No government orders in effect

There were no government orders related to COVID-19 in effect during the quarter which could have fully or partially suspended your trade or business.

Letter 105C, form language on the suspension prong, letters issued since 2024

The sentence

This is the Service's form language on the suspension prong in Letters 105C issued since 2024.¹ It is a statement of fact about the public record of the United States, and it is measured against that record. It is also a statement about the statute, because it assumes a rule the statute does not contain: that an order counts only if it stood in force throughout the quarter.

What the statute asks about the quarter

The Suspension Clause asks whether "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)."² The phrase "during the calendar quarter" attaches to "suspended." Congress wrote nothing about the duration of the order, nothing requiring the order to remain in effect on the quarter's last day, and nothing requiring it to have been in effect on its first. An order in force on any day of the quarter that reached a function of the business is an order within the clause, and the suspension it compelled is a suspension "during the calendar quarter."

The Service's own Notice says the same. Question 22 of Notice 2021-20 asks whether an employer whose order "is subsequently lifted in the middle of a calendar quarter" is an eligible employer for the whole quarter, and answers:

Yes. 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.

Notice 2021-20, 2021-11 I.R.B. 922, Q&A-22, at 932 (Ex. LAW-101)

The Notice's example is an order that closed non-essential businesses from March 10 through April 30, 2020 and "was not extended"; the employer is an eligible employer for the entire second quarter of 2020.³ The Service is bound by its own published guidance to the same extent as a revenue ruling, and the United States has told two federal courts that the favorable text of the Notice is text the Service must honor. A letter that treats the quarter as a period through which an order must have run from end to end applies a test found in no statute and disclaimed by the Notice the letter cites.

The record for every quarter

Measured against the statute as written, the sentence fails for every quarter of the credit, in every State and the District. Between March 12 and April 6, 2020 every State and the District issued an order limiting commerce, travel or group meetings due to COVID-19; by April 7, 2020 forty-two States and territories had ordered residents to stay at home, covering 2,355 of the nation's 3,233 counties (Ex. LAW-201). On July 1, 2020 capacity, exposure-control, gathering and quarantine orders were in force in every State, and the reopening orders that followed were themselves orders fixing how far each premises could open. On January 1, 2021 winter closure or capacity orders were in force in more than thirty jurisdictions; capacity orders remained in twenty-five on March 31, 2021, with binding operating conditions in others; the last statewide caps ended June 15, 2021 in California, June 30, 2021 in Washington and Oregon and July 1, 2021 in New Mexico (Ex. CA-029; Ex. WA-065, Ex. OR-043; Ex. NM-060). The federal layer ran through the whole period and past it. Those orders reached the functions on which most small businesses depend: the premises and its occupancy, the dining room and the sales floor, the workforce and the schools and child care that release it, the customers forbidden to come, the suppliers and carriers under orders of their own, the courts, recorders and licensing boards through which transactions run.⁴

The Library states the count for each quarter, live, in the table that follows this analysis, with the number of States in which an order of the State's own authorities was in force on the quarter's first and last days. The six quarter pages list the instruments; The Nation Under Orders tells the chronology State by State.

The third quarter of 2021

The letters dispute this quarter most often, and the record answers it most completely. When this analysis was published the Library held 2,704 orders in force during the quarter, 2,197 of them from the States, counties, cities and courts and 507 from the federal government; on July 1, 2021 an order of a State's own authorities was in force in all fifty-one jurisdictions, and the federal layer reached every employer in every one of them on every day of the quarter. The instruments include:

Beneath those instruments lay the suspension the earlier orders had compelled and that no order permitted the premises, staff, inventories, contracts and events to restore before the last statewide caps ended on June 30 and July 1, 2021; an operation ordered suspended through June 30 was not operating normally on July 1. The continuing-suspension analysis makes that showing through the statute's own grammar, Tri-State's definition of suspension as delay, the Notice's Q&A-22 and the orders' own restoration arithmetic. The third quarter of 2021 is listed instrument by instrument on its own page.

What the sentence describes

The sentence asserts that none of those instruments existed. It is factually incorrect. For the six quarters it describes a period that did not occur. The Service does not say what record it consulted before writing it. At the July 16, 2024 preliminary-injunction hearing in Stenson Tamaddon, LLC v. IRS, No. 2:24-cv-01123-SPL (D. Ariz.) (the transcript is cited here as "Tr."), counsel for the United States told the District Court that the Service was "taking a closer look at every single claim" and was

doing more follow-up, Your Honor, with the taxpayers about the amount of gross receipts; what sort of state, local, or government orders they're relying upon in claiming the ERC.

Tr. 16:9-10; 51:1-7

The record here is the orders themselves, published by the authorities that issued them and subject to judicial notice.⁵ A letter that reports the absence of instruments the Federal Register, the State registers and the county codes record by number, date and page is not a finding about the taxpayer; it is a misstatement about the public record, and the record corrects it.

1. The Service's form language on the suspension prong in Letters 105C issued since 2024; see Opening Br. at 11-12 (the opening brief of the appellant in Stenson Tamaddon, LLC v. IRS, No. 25-4217 (9th Cir. Sept. 17, 2025): record examples of letters and Forms 886-A deciding claims on the Notice); National 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"); National Taxpayer Advocate, blog of Apr. 27, 2026 (the 2024 letters were "based on the results of risk filter analyses rather than a prior examination"). ↩
2. CARES Act § 2301(c)(2)(A)(ii)(I), Pub. L. 116-136, 134 Stat. 281, 347-48 (Mar. 27, 2020) (Ex. LAW-001); I.R.C. § 3134(c)(2)(A)(ii)(I), enacted by ARPA § 9651, Pub. L. 117-2, 135 Stat. 4, 176-77 (Mar. 11, 2021) (Ex. LAW-003). The clause is identical in every enactment. ↩
3. Notice 2021-20, 2021-11 I.R.B. 922, Q&A-22, at 932 (Ex. LAW-101) (question, answer and example); see also Q&A-16, at 929-30 (the transition period the Notice itself allows); Internal Revenue Manual (CCDM) 32.2.2.10(3)-(4) (a notice binds the Service "to the same extent as a revenue ruling") (Ex. GOV-006); Doc. 44 at 19, 24 (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: the Notice is "merely guidance" and "the statute will control") (Ex. GOV-009). ↩
4. Ex. LAW-201 (Moreland et al., 69 MMWR 1198: forty-two States and territories issued mandatory stay-at-home orders between March 1 and May 31, 2020, covering 2,355 of 3,233 counties, the last issued April 7, 2020); the State and metropolitan instruments of each quarter, held in the Library under the exhibits shown on the quarter pages and the State pages; The Interconnected Economy (the functions the orders reached, by mechanism). ↩
5. Tr. 16:9-10; 50:15-18; 51:1-7 (statements of counsel for the United States) (Ex. GOV-008); Fed. R. Evid. 201(b), (c)(2) (Ex. LAW-024); Kater v. Churchill Downs Inc., 886 F.3d 784, 788 n.3 (9th Cir. 2018) (Ex. LAW-023); Clark v. Governor of New Jersey, 53 F.4th 769 (3d Cir. 2022), slip op. at 8 n.5 (Ex. LAW-032). ↩