Just how It Functions

I do not want to get too technical here, however Area 2301(e) of the CARES Act -- which created the employee retention credit -- says that for functions of the employee retention credit, "rules comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall apply," do not get captured up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just referred to as the Internal Income Code of 1986. The vital part here is those other code sections referral.

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 deduction for those exact same incomes. Let's focus on the clause that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

This is stating that you don't take into account salaries with respect to a person who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax specialists are taking a look at the employee retention credit certified salaries FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are wages paid by an employer to workers who relate people thought about certified earnings?

" and they're saying, "Look at the response here. It's only these relatives whose incomes don't count. And the IRS didn't particularly say owner earnings or spouse earnings do not count here, so bad-a-boo, bad-a-bing, for that reason owner incomes must count." To that, I would say, "Look. The IRS website is not the tax code.

 


 

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