Albany NY Employee Retention Qualifications

 
Can you take the employee retention credit on the salaries paid of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax professional community right now. I'm not going to hang my hat on any one position till we get more clarification from the IRS on this, however if I needed to lean one method or the other, I would lean in the instructions of stating that owner salaries in so far as we're talking about someone who owns more than 50 percent of the company, do not certify.
  
 
How It Functions
I don't desire to get too technical here, but Section 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "rules similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 will use," don't get captured up on the 1986, that's just the last time the Internal Revenue Code had a major overhaul, so it's just referred to as the Internal Revenue Code of 1986. The vital part here is those other code areas referral.

Since that's the easy one, let's start with 280C(a). 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 reduction for those exact same earnings. But now let's speak about section 51(i)( 1 ), which states, "No incomes 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 a person who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any person who owns, straight or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's concentrate on the clause that states "if the taxpayer is a corporation" since we're presuming 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 presuming an S corp taxpayer here.That is just saying that if you get a credit on some earnings you pay in your service, you can't double dip and take a deduction for those same wages. 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 saying that you don't consider salaries with regard to a person who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is stating that you do not take into account incomes with respect to an individual who owns, directly 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 qualify. Now, some tax experts are looking at the employee retention credit certified incomes FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are incomes paid by a company to staff members who are associated people considered qualified earnings?

" and they're saying, "Look at the response here. It's just these family members whose earnings don't count. And the IRS didn't specifically say owner salaries or spouse wages do not count here, so bad-a-boo, bad-a-bing, therefore owner salaries should count." To that, I would state, "Look. The IRS site is not the tax code. That seems clear to me that owner earnings do not qualify. It's just these relatives whose earnings do not count. The IRS site is not the tax code.