Albany NY Employee Retention Credit

 
Can you take the employee retention credit on the wages paid of your S corporation to you, the 100% owner? Now, this is a huge dispute in the tax professional neighborhood today. I'm not going to hang my hat on any one position up until we get more information from the IRS on this, but if I needed to lean one method or the other, I would lean in the instructions of saying that owner wages in so far as we're talking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Functions
I don't wish to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "rules comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," don't get captured up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's simply referred to as the Internal Income Code of 1986. The vital part here is those other code sections reference.

Let's start with 280C(a) because that's the easy one. That is just saying that if you get a credit on some salaries you pay in your service, you can't double dip and take a deduction for those very same salaries. However now let's talk about section 51(i)( 1 ), which says, "No salaries shall be considered ...

with regard to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to a person who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and revenues interests in the entity." So let's focus on the stipulation that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.That is just stating that if you get a credit on some wages you pay in your business, you can't double dip and take a reduction for those very same wages. Let's focus on the clause that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is stating that you do not consider salaries with respect to an individual who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. This is stating that you don't take into account incomes with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax professionals are taking a look at the employee retention credit certified earnings FAQs on the IRS website, and they're looking at FAQ 59, which states, "Are salaries paid by a company to workers who belong individuals thought about certified wages?

" and they're saying, "Look at the answer here. It's just these relatives whose incomes do not count. And the IRS didn't specifically state owner salaries or partner wages don't count here, so bad-a-boo, bad-a-bing, therefore owner salaries must count." To that, I would state, "Look. The IRS website is not the tax code. That seems clear to me that owner wages do not certify. It's just these relatives whose incomes do not count. The IRS website is not the tax code.