Albany NY Employee Retention Erc

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax professional neighborhood right now. I'm not going to hang my hat on any one position till we get more information from the IRS on this, however if I had to lean one way or the other, I would lean in the instructions of saying that owner earnings in so far as we're speaking about someone who owns more than 50 percent of the organization, do not qualify.
  
 
How It Works
I don't wish to get too technical here, but Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "guidelines similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall use," 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 just described as the Internal Revenue Code of 1986. The essential part here is those other code sections reference.

Since that's the easy one, let's begin with 280C(a). That is just stating 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. Now let's talk about area 51(i)( 1 ), which states, "No wages shall be taken into account ...

with respect to regard individual who bears any of the relationships described in subparagraphs (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or straight, more than 50 percent in value of worth outstanding stock impressive the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who person, directly or indirectly, more than 50 percent of the capital and profits interests revenues the entity." So let's focus on the provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the clause that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is simply stating that if you get a credit on some earnings you pay in your company, you can't double dip and take a reduction for those same salaries. Let's focus on the provision that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

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

" and they're saying, "Look at the response here. It's only these relatives whose wages do not count. And the IRS didn't particularly state owner wages or partner earnings do not count here, so bad-a-boo, bad-a-bing, therefore owner wages must count." To that, I would say, "Look. The IRS website is not the tax code. That appears clear to me that owner earnings do not certify. It's only these loved ones whose wages do not count. The IRS website is not the tax code.