Albany NY Employee Retention Tax Credit

 
Can you take the employee retention credit on the salaries paid out of your S corporation to you, the 100% owner? Now, this is a big dispute in the tax expert community right now. I'm not going to hang my hat on any one position up until we get more explanation 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 wages in so far as we're speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Functions
I do not want to get too technical here, however Section 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "guidelines comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue 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 Profits Code of 1986. The fundamental part here is those other code sections referral.

Let's start 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 salaries. Now let's speak about section 51(i)( 1 ), which says, "No earnings will be taken into consideration ...

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, directly 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 earnings interests in the entity." So let's focus on the provision that states "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.Let's focus on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.That is just 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 very same wages. Let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

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

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