Findings
On the statute's text as the United States agreed to it and Tri-State fixed it, and on the orders inventoried in the layers and quarters sections and tabulated on this page, the operation of the personal care and other services industry was partially suspended in each of the six calendar quarters from April 1, 2020 through September 30, 2021 due to orders from appropriate governmental authorities limiting commerce, travel and group meetings due to COVID-19. The findings follow, one for each quarter, in the statute's words; the standards are then stated and satisfied; and the Library on which the findings rest is described. The Service's account of the period, under which no order reached a salon chair, a laundromat, a funeral chapel, a grooming room or a repair bench in any of these six quarters, is not a contest of weight; it is a description of a period that did not occur, and the fifty-one State rows tabulated on this page are the measure of it.
The findings
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 personal care and other services was partially suspended due to orders from appropriate governmental authorities limiting commerce, travel and group meetings due to COVID-19, namely the closure orders that named the industry's trades in forty-six States and the District of Columbia and the county orders that closed them in the rest, the funeral caps and gathering bans, the stay-home orders on the customer base and the closure orders on the laundry's accounts, the reopening orders that conditioned the service on appointment, spacing, occupancy, screening and face coverings, the workplace infection-prevention and exposure-control requirements written into those orders, and the federal leave mandate and scarce-materials orders (Ex. SEC-18-008; Ex. SEC-18-032; Ex. SEC-18-033; Ex. SEC-18-034; Ex. SEC-18-035; Ex. SEC-18-038; Ex. SEC-18-009; Ex. SEC-18-011; Ex. SEC-18-025; Ex. SEC-18-026; Ex. SEC-18-027; Ex. SEC-18-039; Ex. SEC-18-040; Ex. SEC-18-041; Ex. FED-170; Ex. FED-074).267
The third quarter of 2020
During the calendar quarter beginning July 1, 2020 and ending September 30, 2020, the operation was partially suspended due to such orders, namely the reopening conditions on the service in every State, California's second indoor closure and its county implementations, New York City's and Chicago's mask-off-service prohibitions, the statewide and metropolitan face-covering orders of thirty-four States, airborne-transmission controls binding every chair, and the funeral caps and federal leave mandate (Ex. SEC-18-018; Ex. SEC-18-022; Ex. MET-NYC-025; Ex. WA-037; Ex. CO-031; Ex. MET-MSY-054; Ex. MET-MSY-073; Ex. SEC-18-041; Ex. FED-170; and Texas's Executive Order GA-29, Kentucky's Executive Order 2020-586 and Louisiana's Proclamation 89 JBE 2020).268
The fourth quarter of 2020
During the calendar quarter beginning October 1, 2020 and ending December 31, 2020, the operation was partially suspended due to such orders, namely the winter re-tightening orders that closed the trade again in California's regions, New Mexico and New York's zones, cut it to twenty-five percent in Illinois, Washington, Colorado, Massachusetts, New Jersey and the metros named in the quarters section, made it appointment-only with no mask-off services in Michigan, capped the funeral in Oregon, Delaware, New Jersey and Kentucky, and closed the repast with the restaurants, together with the continuing reopening conditions, the face-covering orders of thirty-six jurisdictions, airborne-transmission controls binding every premises and every person in it, and the federal leave mandate (Ex. SEC-18-024; Ex. NM-039; Ex. NY-008; Ex. SEC-18-019; Ex. WA-047; Ex. CO-081; Ex. MA-040; Ex. NJ-037; Ex. MI-061; Ex. MET-DET-001; Ex. PA-022; Ex. MET-DCM-011; Ex. MET-STL-074; Ex. MET-KC-061; Ex. FED-170; and the Michigan Department of Health and Human Services' order of October 29, 2020).269
The first quarter of 2021
During the calendar quarter beginning January 1, 2021 and ending March 31, 2021, the operation was partially suspended due to such orders, namely the winter orders in force through their stepped expiry between January 22 and March 31, 2021, the capacity, appointment, distancing and face-covering conditions that continued in twenty-two jurisdictions, the State workplace standards and the federal conveyance, building, entry and testing orders (Ex. SEC-18-024; Ex. SEC-18-019; Ex. MI-063; Ex. MI-064; Ex. MI-066; Ex. WA-047; Ex. NJ-037; Ex. PA-022; Ex. TX-026; Ex. RI-070; Ex. NY-109; Ex. DC-016; Ex. SEC-10-043; Ex. FED-020; Ex. FED-060; Ex. FED-207; and Texas's Executive Orders GA-32 and GA-34, Maryland's Order No. 21-03-09-01 and Connecticut's Personal Services sector rules of February 26, 2021).270
