Retail Trade

For every quarter, the six-quarters section lists the orders in force on the quarter's first and last day, by issuer, date and terms, with exhibit identifiers, and the tables on this page tabulate them. For the second quarter of 2020 the list runs to the closure orders of forty-three jurisdictions and the caps, curbside orders and mall closures of all fifty-one; for the third quarter of 2021 alone it runs to the federal designation, conveyance, entry, border, workplace and eviction orders, Hawaii's entire regime, the statewide face-covering reinstatements of seven jurisdictions (airborne-transmission controls with the business as enforcer), the unvaccinated-patron masking and verification rules of seven jurisdictions (California, New York, Connecticut, Rhode Island and, until their universal orders, Washington, New Mexico and Nevada), the face-covering orders of more than forty cities and counties, the vaccination-proof orders of four cities, the workplace standards of five States and the school, quarantine and court orders of more than twenty. A form sentence that no orders were in effect is not the "case-by-case" determination "under the facts and circumstances" the United States described to the District Court; by the National Taxpayer Advocate's account the letters that carry it issued from "a risk-scoring analytic process" and not from an examination.²²⁷ The sentence describes a quarter that did not occur, and the Service's records, whatever they contain, do not contain the Federal Register, the State registers or the county codes.

The instruments that make the sentence factually incorrect for this industry may be taken from any of the six quarters. The Governor of New Jersey ordered on March 21, 2020 that "the brick-and-mortar premises of all non-essential retail businesses must close to the public" at 9:00 p.m. that day and that every indoor mall close with them, an order that stood for in-store retail until June 15, 2020 (Ex. NJ-020) and, for the malls, until EO 157 ¶ 1, operative on its issuance June 26, 2020, permitted every retail premises, indoor or outdoor, to open at 50 percent under consolidated exposure-control conditions (Exs. SEC-07-013, NJ-026).²²⁸ The Governor of New York ordered on March 20, 2020 that "[e]ach employer shall reduce the in-person workforce at any work locations by 100% no later than March 22 at 8 p.m.," and the State's Empire State Development guidance permitted a non-essential retailer only "delivery for orders placed remotely ... provided, however, that only one employee is physically present at the business location."²²⁹ The Governor of Michigan ordered on April 9, 2020 that every open store over 50,000 square feet admit no more than "4 people per 1,000 square feet of customer floor space," that it "[c]lose areas of the store ... dedicated to ... [c]arpet or flooring ... [f]urniture ... [g]arden centers and plant nurseries ... [p]aint," and that it cease "the advertising or promotion of goods that are not groceries, medical supplies, or items that are necessary to maintain the safety, sanitation, and basic operation of residences."²³⁰ The Director of the Ohio Department of Health ordered on November 13, 2020, effective 12:01 a.m. November 16, 2020 and in force to June 2, 2021, that no retail premises "shall be open for business or operate unless in compliance" with the facial-covering and distancing conditions of the order, workplace infection-prevention and exposure-control requirements of which the customer's face covering was one, created a Retail Compliance Unit to inspect them, and provided for a notice of violation "requiring closure" of the store.²³¹ The Secretary of Health and Human Services, exercising the President's Defense Production Act authority, forbade any person to accumulate designated respirators, masks, gloves, sanitizers and disinfectants "in excess of the reasonable demands of business, personal, or home consumption" or "for the purpose of resale at prices in excess of prevailing market prices," from March 25, 2020, and on July 7, 2021 extended that designation with effect from July 1, 2021 through November 15, 2021, so that a federal order limiting commerce in identified retail goods was in force on every day of the third quarter of 2021.²³² In that same quarter the Los Angeles County Health Officer ordered on July 16, 2021, effective 11:59 p.m. July 17, that "this Order reinstates masking by all, regardless of vaccination status" in every indoor public setting including every store, one of the airborne-transmission controls the County placed on every indoor workplace beside the employer, event, school and quarantine conditions of the same order; the Governor of Illinois ordered on August 26, 2021 that "[b]eginning on Monday, August 30, 2021, all individuals in Illinois who are age two or over ... shall be required to cover their nose and mouth with a face covering when in an indoor public place," restated on September 3 with the employer's duty to enforce the requirement on its staff; and the Secretary of Health of Washington ordered on August 19, 2021, effective August 23, that "[e]very person in Washington State must wear a face covering ... when they are in a place where any person from outside their household is present," with the Governor's companion proclamation placing the duty of admission on the business and the duty to mask every employee at the worksite on the employer.²³³ The Service's position is not a close call on a contested record. It is factually incorrect. It describes a period, March 2020 through September 2021, that did not occur. The position that an employer operating a retail store in the United States between March 2020 and September 2021 was subject to no governmental order limiting its operations cannot be squared with the Federal Register, the State registers or the county codes, and this analysis declines to treat it as a serious account of the period.

