Albany NY Employee Retention Program

 
Can you take the employee retention credit on the incomes paid out of your S corporation to you, the 100% owner? Now, this is a huge dispute in the tax professional community today. I'm not going to hang my hat on any one position until we get more clarification from the IRS on this, but if I had to lean one way or the other, I would lean in the direction of stating that owner salaries in so far as we're speaking about someone who owns more than 50 percent of the organization, do not certify.
  
 
Exactly How It Functions
I do not wish to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for functions of the employee retention credit, "guidelines comparable to the rule of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall use," don't get caught up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just referred to as the Internal Income Code of 1986. The fundamental part here is those other code areas referral.

Let's start with 280C(a) since that's the simple one. That is simply saying that if you get a credit on some incomes you pay in your service, you can't double dip and take a deduction for those same salaries. Now let's talk about area 51(i)( 1 ), which states, "No salaries will be taken into account ...

with respect to an 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 indirectly, more than 50 percent in value of the outstanding stock of 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 earnings the entity." So let's concentrate on the clause that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "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 incomes you pay in your business, you can't double dip and take a reduction for those very same incomes. Let's focus on the stipulation that states "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.

So this is stating that you don't take into consideration incomes with respect to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is saying that you don't take into account wages with respect to a person who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That seems clear to me that owner wages do not certify. Now, some tax experts are taking a look at the employee retention credit qualified wages FAQs on the IRS site, and they're taking a look at FAQ 59, which says, "Are wages paid by an employer to employees who belong individuals thought about qualified wages?

" and they're stating, "Look at the response here. It's only these family members whose salaries don't count. And the IRS didn't particularly state owner wages or partner wages don't count here, so bad-a-boo, bad-a-bing, for that reason owner salaries need to count." To that, I would say, "Look. The IRS website is not the tax code. That appears clear to me that owner incomes do not certify. It's just these loved ones whose salaries don't count. The IRS website is not the tax code.