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The COVID Project

Industry 13 of 27 · Findings

Financial Services

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

BRbranches and lobbiesATATM, drive-up and cash logisticsCCcontact centerCLconsumer and auto lendingMLmortgage lendingBLbusiness lending and depositsSVservicing, forbearance…INinsuranceWMwealth and advisoryMKmarketing, events, seminarsHRhiring, screening, training…OPoffice, administration, teleworkWFworkforce availabilityCBcustomer, member and client base…
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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 financial services 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 findings by quarter

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 financial services was partially suspended due to the stay-at-home, closure, capacity and telework orders of every State and the District, the CARES Act's forbearance, reporting, foreclosure and eviction provisions and the federal housing agencies' moratoria, the State moratoria and forbearance mandates, the insurance regulators' cancellation, refund and grace-period orders, the federal regulators' appraisal, deposit, meeting and examination instruments, the closure of the courts, recorders and motor-vehicle offices through which the industry's loans are made and enforced, and the leave, entry and visa orders on its workforce, 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 reopening orders' capacity caps, face-covering and exposure-control requirements and telework commands, the federal moratoria as extended to December 31, 2020 and the CDC's order of September 4, 2020, the State moratoria in force in every region and the Texas Eviction Diversion Program, the local sale and writ stays, the insurance and benefits instruments, and the federal supervisors' remote-operation instruments.

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 returned offices and contact centers to telework or reduced occupancy in eleven jurisdictions, the federal moratoria and the CDC order as extended into 2021, the State stays re-imposed or newly enacted in Nevada, New York, Oregon, Illinois, North Carolina and Maryland and continuing elsewhere, the face-covering mandates of every State that issued one, airborne-transmission controls on every indoor business with a duty on the operator, the court orders suspending trials and staying writs and sales, and the supervisors' and insurance regulators' 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 winter orders through their stepped expiry, the federal moratoria extended to June 30, 2021 with forbearance extended to eighteen months, the CDC order, the State stays in force in every region, the CDC's conveyance order and the federal workplace order, airborne-transmission controls on every commute and in every federal building, the entry proclamations, the benefits instruments and the court orders.

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 State capacity, telework and face-covering orders, the last airborne-transmission controls with a business duty, in force to their expiry between April 4 and June 30, 2021, the Bureau's Bulletin 2021-02 and Regulation F rule, the federal moratoria and the CDC order to July 31, the State statutes and proclamations of June 2021 that carried the stays past the quarter's end, the ARPA COBRA subsidy and the benefits instruments, the conveyance, entry and workplace orders, and the court orders.

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 federal foreclosure moratoria to July 31 and the foreclosure-related eviction moratoria to September 30, the CDC's orders to July 31 and from August 3 to August 26, the CARES Act's reporting mandate, the Bureau's Regulation X rule from August 31 and its Regulation F rule and Bulletin 2021-02, the ARPA subsidy and the coverage and tolling mandates, the foreclosure, eviction, garnishment and repossession instruments of nineteen States and the District, thirteen of them on every day of the quarter, the insurance instruments of eight States, the workplace standards of six States and the exposure-prevention plans of New York, the indoor face-covering orders of seven States and the District, the unvaccinated-person mandates of California and Connecticut and the orders of more than thirty metropolitan jurisdictions from July 17, 2021 onward, airborne-transmission controls that bound every branch lobby with a duty on the operator, the supervisors' and self-regulatory instruments, the conveyance, entry and border orders, the school, quarantine, health-care, tribal and territorial orders on the workforce and counterparties, and the court orders of at least twenty-nine States, each in force on some day of the quarter and most on every day.

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.204

The standards satisfied

Each finding is established by a preponderance of the evidence, on public records subject to judicial notice, in a de novo proceeding.205 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, the United States' representations to two federal courts, and the instruments themselves.206 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 does not reach such a claim; and a position that applies the words Congress wrote to the Federal Register, the Statutes at Large and the State registers is not frivolous under section 6702 or Notice 2010-33.207 Fraud is the Government's burden by clear and convincing evidence, and nothing in a claim founded on the public record supports it.208 For federal credit unions, section 2301(f)(2)(A) and section 3134(f)(2)(A) place the first, second and third quarters of 2021 within the credit by their text, the Service's own advice so states, and the findings above stand for them in every quarter.209

  1. The six quarters, the function-by-function section and the interconnected-economy section above; Tri-State at 9, 19; I.R.C. § 3134(c)(2)(A)(ii)(I) (Ex. LAW-006); CARES Act § 2301(c)(2)(A)(ii)(I), 134 Stat. at 347-48 (Ex. LAW-001). ↩
  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); Delaney v. Commissioner, 743 F.2d 670, 671 (9th Cir. 1984) (Ex. LAW-070); Knudsen v. Commissioner, 131 T.C. 185, 188 (2008) (Ex. LAW-071); Fed. R. Evid. 201(b) (Ex. LAW-024); Kater v. Churchill Downs Inc., 886 F.3d 784, 788 n.3 (9th Cir. 2018) (Ex. LAW-023); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998-99 (9th Cir. 2010) (Ex. LAW-073). ↩
  3. Treas. Reg. § 1.6662-4(d) (Ex. LAW-036); Treas. Reg. § 1.6662-3(b)(3) (Ex. LAW-035). ↩
  4. I.R.C. § 6664(c) (Ex. LAW-039); I.R.C. § 6676 (Ex. LAW-040); Pub. L. 119-21, § 70605(f), 139 Stat. at 288 (Ex. LAW-005); I.R.C. § 6702 (Ex. LAW-041); Notice 2010-33, 2010-17 I.R.B. 609 (Ex. LAW-026). ↩
  5. I.R.C. § 7454(a) (Ex. LAW-038). ↩
  6. CARES Act § 2301(f)(2)(A), as added by Pub. L. 116-260, div. EE, § 207(d)(3)(A) (Ex. LAW-002; Ex. LAW-007); I.R.C. § 3134(f)(2)(A) (Ex. LAW-006); Chief Counsel Advice 202333001 (July 18, 2023); Notice 2021-23, 2021-16 I.R.B. 1113, § III.B (Ex. LAW-102). ↩