The word "essential" is not in the statute. The essential-services designations permitted a grocery, pharmacy, hardware or general-merchandise store to open its door; they exempted no store from the occupancy caps, per-square-foot limits, one-adult-per-household rules, department closures, hours, masked-entry duties, compliance inspections, quantity and price limits or workplace standards that the same orders imposed on it. Michigan's EO 2020-42 is the text: the essential store over 50,000 square feet was open, and it was open to four customers per 1,000 square feet, with its carpet, furniture, garden and paint departments cordoned and its advertising of everything else barred; Kentucky's life-sustaining store was open to one adult per household; Missouri's open store was capped at 10 or 25 percent; Ohio's open retailer could "be open for business or operate" only "in compliance," on pain of a closure notice; every open retailer of designated goods held them under a federal quantity-and-price order from March 25, 2020 to November 15, 2021.²³⁴ The Notice itself provides that an employer so designated "may be considered to have a partial suspension of operations if, under the facts and circumstances, more than a nominal portion of its business operations are suspended by a governmental order," that "an essential business that is permitted to continue its operations may, nonetheless, be considered to have a partial suspension of its operations if a governmental order requires the business to close for a period of time during normal working hours," and that a compelled modification "is considered to be a partial suspension"; and the United States told the District Court that an employer "could be considered to have a partial suspension due to the governmental order if it was required to suspend certain operations for certain purposes."²³⁵ The Service's own answer to its essential-business question has changed with each publication: the "more than a nominal portion" pathway entered FAQ 30 only on June 19, 2020; the Notice of March 1, 2021 attached a ten percent deeming rule to it; and Publication 5887 now rewrites the clause as "shut down due to a government order," a sentence Congress did not write.²³⁶ A gloss that has changed three times in the Service's hands is not the statute, and no version of it has the force of law; the statute asks whether the operation was partially suspended due to orders, and every open retailer named above was. The designation was a permission to operate under the orders, not an exemption from them; an employer that "remained open" under an order that fixed how open it could be was partially suspended by that order.

The statute says nothing of the source or addressee of the order; it asks whether the order limited "commerce, travel, or group meetings." The Notice's own list of qualifying orders includes "A State's emergency proclamation that residents must shelter in place for a specified period" and "An order from a local official imposing a curfew on residents that impacts the operating hours of a trade or business," both addressed to the public, and the United States quoted that list to the District Court as the statute's meaning and told the Ninth Circuit that a business "may be suspended 'due to' a government order addressing a third party."²³⁷ The orders that reached this industry were, moreover, directed at business operations in terms: "the brick-and-mortar premises of all non-essential retail businesses must close to the public"; "Each employer shall reduce the in-person workforce at any work locations by 100%"; no retailer "shall be open for business or operate unless in compliance"; "If any such business cannot adhere to the 10 patron limit ... it must close."²³⁸ And the stay-at-home order on the retailer's customers was itself an order limiting the retailer's commerce: the commerce a store transacts is the commerce of the residents the order confined. The position rewrites the statute, contradicts the Notice's own example, and misdescribes the orders.

