No. 116-260, div. EE, § 207, 134 Stat. 1182, 3059-65 (2020). ↩
59. Notice 2021-49, 2021-34 I.R.B. 316, § I, at 316; § III.D, at 317-18 (released Aug. 4, 2021; published Aug. 23, 2021). ↩
60. Notice 2021-65, 2021-51 I.R.B. 880, § III.A, at 881 (released Dec. 6, 2021; published Dec. 20, 2021). ↩
61. CARES Act, Pub. L. No. 116-136, § 2301(c)(2)(A)(ii)(I), 134 Stat. 281, 348 (2020); I.R.C. § 3134(c)(2)(A)(ii)(I), added by Pub. L. No. 117-2, § 9651, 135 Stat. 4, 177 (2021). The clause is quoted from the Statutes at Large. ↩
62. Doc. 44 at 19, 24; Doc. 49 at 27. ↩
63. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928. ↩
64. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-17, Example 4, at 930; Doc. 44 at 13. ↩
65. IRS Publication 5887 (Rev. 12-2024) ("shut down due to a government order"); IRS, Frequently Asked Questions About the Employee Retention Credit, "Signs of incorrect ERC claims" (added Nov. 21, 2024) (Ex. GOV-003); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928; Q&A-17, Example 4, at 930. ↩
66. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928; Br. for Appellees at 16, 18-19, 26, 29-30, 35, 37-38, 41 & n.5, 44-45, 49 & n.9, 50, 58. ↩
67. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-13, at 929. ↩
68. Br. for Appellees at 41; Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 928; Q&A-12, at 928-29; Q&A-13, Example, at 929. ↩
69. IRS, FAQs: Employee Retention Credit under the CARES Act, FAQ 32, as captured by the Internet Archive on May 6 and May 18, 2020 ("Page Last Reviewed or Updated: 29-Apr-2020"); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-13, at 929. ↩
70. Tri-State, ECF No. 38, at 17-19. ↩
71. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-14, at 929. ↩
72. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-15 and Examples 1-3, at 929; Q&A-16(3), at 929. ↩
73. IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders," Q4 (page as rendered Sept. 26, 2026) (Ex. GOV-003); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 928; Q&A-15, at 929. ↩
74. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-16, at 929-30. ↩
75. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-18, at 930-31. ↩
76. Tri-State, ECF No. 38, at 9-11; Br. for Appellees at 16, 18-19, 26, 29-30, 35, 37-38, 41 & n.5, 44-45, 49 & n.9, 50, 58 ("sufficient—though not necessary—conditions"). ↩
77. Doc. 44 at 30; Notice 2021-20, 2021-11 I.R.B. 922, Q&A-18, at 930-31. ↩
78. Doc. 44 at 14; Br. for Appellees at 38; Tri-State, ECF No. 38, at 16. ↩
79. CARES Act § 2301(c)(2)(A)(ii)(II), 134 Stat. at 348 (the gross-receipts prong); Notice 2021-23, 2021-16 I.R.B. 1113, § III.C, at 1114 (the 80 percent test and the alternative-quarter election); Notice 2021-49, 2021-34 I.R.B. 316, § III.E, at 318-19 (severely financially distressed employers); I.R.C. § 3134(c)(3)(C); Opening Br. at 7. ↩
80. IRS, Frequently Asked Questions About the Employee Retention Credit, "Qualifying government orders," Q5 (added Sept. 14, 2023) (Ex. GOV-003, at 7); Office of Chief Counsel, IRS, Mem. AM 2023-007, at 12 (Oct. 18, 2023) (Ex. GOV-004). ↩
81. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 927-28. ↩
82. Doc. 49 at 13-14. ↩
83. IRS, FAQs: Employee Retention Credit under the CARES Act, FAQ 28, as captured by the Internet Archive on May 6 and May 18, 2020 ("Page Last Reviewed or Updated: 29-Apr-2020"); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 927-28; Q&A-19, at 931. ↩
84. Office of Chief Counsel, IRS, Mem. AM 2023-005, at 7 (June 30, 2023) (released July 21, 2023); Notice 2021-20, 2021-11 I.R.B. 922, Q&A-16(4), at 930; Q&A-22, at 932. ↩
85. The disclaimer appears on each of the Service's ERC FAQ pages of the period, as captured by the Internet Archive on May 6, 2020, May 18, 2020 and January 15, 2021. ↩
86. Notice 2021-20, 2021-11 I.R.B. 922, § II, at 922. ↩
87. IRS, FAQs: Employee Retention Credit under the CARES Act, FAQs 28-38, as captured by the Internet Archive on May 6, 2020 (the FAQ index) and May 18, 2020 (the suspension-test page), each carrying "Page Last Reviewed or Updated: 29-Apr-2020." ↩
88. IRS, FAQs: Employee Retention Credit under the CARES Act, FAQs 30, 33, 34 and 35, as captured by the Internet Archive on January 15, 2021. ↩
89. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 927-28; Q&A-11, at 928; Q&A-13, at 929; Q&A-16, at 929-30; Q&A-17, at 930; Q&A-18, at 930-31, compared with FAQs 28-38 as captured May 6 and May 18, 2020 and January 15, 2021; Doc. 44 at 19, 24; Br. for Appellees at 26. ↩
90. IRS, IR-2021-48 (Mar. 1, 2021). ↩
91. The FAQ pages as captured May 6 and May 18, 2020 and January 15, 2021; Notice 2021-20, 2021-11 I.R.B. 922, Q&A-11, at 928; Q&A-18, at 931; IRS, Frequently Asked Questions About the Employee Retention Credit, Q5 (added Sept. 14, 2023) (Ex. GOV-003, at 7); Office of Chief Counsel, IRS, Mem. AM 2023-007, at 12 (Oct. 18, 2023) (Ex. GOV-004); Doc. 44 at 14, 28; Doc. 49 at 22, 26; Br. for Appellees at 16, 18-19, 26, 29-30, 35, 37-38, 41 & n.5, 44-45, 49 & n.9, 50, 58 ("a safe harbor rather than a hard floor"). ↩
92. IRS, FS-2025-07 (Oct. 22, 2025). ↩
93. Office of Chief Counsel, IRS, Mem. AM 2023-005, at 1 (June 30, 2023) (released July 21, 2023). ↩
94. Id. at 5, 6, 7. ↩
95. Id. (the stipulated facts of the scenarios in AM 2023-005). ↩
96. Office of Chief Counsel, IRS, Mem. AM 2023-007, at 1 n.1, 13 (Oct. 18, 2023) (Ex. GOV-004); Occupational Exposure to COVID-19; Emergency Temporary Standard, 86 Fed. Reg. 32376 (June 21, 2021). ↩
97. Office of Chief Counsel, IRS, Mem. AM 2023-007, at 12 (Ex. GOV-004); Doc. 44 at 14; Opening Br. at 11, 44. ↩