Albany NY Employee Retention Tax Credit 2020

 
Can you take the employee retention credit on the incomes paid of your S corporation to you, the 100% owner? Now, this is a big debate in the tax expert community right now. I'm not going to hang my hat on any one position till we get more explanation from the IRS on this, however if I needed to lean one method or the other, I would lean in the direction of saying that owner incomes in so far as we're discussing someone who owns more than 50 percent of the company, do not qualify.
  
 
Just how It Works
I don't 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 similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will use," don't get captured up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just described as the Internal Income Code of 1986. The vital part here is those other code sections reference.

Let's begin with 280C(a) because that's the simple one. That is just saying that if you get a credit on some earnings you pay in your company, you can't double dip and take a deduction for those very same wages. Today let's discuss area 51(i)( 1 ), which states, "No incomes shall be considered ...

with regard 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 worth of the impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and revenues interests in the entity." So let's focus 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" since we're presuming an S corp taxpayer here.That is just saying 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 clause that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.

So this is saying that you don't take into account earnings with respect to an individual who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is stating that you don't take into account salaries with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That seems clear to me that owner salaries do not certify. Now, some tax specialists are looking at the employee retention credit qualified salaries FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are salaries paid by an employer to staff members who are associated individuals thought about qualified earnings?

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