"Comparable operations," "telework" and "curbside" are not in the statute; Tri-State defines a partial suspension as a temporary delay, interruption or termination of a portion of the business, and a sales floor ordered closed while the website ran has had its in-person portion terminated for the duration of the order.²³⁹ The Notice's own words confirm it, and for this industry they confirm it by name. Q&A-17's Example 3 provides that where "Employer G, a retail business, must close its retail storefront locations due to a governmental order" and "the retailer's online ordering and fulfillment system is unaffected by the governmental order," Employer G's operations "are considered to have been partially suspended due to the governmental order requiring it to close its retail storefront locations"; Example 6 provides that "Employer J, a large retailer," permitted only "curbside service to pick up items ordered online or by phone," is "partially suspended due to the governmental order requiring it to close its storefront location"; Q&A-20's Example provides that "Employer L," a national retail chain closed to customers in some jurisdictions but permitted curbside, "has a partial suspension of operations of its trade or business" and is "an eligible employer nationwide."²⁴⁰ Q&A-15's second paragraph provides that where "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"; Q&A-16(3) provides that where the physical work space is so critical that central tasks cannot be performed remotely "this factor alone indicates that the employer is not able to continue comparable operations."²⁴¹ A store's floor is that work space; the customer who browses, tries, queues and pays in person cannot be served from a website, which is why e-commerce was 11.3 percent of retail sales before the closures and why the Notice's own examples treat the closed storefront as a partial suspension without asking what the website did.²⁴² The comparable-operations sentence with which Q&A-15 opens is not in the statute, appeared in this form only on March 1, 2021, has no force of law by the United States' own account, and is not applied here.²⁴³ The position substitutes words Congress did not write for the ones it did, and it contradicts the three retail examples in the Service's own Notice.

Q&A-13 addresses an employer that "responds to the lack of demand by suspending some or all of its operations." This analysis relies on no response to demand. It relies on orders that closed the sales floor, capped it, cordoned it, curfewed it, placed it under exposure controls the retailer enforced at its door, rationed its goods, closed its mall, closed its suppliers' plants, closed its borders and closed its workforce's schools, and it treats those orders as orders limiting commerce, travel and group meetings under the statute's text, under Q&A-12's logic and under the United States' admission that a third-party order counts.²⁴⁴ Where Q&A-13 would exclude an order confining the customer base, it adds to the statute words the United States has represented have no force of law; a stay-at-home order on the customer base is an order limiting commerce, travel and group meetings in terms, and the commerce it limited was the retailer's. Q&A-13's own example describes "a governmental order that limits travel and requires members of the community to stay at home," which is a description of an order within the clause, not outside it.²⁴⁵ As posted April 29, 2020, the customer exclusion was confined 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, eight months after the second quarter of 2020 had closed and after every 2020 quarter had closed.²⁴⁶ The position describes an employer this analysis does not address, and the rule it invokes cannot be reconciled with Q&A-10, Q&A-12 or the United States' brief.

A door closed because EO 107 closed it, a floor capped at four customers per 1,000 square feet because EO 2020-42 capped it, a department cordoned because the same order cordoned it, a customer masked because a Governor's proclamation or a county health officer's order required the retailer to refuse the unmasked, a store shut at 10:00 p.m. because a Director's curfew shut it, and a stock of sanitizer held below a federal ceiling because a Federal Register notice fixed the ceiling are not voluntary. Q&A-14 by its own terms reaches only a suspension "not due to a governmental order"; every modification relied on here is traced to an order with an exhibit identifier.²⁴⁷ Where a chain adopted a nationwide policy to comply with the orders of the jurisdictions that bound it, Q&A-20 makes it eligible "with respect to all of its operations in all locations ... whether or not the employer voluntarily adopts consistent measures for its business operations in other jurisdictions."²⁴⁸ Tri-State answered the same argument for a hospital: the changes "were not voluntary," and "the required protocols and procedures to comply with the Proclamation" were the order's doing.²⁴⁹ A modification traced to an order with an exhibit identifier is not voluntary, and the position that it was describes an employer this analysis does not address.

