Brentwood NY Employee Retention Credit Eligibility

 
Can you take the employee retention credit on the wages paid of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax professional neighborhood 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, 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 speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
How It Functions
I do not wish to get too technical here, however Section 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for purposes of the employee retention credit, "rules comparable to the rule of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," do not get captured up on the 1986, that's just the last time the Internal Revenue Code had a major overhaul, so it's simply referred to as the Internal Income Code of 1986. The fundamental part here is those other code sections recommendation.

Let's begin with 280C(a) since that's the easy one. That is just saying that if you get a credit on some wages you pay in your business, you can't double dip and take a reduction for those very same incomes. And now let's speak about area 51(i)( 1 ), which says, "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 area 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 worth of the impressive stock of the corporation, or, if the taxpayer is an entity aside from a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's focus on the stipulation that says "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 assuming an S corp taxpayer here.That is just stating that if you get a credit on some wages you pay in your organization, you can't double dip and take a reduction for those same salaries. 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 don't take into consideration incomes with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. This is stating that you do not take into account wages with respect to a person who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation. That appears clear to me that owner incomes do not qualify. Now, some tax experts are taking a look at the employee retention credit certified wages FAQs on the IRS site, and they're looking at FAQ 59, which says, "Are wages paid by an employer to staff members who relate people considered qualified incomes?

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