Bayside NY Employee Retention Tax Credit 2021

 
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 dispute in the tax expert 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 incomes in so far as we're discussing somebody who owns more than 50 percent of the company, do not certify.
  
 
Just how It Functions
I do not want to get too technical here, but Area 2301(e) of the CARES Act -- which created the employee retention credit -- states that for functions of the employee retention credit, "guidelines comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall apply," do not get caught up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's simply described as the Internal Income Code of 1986. The fundamental part here is those other code sections referral.

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

with respect to regard individual who person 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 owns, directly or indirectly, more than 50 percent in value of the outstanding stock exceptional the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests revenues the entity." So let's concentrate on the provision that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the provision that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is simply stating that if you get a credit on some earnings you pay in your company, you can't double dip and take a reduction for those very same wages. Let's focus on the provision that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is saying that you do not 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 do not take into account salaries with regard to an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That seems clear to me that owner earnings do not qualify. Now, some tax professionals are looking at the employee retention credit certified wages FAQs on the IRS site, and they're looking at FAQ 59, which says, "Are incomes paid by an employer to employees who relate individuals considered certified wages?

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