The United States and the District Court have defined the employer Q&A-14 excludes as one "not being ordered to do so."²⁵⁰ No retailer in the eight States whose standing duties are set out above answered that description in any of the six quarters. The reopening orders permitted the sales floor to open only on conditions with the force of law, the occupancy a store "shall operate at no more than" and the policies every employer "shall develop, establish and implement" (Exs. TX-021, AZ-019), with the emergency act's penalty behind each (Exs. DUT-TX-012, DUT-AZ-007). The standing statutes commanded the same conduct independently: "Each person shall act responsibly to prevent and control communicable disease" (Ex. DUT-TX-001); "[e]ach employer shall" provide "a place of employment that is reasonably safe and healthful" (Ex. DUT-TX-013); and every employer in every State owed "employment and a place of employment which are free from recognized hazards," enforced by citation from September 2020 (Exs. DUT-FED-001, LAW-487). The legislatures then fixed the standard of care as compliance with governmental standards, guidance and protocols (Exs. DUT-TX-015, DUT-AZ-010, DUT-MI-015, DUT-FL-012). The safe-workplace statute had no COVID-19 content until the health authorities said what a safe workplace required; the measures were taken because those directives defined the duty and would not have been taken without them. "Due to" is but-for causation, and the causation runs from the command to the measure without an intervening choice; an owner's later description of compliance as a choice is not an element of the test and not evidence of the counterfactual, and compliance under threat of penalty is compliance whether or not the actor calls it a choice.²⁵¹ The Notice's own words confirm it: a modification "required by a governmental order as a condition of reopening" is a partial suspension due to the order.²⁵² A statute that commands conduct is an order from an appropriate governmental authority, and the Service's premise, that no command reached the employer, fails wherever a command did; here a command reached every retailer in every State on every day of the six quarters.

The ten percent figure is, in the United States' words, "not determinative," "[e]ffectively ... a safe harbor," "not an eligibility requirement," "a quintessential safe harbor," "a safe harbor rather than a hard floor"; the District Court held it "is not an exclusionary cut-off point" and "subject to rebuttal"; and Tri-State held that the Notice "provides a method for the test to be met not as a requirement to meet the test" and that reading it as a requirement "would read requirements into the statute that do not exist."²⁵³ The figure did not exist in the Service's guidance until March 1, 2021; the FAQs of April 29, 2020 contained no "nominal" test and no percentage, and "more than a nominal" first appeared June 19, 2020.²⁵⁴ The Service's FAQ page nonetheless tells every taxpayer that "[t]he IRS considers 'more than nominal' to be at least 10% of your business," and Chief Counsel's memorandum of October 18, 2023 instructs that an employer "needs to substantiate ... a reduction ... of not less than 10 percent to fall within the provisions of Notice 2021-20," in the same year the United States told the District Court the figure "isn't an eligibility requirement."²⁵⁵ 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. The showing for this industry exceeds the safe harbor many times over as a matter of the orders' own terms: a sales floor closed to the public is the whole of the in-store portion; a floor capped at 25 percent is a 75 percent limit on admission; a floor open to four customers per 1,000 square feet in a 100,000-square-foot store is a limit of 400 persons in a building certified for thousands; a garden department cordoned is that department; a 10:00 p.m. curfew is every evening hour; and e-commerce was one-ninth of the industry before the closures.²⁵⁶ The position applies as a floor a figure the United States has told two federal courts is not one, and it applies it to a record that clears it by any measure.

