Bayside NY Employee Retention 2021 Erc Qualifications

 
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 big dispute in the tax professional neighborhood right now. I'm not going to hang my hat on any one position up until we get more clarification from the IRS on this, however if I had to lean one method or the other, I would lean in the instructions of stating that owner wages in so far as we're talking about somebody who owns more than 50 percent of the business, do not certify.
  
 
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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 purposes of the employee retention credit, "guidelines comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall apply," do not get captured up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's just referred to as the Internal Profits Code of 1986. The vital part here is those other code sections referral.

Let's start with 280C(a) since that's the simple one. That is just saying that if you get a credit on some incomes you pay in your organization, you can't double dip and take a reduction for those exact same salaries. And now let's talk about area 51(i)( 1 ), which says, "No salaries shall be taken into consideration ...

with regard to a person who bears any of the relationships described 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, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation, or, if the taxpayer is an entity aside from 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 says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "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 reduction for those exact same incomes. Let's focus on the provision that says "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 account earnings with regard to an individual who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation. This is saying that you do not take into account wages with regard to a person 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 earnings do not qualify. Now, some tax specialists are taking a look at the employee retention credit qualified wages FAQs on the IRS website, 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 salaries?

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