The second quarter of 2021
During the calendar quarter beginning April 1, 2021 and ending June 30, 2021, the operation was partially suspended due to such orders, namely the capacity, appointment, distancing and face-covering conditions on the industry's premises in twenty-two jurisdictions through their stepped expiry between May 19 and July 1, 2021, Hawaii's throughout, the State workplace standards, the OSHA Healthcare Emergency Temporary Standard on health-care laundry and the federal conveyance, entry and border orders (Ex. PA-033; Ex. MI-069; Ex. MA-054; Ex. RI-071; Ex. NJ-050; Ex. NY-134; Ex. CA-036; Ex. WA-072; Ex. WA-105; Ex. OR-043; Ex. DC-016; Ex. MET-HNL-030; Ex. FED-080; Ex. FED-020; Ex. FED-051; Ex. FED-208; and Michigan's rescission of June 17, 2021, Connecticut's Executive Order 12B, Kentucky's Executive Order 2021-386 and New Mexico's order of June 30, 2021).271
The third quarter of 2021
During the calendar quarter beginning July 1, 2021 and ending September 30, 2021, the operation was partially suspended due to such orders, namely the federal conveyance face-covering order and its security directives, the OSHA National Emphasis Program and Healthcare Emergency Temporary Standard, the CISA essential-workforce list of August 10, 2021 as incorporated by continuing State orders, the entry, border and pre-departure orders, the workplace standards of Virginia, California and Oregon, the indoor face-covering orders, occupational-health and airborne-transmission controls enforced against the premises, of Nevada, Louisiana, Oregon, New Mexico, Washington, Illinois, Hawaii, the District of Columbia and the Navajo Nation, of California, Connecticut and New York as to the unvaccinated, and of more than twenty metropolitan areas from Los Angeles County on July 17 to Dayton on September 17, Hawaii's tier and gathering orders and Executive Order 21-05, Puerto Rico's vaccination-or-testing order on every salon, barbershop and spa worker, the sector regulators' licensing waivers and the CMS visitation memorandum, and the school, health-care, quarantine, court and landlord orders on the industry's counterparties and workforce (Ex. FED-020; Ex. FED-052; Ex. SEC-18-003; Ex. FED-080; Ex. SEC-18-001; Ex. FED-207; Ex. FED-235; Ex. SEC-10-043; Ex. NV-041; Ex. OR-048; Ex. WA-078; Ex. SEC-18-042; Ex. DC-057; Ex. HI-025; Ex. AZ-080; Ex. AGY-ST-HEALTH-SUBORDERS-110; Ex. CT-050; Ex. NY-134; Ex. MET-LA-018; Ex. MET-SAC-015; Ex. MET-SFO-071; Ex. MET-STL-021; Ex. MET-MSY-027; Ex. MET-KC-002; Ex. MET-CHI-026; Ex. MET-CHI-041; Ex. MET-DCM-023; Ex. MET-BAL-017; Ex. MET-DFW-028; Ex. MET-PHL-019; Ex. MET-CLT-001; Ex. MET-BOS-013; Ex. MET-DEN-033; Ex. MET-SEA-002; Ex. MET-CMH-048; Ex. AGY-TERRITORIES-035; Ex. AGY-ST-TRADE-BOARDS-052; Ex. FED-156; Ex. NJ-055; Ex. NY-071; Ex. TX-040; Ex. RI-059; and Louisiana's Proclamation 137 JBE 2021, New Mexico's order of August 17, 2021 and Hawaii's Emergency Proclamation of August 5, 2021).272
The standards satisfied
The burden and the standard of proof
In a refund suit the court redetermines the entire liability de novo, and the employer proves its entitlement by a preponderance of the evidence.273 The evidence here is the orders themselves, public records of which a court takes judicial notice, each identified by issuer, date, operative text, enforcement provision and exhibit number, and each traced to the function it reached in the quarter it was in force.274 The Service's administrative reasoning, and the form sentence that no orders were in effect, are of no consequence to that redetermination.275 Fraud is the Government's burden, by clear and convincing evidence, and nothing in the public record admits of it: a position that the operation was suspended by these orders is the statute's text, read as the United States itself agreed it should be read.276
Substantial authority and reasonable basis