The modifications relied on here are closure, curbside-only sale, capped admission, cordoned departments, curfews, compliance inspections with a closure sanction, rationed goods, fixed prices, warehouse closures, telework, and, in the third quarter of 2021, masked entry with a retailer's duty to enforce, a business's duty not to admit the unmasked, a verification-or-attestation duty and a vaccination check at the tenant's door. Q&A-18 itself lists "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" as modifications "required by a governmental order as a condition of reopening a physical space for business or service to the public," and provides that a modification "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."²⁵⁷ Q&A-18's sentence about "an occupancy restriction at a retailer with sufficient physical space to accommodate its customers regardless of the restriction," and Example 6's retailer whose storefront "is large enough that it is able to accommodate all of its customers after these short waits," describe a stipulated store on which the cap never binds; they do not describe a store capped at four customers per 1,000 square feet, at 20 or 25 percent, at one customer per 100 square feet, at ten patrons or at one adult per household, a store whose departments were cordoned, a store closed at 10:00 p.m., or a store whose right to be open turned on a compliance inspection, and they do not describe the holiday season.²⁵⁸ The masks-and-aisles sentence at the end of Q&A-18 first appeared on March 1, 2021, states a factual conclusion as a rule with no record, has no force of law by the United States' own account, and yields to Q&A-18's own first paragraph and to the statute: an order that conditions every customer's entry on a face covering the retailer must enforce, one of the workplace infection-prevention and exposure-control requirements the order attaches to the door, limits commerce at that door.²⁵⁹ Every instrument relied on in the six-quarters section, moreover, arrived as one condition among several on the same floor, and the United States' own position in the District Court is that "employees having to wear face masks may impact business operations" and that "orders that were otherwise directed at business operations (operational hours, space, etc.) would also be considered."²⁶⁰ Tri-State held that "the required protocols and procedures to comply with the Proclamation" were suspensions the order caused and refused the argument that they were nominal.²⁶¹ A store at 25 percent occupancy is not a modification with a nominal effect; it is a 75 percent closure, and the Service's own Notice deems it more than nominal.

This analysis relies on no bare declaration as a suspending order. Each instrument in the layers and six-quarters sections limited commerce, travel or group meetings in terms, and each carried a sanction. Where an emergency declaration is cited, it is cited as the instrument under which those orders were issued and continued, or as the record that every level of government treated the emergency as continuing on every day of the six quarters, which the Notice's own text allows: a declaration that "limits commerce, travel, or group meetings" is an order, and the declarations of Hawaii, Louisiana, Illinois, New Mexico and the District did exactly that.²⁶² The ground answers an argument this analysis does not make.

Chief Counsel memoranda "may not be used or cited as precedent," by their own legend, which Tri-State quoted in declining to rely on the Chief Counsel advice the United States offered there.²⁶³ The suppliers of this industry were closed or capped by order with a date and an exhibit identifier: Michigan's plants from March 24 to May 11, 2020; Pennsylvania's durable-goods manufacturing and non-food warehousing from March 19, 2020; New York's from March 22; New Jersey's from April 10; Washington's from March 25; the meat and poultry plants under a Defense Production Act priority order from April 28, 2020; and the goods themselves under a federal allocation and anti-hoarding order from March 25, 2020 to November 15, 2021 and an export bar from April 7, 2020 to June 30, 2021.²⁶⁴ Nothing here is attenuated. The United States told the Ninth Circuit that the supplier rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier," and told the District Court that an employer is eligible where its operations are suspended "because of the supplier's inability to deliver"; Q&A-12's words contain no "narrow, limited exception," no requirement that any order apply to the employer, and no requirement that the employer possess the supplier's order, and Q&A-70's substantiation list asks for "any governmental order to suspend the employer's business operations" and the records "the employer relied upon," not for a document from the supplier's files.²⁶⁵ Causation is but-for on the United States' own agreed definition: absent the order closing the plant, no law kept the goods off the truck.²⁶⁶ The position describes an attenuated chain this analysis does not rely on, and a Chief Counsel memorandum that cannot be cited as precedent is not the statute.