A return position has substantial authority when the weight of the authorities supporting it is substantial in relation to the weight of contrary authorities, and a reasonable basis when it is reasonably based on one or more authorities.277 The authorities supporting the position that employers in this industry were partially suspended in each of the six quarters are the statutory text; Tri-State's holdings on "partially suspended" and "due to"; the District Court's holdings in Stenson Tamaddon that the Notice has no force of law and that the ten percent figure is a safe harbor; the United States' own representations in both cases; the Notice's own favorable provisions (Q&A-10 and its Example 1, Q&A-12, Q&A-15, Q&A-17, Q&A-18, Q&A-19, Q&A-20 and Q&A-22), which bind the Service; and the orders in the Library. On the other side stand Notice glosses the United States has represented have no force of law, a Chief Counsel memorandum that by its own legend may not be cited as precedent and a FAQ page that the Service itself says will not be relied on to resolve a case. Under Treas. Reg. § 1.6662-4(d)(3)(ii) the weight of an authority depends on its relevance, its persuasiveness and the type of document, and none of these carries weight against the statute, Tri-State and the United States' own representations. The position has substantial authority; it has, a fortiori, a reasonable basis.278
Reasonable cause and good faith
Section 6664(c) excuses an accuracy-related penalty where the taxpayer acted with reasonable cause and in good faith; a taxpayer who determined its eligibility by identifying the governmental orders that limited its operations, quarter by quarter, and by applying the statute's words to them acted on the most reasonable basis available.279
Section 6676 as amended
Section 6676 imposes a penalty on an excessive refund claim unless the claim has a reasonable basis; Public Law 119-21 extended the provision to claims for refund of employment tax, and the reasonable-basis standard remains the measure. A claim resting on the statute's text, Tri-State and the orders in the Library has a reasonable basis, and the penalty does not lie.280
Section 6702
A refund claim that identifies the quarters, the wages and the governmental orders on which it rests is not a frivolous submission; nothing in Notice 2010-33's list of frivolous positions describes a claim under the Suspension Clause supported by the orders that suspended the claimant.281
The Library
The Orders Library
The instruments on which this analysis rests are collected in the Library, organized by layer: the federal folder (FED- and a three-digit number, with ECO-A, ECO-B and ECO-C for the ecosystem instruments); the fifty States and the District (two-letter prefixes, e.g., NJ-004); the forty metropolitan areas (MET-, the metro code and a three-digit number, e.g., MET-CHI-026); the twenty-six sector folders (SEC-, the industry number and a three-digit number, of which SEC-18 is this industry's); the agency folders (AGY-, the agency code and a three-digit number, including AGY-ST-TRADE-BOARDS, AGY-ST-HEALTH-BOARDS, AGY-ST-HEALTH-SUBORDERS and AGY-TERRITORIES); the standing-duty folders (DUT- and a State code); and the legal and government-positions folders (LAW- and GOV- with a three-digit number). Each exhibit is indexed with its issuer, instrument, title, dates of issue, effect and end, limitation types, grade ("Primary source read" where the authority's own document is in hand; "Confirmed from a secondary source" where the instrument is established by the authority's own release, a recital in a primary instrument or an official index), retrieval method, file name, hash and source. This site names only instruments graded verified; an instrument the Library grades otherwise is not named here, and an identifier that appears in this analysis without a link is one whose record the Library carries but whose index row does not yet carry a verified grade.282
How the instruments are cited
The first citation of an order gives the issuer, the instrument, the pin, the date and the exhibit identifier, e.g., Governor of New Jersey, Executive Order No. 107, ¶ 9 (Mar. 21, 2020) (Ex. SEC-18-008); later citations give the exhibit identifier alone. The Notice is cited to the Internal Revenue Bulletin by Q&A and page (Notice 2021-20, 2021-11 I.R.B. 922, Q&A-10, at 927-28). The litigation record is cited as Doc. 44 (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; ECF header pages), Doc. 49 (the summary-judgment order of June 20, 2025, ECF No. 49; ECF header pages), Opening Br. and Br. for Appellees (the briefs in No. 25-4217 (9th Cir.), cited by the briefs' own pages); Tri-State is cited to the order's own pages, which equal the ECF pages. A date given in the text for an instrument is the date on which the instrument took effect unless the text says "issued" or gives both dates; the footnote gives the date of issue.