For the third quarter of 2021 the orders had not lifted: subpart B of the third-quarter section lists, with dates, the orders in force on July 1 and September 30, 2021, and the paragraph that closes that section names the expired instruments on which the proof does not rest. Where the position means that a suspension compelled by an order that expired between March 10 and July 1, 2021 ended at midnight on the day of expiry, it misreads the clause, which asks whether the operation "is fully or partially suspended during the calendar quarter," not whether an order was in effect during it; it contradicts Tri-State's definition of a suspension as a "delay"; and it contradicts the Notice's own Q&A-22 (a suspension during part of a quarter is eligibility for the whole quarter) and Q&A-16(4) (a transition period follows a compelled change).²⁶⁷ The orders' own phase steps fix the restoration period for this industry: fourteen to fifteen months from closure to the last capacity step in New Jersey, New York, Pennsylvania, California, Washington, New Mexico, Michigan, Ohio, Illinois and Massachusetts, with the last step falling between May 19 and July 1, 2021 and the third quarter beginning within days or weeks of it.²⁶⁸ The position mistakes the date an order lapsed for the date the suspension it compelled ended; the clause asks about the second.

The gross-receipts prong is not relied on. The statute makes an employer eligible on either prong, joined by "or"; the United States admitted in Tri-State that the gross-receipts test is "another method to qualify," and the court held that "the fact an employer can be eligible and affected without partial or full suspension is reasonable" and that the plain reading of the suspension prong "does not make the Gross Receipts Test superfluous."²⁶⁹ Congress placed its numerical thresholds in the gross-receipts prong alone and wrote none into the Suspension Clause.²⁷⁰ The suspension prong asks about operations, not revenue, and it is satisfied in every quarter. The ground answers a prong this analysis does not invoke.

Every instrument this analysis relies on as a suspending order is an executive order, proclamation, public health order, administrative rule, regulation, statute, ordinance or court order with the force of law, issued under a recited statutory or constitutional power and enforced by fine, misdemeanor, closure, license, contempt or contract: a Governor's executive order under a State emergency act (Exs. NJ-004, NY-002, MI-011, TX-008); a State health director's order under Ohio Revised Code § 3701.13 (Ex. SEC-07-037); a Secretary of Health's order under the Washington Public Health Code (Ex. WA-078); a rule filed in the Oregon Administrative Rules with a civil penalty of $500 a day (Ex. OR-048); a county health officer's order under the California Health and Safety Code (Ex. MET-LA-018); a city ordinance (Ex. MET-KC-002); a Federal Register notice enforced criminally under the Defense Production Act (Ex. SEC-07-031); a CDC order whose violation "constitutes a violation of Federal law" (Ex. FED-020); a presidential proclamation under 8 U.S.C. § 1182(f) (Ex. FED-207).²⁷¹ Where a State made a federal guidance document binding by incorporating it into an order, as Texas GA-14 did with CISA Version 2.0 and as California's June 11, 2021 order did with the Department of Public Health's face-covering guidance, the binding instrument is the order, and it is the order that is cited; the CISA lists, OSHA's Alert 3996 and the CDC's retail considerations are described in this analysis as guidance and ground no finding.²⁷² The Notice itself provides that whether an instrument is a governmental order "is determined without regard to the level of enforcement."²⁷³ An instrument enforced by fine, closure, misdemeanor or criminal prosecution is not a recommendation, and the position that it is misdescribes every instrument this analysis names.

Agreed. An "order" is "[a]n authoritative indication to be obeyed; a command or direction," and the Service's own Chief Counsel defines it as "a command or mandate delivered by a government official"; the United States agreed in Tri-State that the clause is read by "plain meaning."²⁷⁴ Every instrument in the findings of the six-quarters section is a command from a competent authority to do or refrain from doing something on pain of sanction: close the door; admit no more than four per 1,000 square feet; cordon the department; close at 10:00 p.m.; refuse the unmasked; hold no more than the reasonable demands of business; do not cross for non-essential purposes; wear a mask on the bus. That is the ordinary meaning, and it is satisfied.

The Service is free to disagree about the weight of these instruments. It is not free to say they did not exist.